Final Answer:
The NOL carryforward for Peachtree Corp. is $300,000. (Option d is correct.)
Step-by-step explanation:
Calculate the total net operating loss (NOL): Since the question states the NOL directly as $400,000, there's no need to calculate it from taxable income.
NOL carryforward calculation: The NOL carryforward is determined by subtracting the NOL from the cumulative taxable income of the previous years, considering any limitations.
Cumulative taxable income: $20,000 (year 1) + $30,000 (year 2) + $50,000 (year 3) = $100,000
Carryforward calculation: $400,000 (NOL) - $100,000 (cumulative taxable income) = $300,000
Therefore, the remaining $300,000 of the NOL can be carried forward to future tax years to offset future taxable income.
Note: This answer assumes no limitations on the NOL carryforward period or utilization percentage. Actual carryforward rules may vary depending on the specific tax code and jurisdiction.
Option D is answer.
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Complete Question
Peachtree Corp. is a merchandiser in its fourth year of operations. Peachtree had taxable income of $20,000 in year 1, $30,000 in year 2, and $50,000 in year 3. In year 4, Peachtree incurred a $400,000 net operating loss for tax purposes. The NOL carryforward is _____.
A. $400,000
B. $480,000
C. $320,000
D. $300,000
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