Saved 4 Required information Part 1 of 2 [The following information applies to t

Question

Saved 4 Required information Part 1 of 2 [The following information applies to the questions displayed In its first year of existence (year ), willow Corp. (a c corporation) reports a loss for tax purposes of $50,000. In year 2 t reports a $40000 loss. For year 3. it reports taxable income from ope much tax will Willow Corp, pay in year 3, what i following assumptions? (New Corporate income tax rate has been mentioned as "21% on al recent change. Leave no answer blank. Enter zero if opplicable.) rations of $100,000 before any loss carryovers s its NOL carryover to year 4. and when will the NOL expire under the How points taxable income" as per the eBook a. Year 1 is 2017 Ask Willow Corp. tax liability in Year 3 Willow Corp. NOL carryover to Year 4 Priot References

Explanation / Answer

Solution:

(a)  Year 1 is 2017

Now we need to find,

Willow corporation's tax liability for year 3 (2019) :

100,000 less all carry forward previous losses =

$100,000 - ($50,000 + $40,000)

= $10,000

= $10,000 * 21%

= $2100

   Willow corporation NOL carry over to year 4 (2020) :

Willow corporation will carry forward no further losses is year 4 (2020) since all tax losses are set off in year in 3 (2019).

  The rate of 21% tax liability would be = $2100

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