Question

Question 69 of 75. Which of the following is a correct statement in regard to an NOL? The NOL deduction is limited to 80% of taxable income (determined without regard to the deduction), in losses that arvsem tax years beginning after December 31, 2017 O Beginning in tax years after December 31, 2017, taxpayers may take 100% of an NOL in the year following the loss. Taxpayers will need to make a distinction between NOLs that occurred before January 1, 2018, and after December 31, 2017, when computing the NOL deduction. The taxpayer is allowed to carry backward or forward an NOL deduction if the loss occurred in 2018. Mark for follow up « Back Save / Return Later Summary Next >>

Answer 1

For losses incurred in tax years ending after December 31,2017, 2 year NOL carry back applies to farming losses,and losses from insurance companies other than life insurance company.

(1) The NOL deduction limited to 80% of taxable income, in losses that arise in tax years beginning after December 31, 2017 - It is correct Statement. There is limit of NOL deduction of 80% of taxable income without including NOl deduction.

(2) Beginning in tax years after December 31,2017 tax payer's take 1000% of NOL in the year following the loss - It is incorrect. Carry forward is now limited to 80% of each subsequent year's net income.

(3) Taxpayer will need to make distinction between NOLs that occurred before January 1 , 2018 and after December 31, 2017, when computing the NOL deduction. - It is incorrect. NOL occurred before January 1, 2018 subject to former rule and after December 31, 2017 subject to current rule.

(4) The taxpayer is allowed to carry backward or forward an NOL deduction if the loss occurred in 2018. - It is in correct. For tax year beginning January 1 , 2018 carry back provision for prior two years removed.