Newcastle Corporation was incorporated in 2017. For the years 2017 through 2019, Newcastle has the following net
Question:
Newcastle Corporation was incorporated in 2017. For the years 2017 through 2019, Newcastle has the following net capital gain or loss.
If Newcastle is in the 34% marginal tax bracket for each of these years, what effect do the net capital gains (losses) have on its tax liability for 2017, 2018, and 2019?
Transcribed Image Text:
Net capital gain (loss) 2017 6,000 2018 2019 (27,000) 18,000
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Net capital gains are subject to the corporate tax at regular tax rates Net capital losses cannot be deducted in the year of the loss Losses are carried back three years and forward five years and used to offset net capital gains in the carryover period Carrybacks result in a tax refund Carryforwards reduce the tax paid in future periods on net capital gains Part of the 2018 loss is carried back to 2017 and a 2040 6000 x 34 refund is obtained The remaining 2018 loss of 21000 27000 6000 is carried forward to 2019 to offset the entire capital gain in 2019 The remaining 3000 21000 18000 of 2018 capital loss ...View the full answer
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Related Book For
Concepts In Federal Taxation
ISBN: 9781337702621
26th Edition
Authors: Kevin E. Murphy, Mark Higgins
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