The Loser Corporation had a loss of $200,000 in 2000. The firm had income and paid taxes in the three prior years of:

Suppose the tax law allows losses to be carried back three years and forward 15 years.

a. How much of a refund of prior taxes can Loser receive?

b. How much of the loss, if any, can be carried forward to future years?

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Year Taxable Income Taxes Paid (40% of Taxable Income) 1997 $100,000 $40,000 1998 200,000 80,000 1999 100,000 40,000