MWC Corporation is currently in the sixth year of its existence (2021). In 2016–2020, it reported the following income and (losses) (before net operating loss carryovers or carrybacks). 2016$ (89,000)2017(27,000)201868,5002019148,5002020(233,500)2021415,000 a. What is MWC's 2021 taxable income after the NOL deduction (assume it elects to carryback any NOLs it is allowed to carryback)?b. What is its 2021 book–tax difference associated with its NOL? Is it favorable or unfavorable? Is it permanent or temporary?

In this question, we have to calculate the taxable income of 2021

Answered: carrybacks).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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MWC Corporation is currently in the sixth year of its existence (2021). In 2016–2020, it reported the following income and (losses) (before net operating loss carryovers or carrybacks).

2016	$ (89,000)
2017	(27,000)
2018	68,500
2019	148,500
2020	(233,500)
2021	415,000

a. What is MWC's 2021 taxable income after the NOL deduction (assume it elects to carryback any NOLs it is allowed to carryback)?

b. What is its 2021 book–tax difference associated with its NOL? Is it favorable or unfavorable? Is it permanent or temporary?

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