Ladow Inc. incurred a $32,000 net operating loss in 2021. If Ladow's 2022 taxable income was $38,000 before NOLs, compute Ladow's 2021 NOL deduction.

Question

Quizplus · Accepted Answer

The NOL deduction is limited to 80% of taxable income.

Taxable income before NOLs in 2022 is $38,000.

80% of $38,000 = $30,400

Since the NOL is less than the allowable deduction, the entire $32,000 NOL can be used.

Therefore, the NOL deduction for 2021 is $30,400.

Ladow Inc Incurred a $32,000 Net Operating Loss in 2021