Various members of Congress favor a reduction in the corporate tax rate to improve competitiveness and have proposed legislation to lower corporate income tax rates.Assume the legislation is enacted,and corporate tax rates are reduced.If a C corporation,which normally generates taxable income of $300,000 or higher and has expectations of higher profits in the future,generates an NOL in the current year,how would you recommend the corporation apply the loss?
A)The corporation should carry back the loss two years and claim a refund.
B)The corporation should elect to carry forward the loss to the next year.
C)The corporation is required to carry forward the loss to the next year.
D)The corporation cannot apply a loss to another year.

Question

Quizplus · Accepted Answer

A)If future tax rates are falling,the corporation will want to carry back the loss to the two earlier years when its rates are higher to maximize the tax savings.

Various Members of Congress Favor a Reduction in the Corporate