Question

Brindle corp. is a merchandiser in its first year of operations and has a net loss of $100,000. brindle expects to be profitable within the next 2 years. the enacted income tax rate is 40%. the income tax benefit from brindle's nol

(a) $20,000
(b) $100,000
(c) $0
(d) $40,000

Answer 1

(d) $40,000

The income tax benefit from Brindle's NOL would be $40,000.

Step-by-step explanation:

The income tax benefit from Brindle's Net Operating Loss (NOL) would be $40,000 (option d).

NOL is a tax term that refers to a company having a tax loss in a certain period, which can then be used to offset future taxable income and reduce the overall tax liability. In this case, Brindle corp. has a net loss of $100,000 in its first year, and they expect to be profitable within the next 2 years.

To calculate the income tax benefit from the NOL, we multiply the net loss ($100,000) by the current enacted income tax rate (40%). So, the income tax benefit from Brindle's NOL would be $40,000 (100,000 * 0.4 = 40,000)