A Corporation Generates a Net Operating Loss in 2018

question 1244

Multiple Choice

A corporation generates a net operating loss in 2018. Which of the following statements is correct regarding the corporation's ability to deduct the NOL?

• A) The NOL can only be carried forward, but the carryover period is unlimited.
• B) The NOL can be carried back three years and carried forward five years, with any excess NOL lost.
• C) The NOL can be carried forward five years, with any excess NOL lost.
• D) The NOL can be carried back two years and carried forward 20 years, with any excess NOL lost.

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Definitions:

Quarterly

Pertaining to or occurring every three months.

Gross Earnings

The total income earned by an individual or organization before any deductions or taxes are subtracted.

Total Deductions

The sum of all amounts subtracted from an individual's gross income for taxes, benefits, and other expenses.

Net Earnings

The amount of income left after deducting taxes, benefits, and other expenses from gross earnings; often referred to as take-home pay.