A corporation's records show the following: $$\begin{array} { l r r r c r }
2009 & 2010 & 2011 & 2012 & 2013 \
\text { Net operating gain (loss) } & \$ 6,000 & \$ 16,000 & \$ 32,000 & \$ 27,000 & ( \$ 65,000 )
\end{array}$$ The corporate marginal tax rates in 2014 (or later years, if applicable) are expected to exceed those in the past.If the corporation wishes to maximize its tax savings with the current year's $65,000 NOL, on what portion of income in 2012 will tax not be refunded?
A)$0
B)$4,000
C)$16,000
D)$27,000

Question

A corporation's records show the following: $$\begin{array} { l r r r c r } 
2009 & 2010 & 2011 & 2012 & 2013 \
\text { Net operating gain (loss) } & \$ 6,000 & \$ 16,000 & \$ 32,000 & \$ 27,000 & ( \$ 65,000 )
\end{array}$$ The corporate marginal tax rates in 2014 (or later years, if applicable) are expected to exceed those in the past.If the corporation wishes to maximize its tax savings with the current year's $65,000 NOL, on what portion of income in 2012 will tax not be refunded?
A)$0
B)$4,000
C)$16,000
D)$27,000

Quizplus · Accepted Answer

The corporation will not receive a tax refund on the $27,000 of income in 2012 because it will use the $65,000 NOL to offset the $32,000 from 2011 and the remaining $33,000 against the $27,000 from 2012, with no refund available for the income in 2012.

A Corporation's Records Show the Following The Corporate Marginal Tax Rates in 2014 (Or Later Years