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Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in...

Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2017 $ 60,000 15 % $ 9,000 2018 70,000 15 10,500 2019 80,000 25 20,000 2020 60,000 30 18,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.

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tax rate Tax
2017 $60,000 15% $9,000
2018 70000 15% $10,500
2019 80000 25% $20,000
2020 60000 30% $18,000
2019 2021 2022 carryforward
Opearting loss $160,000
Carryback loss -80000 -60000 -140000
Loss carryforward $20,000 -20000
Tax rate 25% 30% 25%
Tax refundable -20000 -18000
Deferred Tax asset -5000
if in thousands
ans 1 Journal entry DR CR
Income Tax Refund Receivable 38000 38
Deferred Tax assets 5000 5
Income Tax Refund-Operating loss 43000 43
ans 2 Income Statement
Operating loss before Income tax ($160,000) 160
Less: Income Tax-Benefit
Tax Refund 38000 38
Tax savings from carryforward loss 5000 43000 5 -43
Net operating loss ($117,000) 117
If any doubt please comment

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