Which of the following statements regarding net operating losses generated in 2016 is true?
A) Corporations can carry net operating losses back two years and forward up to 15 years.
B) A corporation may elect to forgo carrying a net operating loss back and instead carry it over to future years.
C) When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover.
D)Marginal tax rates are irrelevant in determining the tax benefit of applying a net operating loss carryback or carryover.
E)None of these

Question

Quizplus · Accepted Answer

Option B is true. Corporations can generally carry net operating losses back two years and forward up to 20 years (for losses generated after 2017), but they can elect to forgo the carryback and instead carry the loss forward. Option A is incorrect because the carryforward period is up to 20 years (for losses generated after 2017). Option C is incorrect because applying a net operating loss carryover results in a temporary, not a permanent, book-tax difference. Option D is incorrect because marginal tax rates are relevant in determining the tax benefit of applying a net operating loss carryback or carryover.

Which of the Following Statements Regarding Net Operating Losses Generated