In its first year of existence (year 1) WCC corporation (a C corporation) reported taxable income of
Question:
In its first year of existence (year 1) WCC corporation (a C corporation) reported taxable income of $170,000 and paid $49,550 of federal income tax. In year 2, WCC reported a net operating loss of $40,000. WCC projects that it will report $800,000 of taxable income from its year 3 activities.
a. Based on its projections, how much will WCC corporation save in taxes if it elects to forgo the NOL carryback and carries its year 2 NOL forward to year 3?
b. Assuming WCC corporation carries back its year 2 NOL to year 1, prepare a Form 1139 "Corporation Application for Tentative Refund" for WCC corporation to reflect the NOL carryback. Use reasonable assumptions to fill in missing information.
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
a WCC should carryback the year 2 loss to year 1 If it carries back the loss the loss will offset income that was taxed a 39 marginal rate In contrast if it carries the loss forward the loss will offs...View the full answer
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
