Question

Which of the following statements regarding net operating losses generated in 2019 is true?

A. Corporations can carry NOLs back two years and forward up to 20 years.
B. A corporation can carryover the NOL indefinitely.
C. A corporation can carry NOLs back two years and forward indefinitely.
D. When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover.
E. None of these is a true statement.

Answer 1

The correct statement is C. A corporation can carry NOLs back two years and forward indefinitely.

Step-by-step explanation:

The correct statement regarding net operating losses generated in 2019 is C. A corporation can carry NOLs back two years and forward indefinitely.

Net operating losses (NOLs) occur when a corporation's deductible expenses exceed its taxable income. NOLs can be carried back to offset taxable income in the two previous years and carried forward indefinitely to offset future taxable income.

This provision allows corporations to apply NOLs to reduce their tax liability and potentially receive a refund for taxes paid in prior years.