Response to the following problem:
The Loser Corporation had a loss of $200,000 in 2000. The firm had income and paid taxes in the three prior years of:
|
Year
|
Taxable Income
|
Taxes Paid (40% of Taxable Income)
|
|
1997
|
$100,000
|
$40,000
|
|
1998
|
200,000
|
80,000
|
|
1999
|
100,000
|
40,000
|
Suppose the tax law allows losses to be carried back three years and forward 15 years.
a. How much of a refund of prior taxes can Loser receive?
b. How much of the loss, if any, can be carried forward to future years?