Ladow Inc Incurred a $32,000 Net Operating Loss in 2021

question 3

Multiple Choice

Ladow Inc. incurred a $32,000 net operating loss in 2021. If Ladow's 2022 taxable income was $38,000 before NOLs, compute Ladow's 2021 NOL deduction.

• A) $0
• B) $25,600
• C) $30,400
• D) $32,000

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to changes in sales volume, indicating the degree of fixed versus variable costs.

Percentage Change

A mathematical calculation that depicts the degree of change over time, usually expressed as a percentage.

Break-Even

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and one has "broken even."

Monthly

Pertaining to or calculated for a period of one month.