Luther Industries has outstanding tax loss carryforwards of $70 million from losses over the past four years.If Luther earns $15 million per year in pre-tax income from now on,Luther first pays taxes in:
A)7 years
B)2 years
C)4 years
D)5 years

Question

Quizplus · Accepted Answer

D)The number of years the tax loss carryforwards will last ban be calculated as the tax loss carry forward dividend by the annual pre-tax income or:
Years with no tax = 11ea7cce_3bb3_39ff_928c_556e09bce004_TB1626_00 = 4.67 years,so Luther won't have to pay taxes for the next four years,but will have to start paying some taxes 5 years from now.

Luther Industries Has Outstanding Tax Loss Carryforwards of $70 Million