This year,Garfield Inc.generated a $25,000 net operating loss.Which of the following statements is false?

Question

Quizplus · Accepted Answer

If Garfield cannot use any of the NOL as a carryback deduction, it will result in a deferred tax liability. This is because the NOL creates a tax benefit that will reduce taxable income in future years, leading to lower tax payments. However, since the benefit is created in the current year, it will not be recognized until future years, resulting in a deferred tax liability. The other statements are true - if Garfield can carry the entire NOL back, there will be no deferred tax consequences, Garfield can elect to give up the carryback of the NOL, and if Garfield cannot use the NOL as a carryback deduction, it can carry it forward for 20 years.

This Year,Garfield Inc