For Corporations, Which of the Following Regarding Net Capital Losses

question 80

Multiple Choice

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

• A) 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.
• B) Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expire.
• C) A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss.
• D) Net capital loss carrybacks are deductible in determining a corporation's net operating loss.

---

Definitions:

Total Revenue

The overall income generated by a business through the sale of goods or the delivery of services within a certain period.

Elasticity of Demand

Elasticity of Demand measures how much the quantity demanded of a good responds to a change in the price of that good, indicating how sensitive consumers are to price changes.

Necessity

An essential requirement or need for something.

Luxury Good

A good for which demand increases more than proportionally as income rises, often seen as non-essential but desirable.