Which of the following statements regarding net operating losses is true?
A)A corporation can carry a net operating loss incurred in 2017 forward indefinitely.
B)A corporation can carry forward a net operating loss incurred in 2019 to 2020 but it may offset only 80 percent of taxable income (before the NOL deduction)in 2020.
C)When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover.
D)None of these is a true statement.

Question

Quizplus · Accepted Answer

A corporation can carry forward a net operating loss for up to 20 years, but under the Tax Cuts and Jobs Act of 2017, the net operating loss deduction for losses incurred after 2017 is limited to 80% of taxable income in the year the loss is used. Option A is incorrect because pre-2017 net operating losses can only be carried forward for 20 years. Option C is incorrect because applying a net operating loss carryover does not result in a permanent book-tax difference.

Which of the Following Statements Regarding Net Operating Losses Is