Baker Corporation Suffers a Net Operating Loss (NOL)of $65,000 in 2013.Baker

question 108

Multiple Choice

Baker Corporation suffers a net operating loss (NOL) of $65,000 in 2013.Baker was incorporated in 2011.Baker had a NOL of $20,000 in 2011 and taxable income of $35,000 in 2012.The corporation expects a taxable income of $200,000 in 2014.What valid alternatives are available to Baker concerning the $50,000 loss?
I.Baker can carryback the loss to 2014 and will receive a refund of $2,250.
II.Baker can elect to carryforward the loss and expect to receive tax savings of $19,500.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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