Question: Loss Carryback/Carryforward

Spritely Co. had a loss of $2,500,000 in 2018. The tax rate is 40%. In the past 3 years they have had the following taxable income and tax rates:

2015 2016 2017

Taxable Income $620,000 $500,000 $410,000

Tax Rate 36% 38% 40%

1) What is the amount of the refund to be claimed in 2018?

2) What is the amount of the loss carryforward?

3) The company is expecting so much success in the future they decide that it is probable they will use the carryforward. Provide the journal entry

4) The company is not expecting things to go well in the future so they determine it is not probable they will use their carryforward. Provide Journal Entry.