Good Health Company Inc. began business in 2008 and has operating results as lis

Question

Good Health Company Inc. began business in 2008 and has operating results as listed below. In 2010 it generated a net operating loss of $385,000. This loss is determined after the company had filed its 2012 return. The following table shows Good Health Company's taxable income and tax before consideration of any NOL. The tax rate for all years is 35%.

Year                             2008                2009                2010                2011                2012

Taxable Income           80,000             95,000             (385,000)        120,000           19,000

Tax                              28,000             33,250             -0-                   42,000-            6,650

Recompute Good Health Company's taxable income and tax as well as any refunds due. Also determine any net operating loss carryover to years subsequent to 2012. Assume that the company elects to carry any losses back (two years) then forward.

Explanation / Answer

Year 2008 2009 2010                2011 2012

Taxable Income 80,000 95,000 (385,000)   (265000) {385000-120000} (246000){265000-19000}

Tax Payable 28,000 33,250 -0-     -0- -            

-0-

Tax Paid 28,000 33,250             -0-                   42,000 6,650

Refund 0 0 0 42000 6650

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