tatement 1: A net operating loss is the excess of allowable deductions over gross income from business for a taxable year. Statement 2: A net operating loss which had not previously been deducted from gross income shall be carried over as a deduction only in the next year immediately following the year of such loss. C. Both statements are correct. A. Only statement 1 is correct. B. Only statement 2 is correct. D. Both statements are incorrect.

tatement 1: A net operating loss is the excess of allowable deductions over gross income from business for a taxable year. Statement 2: A net operating loss which had not previously been deducted from gross income shall be carried over as a deduction only in the next year immediately following the year of such loss. C. Both statements are correct. A. Only statement 1 is correct. B. Only statement 2 is correct. D. Both statements are incorrect.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 46P

See similar textbooks

Similar questions

1. Which of the following differences would result in future taxable amounts? a. Revenues or gains that are taxable before they are recognized in financial income. b. Expenses or losses that are deductible after they are recognized in financial income. c. Expenses or losses that are deductible before they are recognized in financial income. d. Revenues or gains that are recognized in financial income but are never included in taxable income. 2. If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as a. research and development expense in the period(s) of construction. b. depreciation deducted as part of research and development costs. c. depreciation or immediate write-off depending on company policy. d. an expense at such time as productive research and development has been obtained from the facility. 3. How should research and development costs be accounted for, according…
A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in other, profitable years by either a carryback of the loss to prior years or a carryforward of the loss to later years. How are loss carrybacks and loss carryforwards recognized for financial reporting purposes?
Hb1.
4. Which of the following differences would result in future taxable amounts? A. revenues or gains that are recognized in financial income but never included in taxable income. B. expenses or losses that are deductible before they are recognized in financial income. C. expenses or losses that are deductible after they are recognized in financial income. D. revenues and gains that are taxable before they are recognized in financial income. 5. The accounting recognition of the benefits for a tax loss carry forward in most situations should be reported as A. an item on the retained eamings statement, not income statement. B. a prior period adjustment in whichever year the benefit is realized. C. a deferred tax asset in the year in which the benefit is realized. D. a reduction of loss in the year of the loss. 6. Because Pinaasa Company uses different methods to depreciate equipment for financial statement and income tax purposes, Pinaasa has temporary differences that will reverse during…
A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in future profitable years. How are loss carryforwards recognized for financial reporting purposes?
NCLCO is allowed as deduction from ordinary income for the next succeedingyear only a.true b.false
Which of the following causes a temporary difference between taxable and pretax accounting income? A. Investment expenses incurred to generate tax-exempt income. B. MACRS used for depreciating equipment. C. The dividends received deduction. D. Life insurance proceeds received due to the death of an executive.
Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively 3. Temporary difference that results in taxable amounts in future years when the related asset or liability is recovered or settled, respectively 4. The future effects on income taxes, as measured by the applicable enacted tax rate and provisions of the enacted tax low, resulting from temporary differences and operating loss carryforwards at the end of the current year 5. The change during the year in a corporations deferred tax liabilities and assets 6. The deferred tax consequences of future taxable amounts 7. The portion of o deferred tax asset for which it is more likely than not that a tax benefit will not be realized 8. Temporary difference that results in deductible amounts in future years when the related asset or liability is recovered or settled, respectively 9. The sum of income tax payable and deferred tax expense (or benefit) 10. The amount of income taxes paid or payable (or refundable) for the current year 11. An excess of tax deductible expenses over taxable revenues in a year that may be carried forward to reduce taxable income in a future year 12. The excess of taxable revenues over tax deductible expenses and exemptions for the year 13. Income tax expense divided by income before income taxes
Recognition of tax benefits in the operating loss year due to a loss carryforward requires O only a note to the financial statements. the establishment of a deferred tax liability. the establishment of a deferred tax asset. the establishment of an income tax refund receivable.
Which of the following is a temporary difference that normally is recognized for accounting purposes before being reported as an expense for tax purposes? Unearned revenue Product warranty costs Depreciation Fines resulting from violations of the law.
26. Which of the following differences would result in future taxable amounts? * a. Expenses and losses that are deductible after they are recognized in financial income. b. Revenues or gains that are taxable before they are recognized in financial income. c. Expenses or losses that are deductible before they are recognized in financial income. d. Revenues or gains that are recognized in financial income but are never included in taxable income.
Statement 1: Deductions for business expenses for the taxable periods are those that benefit all accounting or taxable periods of the taxpayer. Statement 2: Capital expenditures are those that affect or benefit future accounting periods. * a. Both statements are true b. Both statements are false c. Only statement 1 is true d. Only statement 2 is true