TR$17-5$ Loss Carryback$/$Carryforward$,$ Refile CCA $($LO$17\mathrm{.}1,$ LO$17\mathrm{.}2,$ LO$17\mathrm{.}3,$ LO$17\mathrm{.}4)$:

connect

Moon Ltd$.$ reported the following:

$20$X$7($first year of operations$)$

$20$X$8$

Earnings $($loss$)$

$$200,000$

$($$$310,000)$

Depreciation $($assets have a cost of $$450,000)$

$40,000$

$40,000$

$$

$80,000$

$120,000$

Non$-$taxable revenue

$30,000$

$10,000$

Tax rate

$25\%$

$25\%$

Page $1190$

Required:

$1.$ What is the amount of the taxable income or loss in each year?

$2.$ How much is the tax refund to be claimed in $20$X$8?$

$3.$ What is the amount of the loss carryforward at the end of $20$X$8?$

$4.$ Repeat requirements $1-3$ based on the assumption that Moon decides to not claim CCA in $20$X$8$ or $20$X$7.$ Why might the company choose this strategy?