A corporation generates a $200,000 net operating loss in 2018.In 2019 its taxable income from 2019 activities is $220,000.The corporation will be allowed an NOL deduction of
A)$220,000.
B)$200,000.
C)$176,000.
D)$160,000.

Question

Quizplus · Accepted Answer

The corporation can carry the net operating loss back up to two years or forward up to 20 years. If the corporation chooses to carry the loss forward, it can deduct up to 80% of its taxable income in any given year. In this case, the corporation can carry forward the $200,000 NOL from 2018 to 2019 and deduct up to $176,000 (80% of $220,000) from its taxable income in 2019, leaving $44,000 of taxable income. Therefore, the NOL deduction allowed for 2019 is $176,000.

A Corporation Generates a $200,000 Net Operating Loss in 2018