In its first taxable year,Platform,Inc.generated a $200,000 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

Platform's net operating loss carryforward from its first year is $200,000. In its second year, Platform generated $350,000 operating income, which is more than enough to offset the net operating loss carryforward. Therefore, Platform's taxable income for its second year is $350,000 - $200,000 = $150,000. However, Platform also made a $20,000 donation to charity, which is deductible from taxable income. Therefore, Platform's taxable income for its second year is $150,000 - $20,000 = $130,000.

In Its First Taxable Year,Platform,Inc