Corporation VB’s tax returns for 2012, 2013, and 2014 provide

Corporation VB€™s tax returns for 2012, 2013, and 2014 provide the following information:
Corporation VB€™s tax returns for 2012, 2013, and 2014 provide

a. On the basis of the above data, did VB derive any tax benefit from its 2012 NOL? Explain your conclusions.
b. VB generated a $350,000 net operating loss for 2015. It projects that it will continue to operate at a loss through 2016 but should generate at least $1 million taxable income in 2017. On the basis of this projection, compute the net present value of the tax savings from VB€™s deduction of the 2015 NOL, assuming that VB deducts it as a carryback and carryforward to the extent possible. In making your calculations, refer to the corporate tax rate schedule to compute VB€™s tax in 2013 and 2014 and use a 5 percent discount rate to compute NPV.
c. Should VB elect to give up the carryback of its 2015 NOL and use the entire NOL as a carryforward deduction? Support your conclusion with calculations.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...


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