Hammaker Corp. began operations in 2016 and reported taxable net income of $10 m
ID: 2603900 • Letter: H
Question
Hammaker Corp. began operations in 2016 and reported taxable net income of $10 million and $4 million in 2016 and 2017, respectively. In 2018, Hammaker reports a net operating loss (NOL) of $16 million, and elects to carry back that NOL to the extent possible. The tax rate for the years 2016 through 2018 is 35%, but the enacted tax rate for 2019 and later years will be 40%. As part of year-end adjusting entries, what total tax benefit will Hammaker record as a result of the 2018 NOL?
Multiple Choice
$5,700,000
$4,900,000
$6,400,000
$5,600,000
Explanation / Answer
Total tax benefit as a result of the 2018 NOL = (10000000+4000000)*35%+(2000000*40%)= 5700000 Option 1 is correct
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