Question
WCC Corporation has a $100,000 net operating loss carryover to 2022 from a previous year. Assume that it reported $75,000 of taxable income in 2022
WCC Corporation has a $100,000 net operating loss carryover to 2022 from a previous year. Assume that it reported $75,000 of taxable income in 2022 (before the net operating loss deduction) and $30,000 of taxable income in 2023 (before the net operating loss deduction).
a. What is WCC's taxable income in 2022 and 2023 (after the net operating loss deduction), assuming the $100,000 NOL carryover originated in 2017?
b. What is WCC's taxable income in 2022 and 2023 (after the net operating loss deduction), assuming the $100,000 NOL carryover originated in 2020 and WCC elected to forgo the NOL carry back option?
c. Assuming the $100,000 NOL carryover originated in 2020 and WCC elected to not carry back the loss, what is the book-tax difference for each year? Is it favorable or unfavorable? Is it temporary or permanent?
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