Ardelow company has the following information about their income: Year Net Incom

Question

Ardelow company has the following information about their income:

Year                Net Income/Loss                       Tax Rate

2009                        $60,000                                35%

2010                        $45,000                                35%

2011                        $40,000                                40%

2012                      ($125,000)                            40%

2013                          $30,000                              40%

            The company elects the loss carryback and carry-forward provisions. Determine the Income Tax Refund Receivable and Deferred Tax Asset amounts for 2012. (Note: You MUST show all work, including the income tax amounts and tax rates used to determine your answer). To which year will Ardelow first apply the carryback provision?

Explanation / Answer

In 2012 Company suffered a net operating loss of $125,000 , which it'll elect to carry back. The 2012 tax rate is 40%

So it will apply the carryback provision in year 2012.

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