In Year 1, Reese Corporation (a C-Corporation) reported a loss for tax purposes of $50,000. How...
In Year 1, Reese Corporation (a C-Corporation) reported a loss for tax purposes of $50,000. How much tax will Reese Corporation pay in year 2 if it reports taxable income from operations of $30,000 under the following assumptions?
a.Year 1 is 2017
b.Year 1 is 2018
Homework Answers
For tax years beginning before January 1, 2018, Net Operating Losses were able to offset 100% of taxable income of the future years. They were allowed to be carried back two years and carried forward for twenty years.
Under the new law, the Tax Cuts and Jobs Act (TCJA) passed on December 22, 2017, an NOL can offset only 80% of taxable income in any given tax year.
A. Year 1 is 2017 - No taxable income as loss of 50,000$ can be fully set off against income of 30,000$. So there will be no taxable income.
B. Year 1 is 2018 - Taxable income = $30,000-($30,000*80%)= $6,000
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