Loss Carryback and Carryforward
The Bookbinder Company has made $200,000 before taxes during each of the last 15 years, and it expects to make $200,000 a year before taxes in the future. However, in 2013 the firm incurred a loss of $525,000.
The firm will claim a tax credit at the time it files its 2013 income tax return, and it will receive a check from the U.S. Treasury.
Show how it calculates this credit, and then indicate the firm's tax liability for each of the next 5 years.
Assume a 35% tax rate on all income to ease the calculations. Enter your answers as positive values. If an amount is zero, enter "0".
| Prior Years |
2011 |
2012 |
| Profit earned |
$ |
$ |
| Carry-back credit |
$ |
$ |
| Adjusted profit |
$ |
$ |
| Tax previously paid (35%) |
$ |
$ |
| Tax refund: Taxes previously paid |
$ |
$ |
Total check from U.S. Treasury $
Firm's tax liability
2014: $
2015: $
2016: $
2017: $
2018: $