Question

https://quolaf corp. is in its third year of operations. olaf had taxable income (loss) as follows: year 1 $10,000 year 2 $(50,000) year 3 $20,000 the nol carryforward at the end of year 3

a. $30,000
b. $24,000
c. $20,000
d. $34,000

Answer 1

The NOL carryforward at the end of year 3 for Quolaf Corp. is $30,000, which is calculated by subtracting year 3's taxable income from the loss in year 2 that is being carried forward. Option A is correct.

Step-by-step explanation:

The subject question is asking about the net operating loss (NOL) carryforward at the end of year 3 for Quolaf Corp. To find the answer, we need to look at the taxable income (or loss) in each of the three years and carry forward the losses where applicable.

In year 1, Quolaf had a taxable income of $10,000. In year 2, the company had a taxable loss of $(50,000), which could be carried forward to future years. In year 3, the taxable income was $20,000. The loss from year 2 that is being carried forward can offset the taxable income in year 3. So the calculation would be the remaining loss after offsetting year 3's income of $20,000 from the $50,000 loss in year 2, which is $30,000. Therefore, the correct NOL carryforward at the end of year 3 is $30,000= Answer (a).