Baker Corporation suffers a net operating loss NOL) of $65,000 in 2013. Baker was incorporated in 2011. Baker had a NOL of $20,000 in 2011 and taxable income of $35,000 in 2012. The corporation expects a taxable income of $200,000 in 2014. What valid alternatives are available to Baker concerning the $50,000 loss? I. Baker can carryback the loss to 2014 and will receive a refund of $2,250. II. Baker can elect to carryforward the loss and expect to receive tax savings of $19,500. Only statement I is correct. Only statement II is correct. Both statements are correct. Neither statement is correct.

Question

Baker Corporation suffers a net operating loss NOL) of $65,000 in 2013. Baker was incorporated in 2011. Baker had a NOL of $20,000 in 2011 and taxable income of $35,000 in 2012. The corporation expects a taxable income of $200,000 in 2014. What valid alternatives are available to Baker concerning the $50,000 loss? I. Baker can carryback the loss to 2014 and will receive a refund of $2,250. II. Baker can elect to carryforward the loss and expect to receive tax savings of $19,500.  Only statement I is correct. Only statement II is correct. Both statements are correct. Neither statement is correct.

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The Answer of Baker Corporation suffers a net operating loss NOL) of $65,000 in 2013. Baker was incorporated in 2011. Baker had a NOL of $20,000 in 2011 and taxable income of $35,000 in 2012. The corporation expects a taxable income of $200,000 in 2014. What valid alternatives are available to Baker concerning the $50,000 loss? I. Baker can carryback the loss to 2014 and will receive a refund of $2,250. II. Baker can elect to carryforward the loss and expect to receive tax savings of $19,500.  Only statement I is correct. Only statement II is correct. Both statements are correct. Neither statement is correct.

Baker Corporation Suffers a Net Operating Loss NOL) of $65,000