Additional Facts:

Assume that a valuation allowance of $100 million is recorded as of December 31, 2018 ($150 million DTA less $50 million reversing DTLs).

Further assume that the Company's projection for 2019 pretax book income of $0 is accurate, but the Company sells a component of the business and recognizes the component as a discontinued operation.The discontinued operations earn $20 million before tax, and the continuing operations lose $20 million before tax for a net pretax book income of $0.

As described above, the Company has a full valuation allowance.

1a. Is there a tax benefit on the loss of $20 million from continuing operations?

2b. Is there a tax provision on the $20 million of income from discontinued operations?

PART 2 of this case study