What is the earliest year to which a corporation can utilize a net operating loss realized in 2018?
A) 2016
B) The first year after 2018 the corporation's gross income exceeds its tax deductions for the year.
C) The first year the corporation earns any revenues
D) 2019

Question

Quizplus · Accepted Answer

According to the IRS, a net operating loss (NOL) can be carried back to the two years preceding the loss year and carried forward up to 20 years after the loss. However, the earliest year to which a corporation can utilize a net operating loss realized in 2018 is the first year after 2018 the corporation's gross income exceeds its tax deductions for the year. Therefore, option B is the correct answer. Option A (2016) is too early for the corporation to use the NOL, option C (the first year the corporation earns any revenues) is not necessarily the same as the year when gross income exceeds tax deductions, and option D (2019) is not correct because the corporation can carry forward the NOL for up to 20 years, so it can use it in later years as well.

What Is the Earliest Year to Which a Corporation Can