Inc., a calendar year corporation incorporated in January 2006. For each of the years 2006 2010, KAD reported taxable income (loss) before net operating loss deductions as follows:

2006 ......... $15,000

2007 ......... (20,000)

2008 ......... 10,000

2009 ......... 30,000

2010 ......... (75,000)

When filing its tax returns for both 2007 and 2010, KAD did not elect to give up the carry back of its losses. KAD's taxable income before the net operating loss deduction for 2011 is $80,000.

1. What is the amount of net operating loss carry forward that KAD should deduct on its tax return for 2011?

2. How much can KAD carry forward to years after 2011, if anything?

3. Assume the same facts as in the 1st question except that KAD elected "S" status on March 1 2011 with a retroactive date. For the year 2011 KAD incurred a net operating loss from operations of ($40000), instead of $80000 of income in the 1st question.

How much can the stockholders of KAD inc. deduct on their individual income tax returns in 2011 as a result of the net operating loss incurred in 2012?

Additional Requirements

Other Requirements: Assume $5000 of accumulated earnings & profits from the years that KAD was a "C" corp, and the stockholders have a combined total basis of $30000 in the corp. and have also personally guaranteed a $10000 loan made to the corp. by a local bank.

1) He should deduct $40,000 on its tax return for 2011.

2) He would deduct a loss of $80000 as a result of net operating loss incurred in 2012.