A is corrent. The $40,000 net operating loss carryforward is the amount of loss in year 1 which may be carried forward to future years to offset the tax due in those years. The value of the carryforward is the net operating loss multiplied by the tax rate for the year in which the carryforward is expected to be realized. Therefore, the maximum income tax benefit that Brass can realize from the carryforward in year 2 is $12,000 ($40,000 x 30%).
B is incorrect. The $40,000 net operating loss carryforward is the amount of loss in year 1 which may be carried forward to future years to offset the tax due in those years. The value of the carryforward is the net operating loss multiplied by the tax rate for the year in which the carryforward is expected to be realized. Therefore, the maximum income tax benefit that Brass can realize from the carryforward in year 2 is $12,000 ($40,000 x 30%).
B is incorrect. The $40,000 net operating loss carryforward is the amount of loss in year 1 which may be carried forward to future years to offset the tax due in those years. The value of the carryforward is the net operating loss multiplied by the tax rate for the year in which the carryforward is expected to be realized. Therefore, the maximum income tax benefit that Brass can realize from the carryforward in year 2 is $12,000 ($40,000 x 30%).
D is incorrect. The $40,000 net operating loss carryforward is the amount of loss in year 1 which may be carried forward to future years to offset the tax due in those years. The value of the carryforward is the net operating loss multiplied by the tax rate for the year in which the carryforward is expected to be realized. Therefore, the maximum income tax benefit that Brass can realize from the carryforward in year 2 is $12,000 ($40,000 x 30%).
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