For Corporations, Which of the Following Regarding Net Capital Losses

question 130

Multiple Choice

For corporations, which of the following regarding net capital losses is true?

• A)A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss.
• B)A corporation that experiences a net capital loss in year 4 first carries the loss back to year 3, then year 2, and then year 1 before carrying it forward.
• C)Net capital loss carrybacks are deductible in determining a corporation's net operating loss.
• D)Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expire.

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Definitions:

Qualitative Assessment

An analysis method that focuses on non-quantifiable factors such as company quality, business model, governance, and risk factors.

Equity Method

An accounting technique used by a company to record its investment in another company when it holds significant influence but not full control.

Amortization

The gradual reduction of a debt over a period of time through regular payments that cover both principal and interest.

Net Book Value

The total value of a company's assets minus its liabilities and intangible assets, indicating the net worth of the company's tangible assets.