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[answered] ABC Company reported an operating loss of $132,000 for fina


ABC Company reported an operating loss of $132,000 for financial reporting and tax purposes in 2009. The enacted tax rate is 40% for 2009 and all future years. Assume that ABC elects a loss carry-back. No valuation allowance is needed for any deferred tax assets. Taxable income, tax rates, and income taxes paid in ABC's first four years of operations were as follows:

SOLUTIONS TO PROBLEMS MUST BE SUPPORTED BY COMPUTATIONS TO RECEIVE CREDIT, NO EXCEPTIONS.


? ? ? ? ? ? ? ? ? ? ?Taxable Income ? ? ? ? ? ? ?Tax Rates ? ? ? ? ? ? ? Taxes Paid
2005 ? ? ? ? ? ? ? ? $30,000 ? ? ? ? ? ? ? ? ? ? ? ? ?30% ? ? ? ? ? ? ? ? ? ? ? $9,000

2006 ? ? ? ? ? ? ? ? $35,000 ? ? ? ? ? ? ? ? ? ? ? ? ?30% ? ? ? ? ? ? ? ? ? ? ?$10,500

2007 ? ? ? ? ? ? ? ? $42,000 ? ? ? ? ? ? ? ? ? ? ? ? ? 35% ? ? ? ? ? ? ? ? ? ? ?$14,700 ?

2008 ? ? ? ? ? ? ? ? $40,000 ? ? ? ? ? ? ? ? ? ? ? ? ? 40% ? ? ? ? ? ? ? ? ? ? $16,000

Required:
1.? What is the tax liability for each year?

2.? What amount of tax refund is generated by the NOL?

2.? In what year does a deferred tax asset arise and what is the related NOL.

3.? What year is the deferred tax asset used, and how much?


ACCOUNTING 1 Accounting [Insert Name]

 

[Institutional Affiliation] ACCOUNTING 2 1. What is the tax liability for each year?

 

2005 tax liability

 

30/100*$30,000=$9,000

 

2006 tax liability...

 


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