Which of the Following Statements Regarding Net Operating Losses Generated

question 3

Multiple Choice

Which of the following statements regarding net operating losses generated in 2017 is true?

• A) A corporation may elect to forgo carrying a net operating loss back and instead carry it over to future years.
• B) Marginal tax rates are irrelevant in determining the tax benefit of applying a net operating loss carryback or carryover.
• C) When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover.
• D) Corporations can carry net operating losses back two years and forward up to 15 years.
• E) None of these is a true statement.

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Definitions:

Lease

A contractual agreement by which one party conveys property, land, services, or goods to another for a specified time, usually in return for a periodic payment.

Escrow Agent

A neutral third party who holds assets or documents in trust until certain conditions are met and then facilitates the transfer of these assets or completion of legal obligations.

Security Interest

A legal claim or lien on collateral that has been offered to secure a loan, ensuring the lender can repossess or take ownership of the collateral if the borrower defaults.

Mortgage

A legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.