E19-23 (LO3) (NOL Carryback and Carryforward, Valuation Account versus No Valuation Account) Spamela Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) Year 2015 2016 2017 Pretax Income (Loss) $120,000 90,000 (280,000) 220,000 Tax Rate 34% 34 38 The tax rates listed were all enacted by the beginning of 2015 Instructions (a) Prepare the journal entries for the years 2015-2018 to record income tax expense (benefit) and income taxes payable (refundable) and the tax effects of the loss carryback and carryforward, assuming that at the end of 2017 the benefits of (b) Using the assumption in (a), prepare the income tax section of the 2017 income statement beginning with the line (c) Prepare the journal entries for 2017 and 2018, assuming that based on the weight of available evidence, it is more likely (d) Using the assumption in (c), prepare the income tax section of the 2017 income statement beginning with the line E19-24 (LO3) (NOL Carryback and Carryforward, Valuation Account Needed) Beilman Inc. reports the following the loss carryforward are judged more likely than not to be realized in the future "Operating loss before income taxes." than not that one-fourth of the benefits of the loss carryforward will not be realized "Operating loss before income taxes." pretax income (loss) for both book and tax purposes. (Assume the carryback provision is used where possible for a net operating loss.) ear 2015 2017 Pretax Income (Loss) $120,000 90,000 (280,000) 120,000 Tax Rate 40% 40 45 45 2016 The tax rates listed were all enacted by the beginning of 2015