Entities - C Corporation - Net operating losses and capital loss

Question 1

What is the impact of charitable contributions on the NOL calculation

Answer 1

A charitable contribution can’t add to NOL
- A charitable contribution has to be taken out when computing the NOL for the year
Example:
If business income is 100,000 and expenses are 200,000 which included a charitable contribution of 10,000 then NOL for the year is 90

Question 2

what is the impact of Dividend received deduction on NOL

Answer 2

If the company has taxable income of less than the dividend income, the DRD is limited to the taxable income amount

Question 3

What are the rules about NOL

Answer 3

The net operating loss can be carried forward indefinitely to offset future taxable income. An NOL can only be used to offset up to 80% of taxable income in a given year.