Operating income and tax rates for C.J. Company’s first three years of operations were as follows:

           Income _ Enacted tax rate

2014       $300,000                  35%

2015       ($750,000)                 30%

2016       $1,260,000               40%

Assuming that C.J. Company opts only to carryforward its 2015 NOL, what is the amount of deferred tax asset or liability that C.J. Company would report on its December 31, 2015 balance sheet?

      Amount _        Deferred tax asset or liability

a.   $225,000                       Deferred tax liability

b.   $262,500                       Deferred tax liability

c.   $300,000                       Deferred tax asset

d.   $225,000                       Deferred tax asset

why choose C

Use the following information for questions 89 and 90.

Wilcox Corporation reported the following results for its first three years of operation:

2014 income (before income taxes)                  $   200,000

2015 loss (before income taxes)                          (1,800,000)

2016 income (before income taxes)                     2,000,000

There were no permanent or temporary differences during these three years. Assume a corporate tax rate of 30% for 2014 and 2015, and 40% for 2016.

89.     Assuming that Wilcox elects to use the carryback provision, what income (loss) is reported in 2015? (Assume that any deferred tax asset recognized is more likely than not to be realized.)

a.   $(1,800,000)

b.   $ -0-

c.   $(1,740,000)

d.   $(1,100,000)

why choose D

90.     Assuming that Wilcox elects to use the carryforward provision and not the carryback provision, what income (loss) is reported in 2015?

a.   $(1,800,000)

b.   $(1,080,000)

c.   $ -0-

d.   $(1,740,000)

why choose B