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.