Wynn Farms reported a net operating loss of $164,000 for financial reporting and tax purposes in 2024. 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
2020	$ 76,000	25%	$ 19,000
2021	86,000	25	21,500
2022	144,000	25	36,000
2023	76,000	40	30,400

Required:

Prepare the journal entry to recognize the income tax benefit of the net operating loss. 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.

Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.

Answer rating: 100% (QA)

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