Question

A.

In its first year of existence (2017), SCC corporation (a C corporation) reported a loss for tax purposes of $30,000. How much tax will SCC pay in year 2018 if it reports taxable income from operations of $21,000 before considering loss carryovers?

B.

In its first year of existence (2018), SCC corporation (a C corporation) reported a loss for tax purposes of $30,000. How much tax will SCC pay in year 2019 if it reports taxable income from operations of $21,000 before considering loss carryovers?

Answer 1

a year 2 is 2017 (as per given data ] sco's can off with limit of carry forward the loss to set luture taxable income. Here the set off as upto 80% of taxable Income in the year of 2017 ve first year there will be no income, since it is reported a loss of $30000. Therefore in the yeare One no tar is required to pay .. Hence we can say that the tax liability Now lets calculate tax liability of Year 2. Taxable income from operations $21000 less; Deduction (80% of taxable income) ($ 21000 X 807) 1$ 16800 Taxable income for year two is $4200 Tax liability for year a at the rate of 21% ($4200 x 21%) is $882 Hence tax liability is $882