Javier Incurred a $40,000 Net Operating Loss in 2019

question 1

Multiple Choice

Javier incurred a $40,000 net operating loss in 2019.In 2020,he earned $35,000 of taxable income.Javier will be able to take an NOL deduction in 2020 of

• A)$35,000.
• B)$40,000.
• C)$28,000.
• D)$26,250.

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Definitions:

Liability

Financial obligations or debts owed by a business to external parties, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Goods

Tangible products or merchandise that are manufactured, bought, and sold in commerce.

Services

The action of helping or doing work for someone, often producing intangible benefits.

Unearned Revenue

Income received by an entity for services or products yet to be delivered or performed.