Recognizing tax benefits in a loss year due to a net operating loss carryforward requires

Question

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Recognizing tax benefits in a loss year due to a net operating loss carryforward requires creating a deferred tax asset. This is because the net operating loss creates a future tax benefit that will reduce taxable income in a future year, resulting in a lower tax liability. The deferred tax asset reflects the future tax benefit that can be used to offset future taxable income.

Recognizing Tax Benefits in a Loss Year Due to a Net