Problem 2-13 Loss Carryback and Carryforward

The Bookbinder Company has made $150,000 before taxes during each of the last 15 years, and it expects to make $150,000 a year before taxes in the future. However, in 2016 the firm incurred a loss of $700,000. The firm will claim a tax credit at the time it files its 2016 income tax return, and it will receive a check from the U.S. Treasury. Show how it calculates this credit, and then indicate the firm's tax liability for each of the next 5 years. Assume a 40% tax rate on all income to ease the calculations. Enter your answers as positive values. If an amount is zero, enter "0".

Prior Years	2014	2015
Profit earned	$ ?	$ ?
Carry-back credit	$ ?	$ ?
Adjusted profit	$ ?	$ ?
Tax previously paid (40%)	$ 60,000	$ 60,000
Tax refund: Taxes previously paid	$ ?	$ ?

Total check from U.S. Treasury $ ?

Firm's tax liability 2017: $ ? 2018: $ ? 2019: $ ? 2020: $ ? 2021: $ ?