Ladow Inc. incurred a $32,000 net operating loss in 2016. Ladow's 2014 taxable income was $28,000, and its 2015 taxable income was $149,200. Use the corporate tax rates included in Appendix C to compute Ladow's refund from an NOL carryback deduction.

Question

Quizplus · Accepted Answer

The NOL of $32,000 can be carried back to 2014, offsetting the $28,000 taxable income, resulting in a refund of $5,760 (28,000 * 20% tax rate for 2014). The remaining $4,000 NOL can be carried back to 2015, but the refund from 2014 is $5,760.

Ladow Inc Incurred a $32,000 Net Operating Loss in 2016