Question

XYZ Inc. has the following net income before any application of any net operating losses: 2016 $9,000 Net income 2017 $12,000 Net income 2018 ($20,000) Net income 2019 $10,000 Net income 2020 $6,000 Net income What is the income for 2019 after applying any applicable NOL?

Answer 1

$9000

Step-by-step explanation:

The income for 2016 is $ 9,000, there would not be any application of net operating losses as the loss has been incurred in 2018. Net operating loss cannot be applied to previous years profit. Hence, 2016 income would remain at $ 9,000.

Net operating loss of 2018 can be applied against the income of future years i.e. income of the year 2019 and 2020.