Town, a calendar-year corporation that was incorporated in January 2007, experienced a \($600,000\) net operating loss (NOL) in 2009. For the years 2007 and 2008, Town reported taxable income in each year and a total of \($450,000\) for the two years combined. Assume that (1) there are no differences between pre-tax book income and taxable income for all years, (2) the income tax rate is 40% for all years, (3) the NOL will be carried back to the profit years (2007-2008) to the extent of \($450,000\), and \($150,000\) will be carried forward to future periods, and (4) Town expects to report taxable income for the foreseeable future.
Required:
1. What amounts should Town report as “Tax benefit due to NOL carryback and carryforward”
in its 2009 income statement?
2. How much will Town report as a deferred tax asset on its December 31, 2009 balance sheet?