question archive California resident Maggie's sole proprietorship has taxable income of $2,000 in 2016, $10,000 in 2017, $20,000 in 2018 and then has operating loss of $55,000 in 2019
California resident Maggie's sole proprietorship has taxable income of $2,000 in 2016, $10,000 in 2017, $20,000 in 2018 and then has operating loss of $55,000 in 2019
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California resident Maggie's sole proprietorship has taxable income of $2,000 in 2016, $10,000 in 2017, $20,000 in 2018 and then has operating loss of $55,000 in 2019. she can:
a)carry back @20,000 to 2018 and claim a refund of $35,000 in 2019
b)carry back $20,000 to 2018, $10,000 to 2017 and carry forward $25,000
c)carry back $20,000 to 2018, $10,000 to 2017 and $2,000 to 2016; carry forward $22,000
d)pay ordinary income tax rates on $32,000 in 2019
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Option C. Carry back $20,000 to 2018, $10,000 to 2017 and $2,000 to 2016; carry forward $22,000
Explanation: The basic rule to adjust net operating loss is that loss can be carried back three years and forward 5 years to being used up against income of these years.
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