Carter Corporation Reports the Following Results for the Current Year

Question

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The Answer is a)Carter's taxable income is $100,000 ($660,000 + $300,000 - $650,000 - $210,000 DRD).The DRD limitation is $217,000 [0.70 × ($660,000 + $300,000 - $650,000)] and does not apply.
b)Carter's taxable income is $78,000 ($660,000 + $300,000 - $700,000 - $182,000 DRD).Since an NOL is not created by claiming the full $210,000 DRD (see Part a),the DRD is limited to 70% of $260,000 (660,000 + 300,000 - 700,000),or $182,000.
c)Carter reports an NOL of $10,000 ($660,000 + $300,000 - $760,000 - $210,000 DRD).No limitation on the DRD is imposed if the result is an NOL when the full $210,000 DRD is claimed.

Carter Corporation Reports the Following Results for the Current Year

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