Puritan Corp. reported the following pretax accounting income and taxable income for its first three years of operations: Puritan's tax rate is 40% for all years. Puritan elected a loss carryback.
Puritan was certain it would recover the full tax benefit of the NOL. What did it report on December 31, 2009, as the deferred tax asset for the NOL carryforward?

Question

Quizplus · Accepted Answer

The deferred tax asset for the NOL carryforward is calculated by multiplying the NOL by the tax rate. If the NOL is $250,000, the deferred tax asset would be $250,000 x 40% = $100,000.