In its first year of existence (year 1), Willow Corp. (a C corporation) reports

Question

In its first year of existence (year 1), Willow Corp. (a C corporation) reports a loss for tax purposes of $50,000. In year 2 it reports a $40,000 loss. For year 3, it reports taxable income from operations of $100,000 before any loss carryovers. How much tax will Willow Corp. pay in year 3, what is its NOL carryover to year 4, and when will the NOL expire under the following assumptions? (New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change. Leave no answer blank. Enter zero if applicable.)

a. Year 1 is 2017.

William Corp. tax liability in year 3

William Corp. NOL Carryover to year 4

b. Year 1 is 2018

William Corp. Tax Liability in year 3

william corp. NOL carryover to year 4

Explanation / Answer

Willow Corp's Tax liability for year 2019 ( year 3) would be

100000 Less all Carry Forward previous Losses (50000+40000) = 10000

@ rate of 21% Tax Liability would be = $2100

Willow Will CarryForward no further losses is 2020( year 4) since all tax losses are set off in year 3.

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