TRW Inc. began business in 2018 and incurred net operating losses for its first
ID: 2333116 • Letter: T
Question
TRW Inc. began business in 2018 and incurred net operating losses for its first two years. In 2020, it became profitable. The following table shows TRW’s taxable income before consideration of these NOLs.
Those are in " Bold" are right answers. Those are not in Bold are the wrong answers that was answered by one of the chegg expert.
2018 2019 2020 2021 2022 2023 2024 2025 Taxable income $(420,000) $(358,000) $81,000 $41,000 $210,000 $298,000 $387,000 $905,000 2020 2021 2022 2023 2024 2025 Tax. income before NOL deduction 81000 41000 210000 298000 387000 905000 NOL Deduction (81000) (41000) (210000) (298000) (148000) 0 Taxable Income 0 0 0 0 239000 905000Those are in " Bold" are right answers. Those are not in Bold are the wrong answers that was answered by one of the chegg expert.
Explanation / Answer
From 2018 NEW carry over rule , carry back is eliminated for non farming loss and carry over can be made unlimited but limited to the extent of 80% of taxable income. 2020 2021 2022 2023 2024 2025 Tax. income before NOL deduction $ 81,000 $ 41,000 $ 210,000 $ 298,000 $ 387,000 $ 905,000 NOL Deduction limited to 80% of taxable income (64,800) (32,800) (168,000) (238,400) (274,000) - Taxable Income $ 16,200 $ 8,200 $ 42,000 $ 59,600 $ 113,000 $ 905,000 Calculation: 2018 $ 420,000 2019 358,000 Total NOL $ 778,000 Less: carry over to 2020 - 2023 (64,800) (32,800) (168,000) (238,400) (504,000) NOL deduction in 2024 $ 274,000 Note: I have tried my best for corret solution, still if there is any issue, please ask in comment before posting again, Thanks.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.