Patrick has a business net operating loss of $70,000 in 2019. Patrick's business generated significant taxable profits in 2017 and in 2018. Which of the following is true?
A)Patrick may offset income he generated in 2017 and 2018 with 2019's net operating loss by carrying the net operating loss back to each of those tax years. The remaining net operating loss (if any) can be carried forward and used to offset future taxable income.
B)Patrick may use the net operating loss to offset income from any year he chooses.
C)Net operating losses can offset 80% of the income in future years.
D)Patrick may elect to offset the income he generated in 2018 with 2019's net operating loss. The remaining net operating loss (if any) can be used to offset future taxable income.
E)None of these

Question

Quizplus · Accepted Answer

Under the Tax Cuts and Jobs Act, net operating losses arising in tax years after December 31, 2017, can be carried forward indefinitely to offset up to 80% of taxable income in future years. Carrybacks are generally not allowed for losses arising after this date.

Patrick Has a Business Net Operating Loss of $70,000 in 2019