Chapter 16 Saved Help Save Exit Submit Check my work 6 Requ

Chapter 16 Saved Help Save & Exit Submit Check my work 6 Required information [The following information applies to the questions displayed below.] MWC Corp. is currently in the sixth year of its existence (2017). In 2012-2016, it reported the following income and Part 3 of 3 (losses) (before net operating loss carryovers or carrybacks). points 2012:S (72, 500) 2013 (33, 500) 2014: 32,000 2015: 172, 500 2016: (36, 000) 2017: 547,500 Skipped eBook Print References MWC always elects to forgo NOL carrybacks c. What is its 2017 taxable income after the NOL deduction? What is its 2017 book-tax difference associated with its NOL? Is it favorable or unfavorable? Is it permanent or temporary? avorable or Difference Unfavorable Permanent Year emporary or Income 2017 Mc Graw Prev of 16 Next

Solution

carryover of 2016 NOL will create a temporary difference of $3600   .Since the tax paid(due to availability of tax loss deduction) is less than accrued tax income as per accounting records ,it will create favorable difference.

Year	Taxable Income	Book tax Difference	Favorable /Unfavorable	Temporary or permanent
2017	547500-36000 loss of 2016 carryover	36000	Favorable	Temporary
	= 511500