Example Use Case 1
Taxable Income + Special Deduction = 28,000
Current year: 2021
Current period: P12
Current entity: LE105
Utilization Rules:
Table 29-5 Example Use Case 1: Utilization
Unrecognized Net Operating Losses | Unrecognized Capital Loss | ||||
---|---|---|---|---|---|
Year of Expiration | TLCAvailable | Utilization Automated | Year of Expiration | TLCAvailable | Utilization Automated |
2021 | 20,000 | -20,000 | 2021 | 5,000 | -5,000 |
2022 | 10,000 | -3,000 | 2022 | 10,000 | |
Total | 30,000 | 15,000 |
- The system starts with the current year (2021) and attempts to utilize available losses in ascending Sequence order. Detail account Unrecognized Net Operating Losses is first in Sequence 1. The system utilizes 100% of the available loss for 2021 in Unrecognized Net Operating Losses. Available loss is 20,000. The amount utilized is 100% of 20,000. The remaining taxable income is 28,000 - 20,000 = 8,000.
- Detail account Unrecognized Capital Loss is second in Sequence 2. The system utilizes 100% of the available loss for 2021 in Unrecognized Capital Loss. Available loss is 5,000. The amount utilized is 100% of 5,000. The remaining taxable income is 8,000 - 5,000 = 3,000.
- There are no more utilization rules for LE105. The system advances to the next year, 2022, and attempts to utilize all available losses until there are no more available losses, or there is no more taxable income to be offset.
- The Total utilized amount will be offset in the Current Provision for the Tax Loss Carryforward accounts.