In its first taxable year, Platform, Inc. generated a $100,000 net operating loss and made a $10,000 cash donation to a local charity. In its second year, Platform generated $350,000 operating income and made a $20,000 donation to the same charity. Compute Platform's taxable income for its second year.

Question

Quizplus · Accepted Answer

In the second year, Platform's taxable income is $350,000 - $20,000 = $330,000. However, the $100,000 net operating loss from the first year can be carried forward and used to offset the taxable income in the second year, resulting in a taxable income of $330,000 - $100,000 = $230,000.

In Its First Taxable Year, Platform, Inc