Patrick Has a Business Net Operating Loss of $70,000 in 2019

question 11

Multiple Choice

Patrick has a business net operating loss of $70,000 in 2019. Patrick's business generated significant taxable profits in 2017 and in 2018. Which of the following is true?

• A)Patrick may offset income he generated in 2017 and 2018 with 2019's net operating loss by carrying the net operating loss back to each of those tax years. The remaining net operating loss (if any) can be carried forward and used to offset future taxable income.
• B)Patrick may use the net operating loss to offset income from any year he chooses.
• C)Net operating losses can offset 80% of the income in future years.
• D)Patrick may elect to offset the income he generated in 2018 with 2019's net operating loss. The remaining net operating loss (if any) can be used to offset future taxable income.
• E)None of these

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Definitions:

State Income Taxes

Taxes levied by individual states on the income of residents and sometimes non-residents earning income within the state.

Schedule A

A form used by U.S. taxpayers to itemize deductions on their federal income tax return.

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