A corporation has non-capital loss carry forwards and net capital loss carry forwards. How does management decide which...

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A corporation has non-capital loss carry forwards and net capital loss carry forwards. How does management decide which...

A corporation has non-capital loss carry forwards and net capital loss carry forwards. How does management decide which of these carry forwards should be deducted first?

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business accounting

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Answer 1

Answer #1

The Non Capital Loss & net capital loss put together will for the Net Operating Loss (NOL) for the Company. For tax years starting from 1st Jan 2018 the Tax Cut & Jobs Act allows indefinite time to carry forward loss.But the same is limited to 80% of the net Income of each subsequent year.

Non Operating Loss carry forwards are recorded as an Asset in the books of the Corporation, shown as Deferred Tax Asset in Balance sheet as benefit in the future tax liability savings & is utilized till its balance is exhausted.

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