Question

Conlin Corporation had the following tax information.
Year Taxable Income Tax Rate Taxes Paid
2015 $300,000 35% $105,000
2016 325,000 30 97,500
2017 400,000 30 120,000
In 2018, Conlin suffered a net operating loss of $480,000, which it elected to carry back. The 2018 enacted tax rate is 29%. Prepare
Conlin’s entry to record the effect of the loss carryback.

Answer 1

Solution:

Loss carryback to 2016 = $325,000

Loss carry back to 2017 = $480,000 - $325,000 = $155,000

Income tax refund for loss carryback = ($325,000*30%) + ($155,000*30%) = $144,000

Conlin Corporation
Journal Entries
Date	Particulars	Debit	Credit
31-Dec-18	Receivables - Income tax refund Dr	$144,000.00
	To Income Tax benefit - Net operating loss		$144,000.00
	(To record income tax benefit for loss carryback)