Final answer:
Yes, a current-year net operating loss (NOL) of a C corporation can be used to offset income from the corporation in other years. When a corporation has a net operating loss, it means that its deductible expenses exceed its taxable income. This loss can be carried forward to offset taxable income in future years, reducing the corporation's tax liability.
Step-by-step explanation:
Yes, a current-year net operating loss (NOL) of a C corporation can be used to offset income from the corporation in other years.
When a corporation has a net operating loss in a particular year, it means that its deductible expenses exceed its taxable income. This loss can be carried forward to offset taxable income in future years, reducing the corporation's tax liability.
For example, let's say a C corporation has a net operating loss of $100,000 in Year 1. In Year 2, the corporation earns $80,000 in taxable income. By utilizing the NOL from Year 1, the corporation can offset its Year 2 taxable income by $80,000, resulting in a tax liability on only $0. The remaining $20,000 NOL can be carried forward to offset income in future years until fully utilized.