Apply NOL And Business Loss Limitations Practice Test

In tax year 2024, an S corporation allocates a $600,000 ordinary loss to its sole shareholder, Chen (single). Chen has $700,000 of wage income and no other items. Assume basis and at-risk limitations do not apply. How should the entity account for excess business losses on Chen’s return?

In tax year 2024, River Co., a C corporation, has $900,000 of taxable income (before net operating loss deduction) and a 2022 net operating loss carryforward of $1,000,000. River is considering whether it can fully eliminate taxable income. Based on the scenario, which tax treatment is appropriate?