1) Explain the concept of Net Operating Loss carryback and carryforwards. (Do not copy from the internet or textbook, explain in your own words.) (5pts)

Calculate the total annual tax refund to be received by Seasons Pizza Inc. as a result of the net operating loss in 2018. (5pts)

2015 2016 2017 2018

Total Revenues 1,200,000 $1,000,000 $1,500,000 $800,000

Operating Expenses 853,500 700,000 990,000 2,000,000

NOP 346,500 300,000 510,000 <1,200,000>

Tax (34%) 117,810 102,000 173,400 0

NI /NL 228,690 198,000 336,600 <1,200,000>

2) Based on the Tax Cuts and Jobs Act (2018) calculate the total tax liability for Caf Gelatto, an LLC, if they earned a taxable income of $325,000 in 2018. (Hint: use the example provided in the powerpoint slides under Income Taxes, show the tax liability at each tax bracket). (10pts)

3) a) Explain the differences between Economics, Accounting and Finance. (5pts)

b) Explain the differences between corporate finance, personal finance and governmental (or

public) finance. (5pts)

4) If you were to start a business tomorrow, give 2 reasons each why you would organize your business as: (10pts)

a) sole proprietor

b) LLC

c) S Corporation

5) How is a B-Corp different from a C-Corp? Explain the triple bottom-line that B-Corps must meet (as we discussed in class). (5pts)

6) Why do governments impose income taxes? Explain. (10pts)

7) Explain the difference between the capital gains tax and ordinary income tax. (5pts)