Which of the Following Statements Regarding Net Operating Losses Generated

question 38

Multiple Choice

Which of the following statements regarding net operating losses generated in 2013 is true?

• A) Corporations can carry net operating losses back two years and forward up to 15 years.
• B) A corporation may elect to forgo carrying a net operating loss back and instead carry it over to future years.
• 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) Marginal tax rates are irrelevant in determining the tax benefit of applying a net operating loss carryback or carryover.
• E) None of these is a true statement.

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Definitions:

Debt Or Equity Securities

Financial instruments indicating ownership in a company (equity) or a loan made to the company or government entity (debt), which may produce income through interest or dividends.

Net Income

The net income of a company following the deduction of all costs, taxes, and expenses from the gross revenue.

Idle Cash

Idle cash refers to money that is not currently invested, spent, or utilized in any way, meaning it does not earn interest or contribute to the financial goals of an individual or company.

Money-Market Securities

Short-term financial instruments, typically with high liquidity and low risk, used for borrowing and lending in the money market.