McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 4

MWC Corp. is currently in the sixth year of its existence (2011). In 2006- 2010, it reported the following income and (losses) (before net operating loss carryovers or carrybacks).
2006: ($ 70,000)
2007: ($ 30,000)
2008: $ 60,000
2009: $140,000
2010: ($ 25,000)
2011: $300,000
a. Assuming the original facts and that MWC elects to not carry back NOLs, what was MWC's year 2009 taxable income
b. If MWC does not elect to forgo any NOL carrybacks, what is its 2011 taxable income after the NOL deduction
c. If MWC always elects to forgo NOL carrybacks, what is its 2011 taxable income after the NOL deduction What is its 2011 book-tax difference associated with its NOL Is it favorable or unfavorable Is it permanent or temporary