Question

If a corporation had positive income and thus paid taxes in 2013 and 2012, but it incurred a loss in 2014, it could carry that loss back to those 2 prior years, reduce the taxable income in those years, and receive a credit (in the form of a refund check) for any overpayments of past taxes. Moreover, if its 2014 loss was greater than the taxable income in those past 2 years, then it could carry the loss forward to reduce income in 2015 and beyond—up to 20 years. True or false?

Answer 1

True. If a corporation had positive income and paid taxes in 2013 and 2012, but incurred a loss in 2014, it can carry that loss back to those 2 prior years to reduce the taxable income in those years. It can also carry the loss forward to reduce income in 2015 and beyond.

Step-by-step explanation:

True. If a corporation had positive income and paid taxes in 2013 and 2012, but incurred a loss in 2014, it can carry that loss back to those 2 prior years to reduce the taxable income in those years. This would result in receiving a credit (in the form of a refund check) for any overpayments of past taxes. If the 2014 loss exceeds the taxable income in those 2 previous years, the corporation can carry the loss forward to reduce income in 2015 and beyond, for up to 20 years.