Question
BlubBlub Co. experienced the following timeline of taxable income before the effects of net operating loss carrybacks and carryforwards. Taxable income before the effects of
BlubBlub Co. experienced the following timeline of taxable income before the effects of net
operating loss carrybacks and carryforwards.
Taxable income before the effects of
net operating loss carrybacks and
carryforwards
2017 - $1600
2018 - ($2718)
2019 - $945
Under the U.S. Tax Cuts and Jobs Act of 2017 ("TCJA"), net operating losses cannot be
carried backward, but can be carried forward indefinitely. Net operating loss carryforwards
can be used to reduce taxable income by up to 80% of taxable income in any year. The
federal corporate income tax rate is 21%.
After taking into consideration the effects of net operating loss carrybacks and
carryforwards, as well as the limitations on using carryforwards under the TCJA, by how
much did BlubBlub Co's deferred tax assets decrease in 2019?
(Round to the nearest whole dollar.)
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