TLR Productions reported income before taxes of $205,000 for the years 2016, 2017, and 2018. In 2019 they experienced a loss of $500,000. TLR had a tax rate of 35% in 2016 and 2017, and a rate of 45% in 2018 and 2019. Assuming the company uses the carryback provisions for the net operating loss, what amount should be reported as Income Tax Refund Receivable in 2019?

Question

Quizplus · Accepted Answer

The company can carry back the 2019 loss to offset the taxable income of 2017 and 2018. The tax refund is calculated as follows: $205,000 (2017 income) x 35% + $205,000 (2018 income) x 45% = $71,750 + $92,250 = $164,000.

TLR Productions Reported Income Before Taxes of $205,000 for the Years