Net Operating Loss Carry forward
Refer to Practice 16–14. Assume that the net operating loss in 2008 was $100,000 instead of $50,000. Make the journal entry necessary to record (1) any net operating loss (NOL) carryback in 2008 and (2) any net operating loss (NOL) carry forward created in 2008. The enacted tax rate for future years is 40%. State any assumptions you must make.
Practice 16–14
Net Operating Loss Carryback
Taxable income and income tax rates for 2006–2008 for the company have been as follows:
|
|
Taxable |
Income Tax |
Total |
|
Year |
Income |
Rate |
Tax Paid |
|
2006 |
$ 40,000 |
30% |
$12,000 |
|
2007 |
30,000 |
35 |
10,500 |
|
2008 |
(50,000) |
40 |
0 |
Make the journal entry necessary to record any net operating loss (NOL) carryback in 2008.