Question

Habiby, Inc., began operations in 2017 and has the following income and expenses for 2017 through 2020.

2017 2018 2019 2020 Income $180,000 $300,000 $320,000 $320,000 Expenses (280,000) (150,000) (400,000) (220,000) Operating Income $(100,000) $150,000 $(80,000) $100,000

Refer to the Corporate Tax Rate Schedule table to answer the following questions.

a. What is the amount of tax that Habiby should pay each year? If an amount is zero, enter "0".

2017 $ 2018 $ 2019 $ 2020 $

b. How much would Habiby have paid in tax if the old NOL rules were in place but the corporate tax rate was 21 percent?. If an amount is zero, enter "0".

2017	$
2018	$
2019	$
2020	$

Answer 1

A	Amount of tax that Habiby should pay each year
2017	Taxable income	($100,000)
	Tax	$0
2018	Taxable income	$150,000
	Less: NOL carryforward	$100,000
	Net Taxable income	$50,000
	Tax @ 21%	$10,500
2019	Taxable income	($80,000)
	Tax	$0
2020	Taxable income	$100,000
	Less: NOL carryforward	$80,000
	Net Taxable income	$20,000
	Tax @ 21%	$4,200
	2017	$0
	2018	$10,500
	2019	$0
	2020	$4,200
B	Amount of tax if old NOL rules were in place, tax rate 21%
2017	Taxable income	($100,000)
	Tax	$0
2018	Taxable income	$150,000
	Less: NOL carryforward	$100,000
	NOL carryback	$50,000
	Net Taxable income	$0
	Tax @ 21%	$0
2019	Taxable income	($80,000)
	Tax	$0
2020	Taxable income	$100,000
	Less: NOL carryforward	$30,000
	Net Taxable income	$70,000
	Tax @ 21%	$14,700
	2017	$0
	2018	$0
	2019	$0
	2020	$14,700