Question & Answer: Craig’s Cars, a car dealership, has taxable income and net operating losses as follows:…..

Craig’s Cars, a car dealership, has taxable income and net operating losses as follows:

Tax Year -Taxable Income/NOL
2012 – $30,000
2013 -$45,000
2014 – $80,000
2015 -($100,000)
2016 -$500,000
Craig’s Cars does not make an election regarding NOLs (i.e. Craig’s Cars will use the default carryover provisions). What will Craig’s Cars 2014 taxable income be after application of the NOL?

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Expert Answer

 

Losses can be carried forward upto 20 years and can be carried back for 2 years.

Craig’s Cars 2014 taxable income after application of the NOL will be :-

80000 – 80000 ( NOL ; NOL of 100000 limited to 80000 ) = 0

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