M7-NOLs and Capital Loss Limitations

Question 1

A C corporation’s net capital losses are:

Answer 1

carried back 3 years and forward 5 years; they expire after 5 years

In addition a C corporation cannot deduct net capital losses from ordinary income

Question 2

Corporations may not deduct any capital loss from ordinary income, but instead only carry it back 3 years and forward 5 years as a (short-term or long-term) capital loss to deduct from net capital or section 1231 gains?

Answer 2

short-term

Question 3

Capital losses can only be used to offset capital gains up to the amount of the carryback or carryover, not ordinary income. (true or false)

Answer 3

true

Question 4

A net operating loss (NOL) for corporations is the excess of deductions over gross income; however, the dividends received deduction is allowed to be deducted before calculating the NOL. (true or false)

Answer 4

true

Question 5

Net Operating Losses = hindsight is 2 x 20 (20/20)

Answer 5

The carryback period is generally 2 years and the carryforward is 20 years.