1. Administering Tax Reporting
  2. Working with Net Operating Losses (NOL)/Credits
  3. Learning NOL Automation Calculation Rules
  4. Utilizing Tax Loss/Credit
  5. Example Use Cases: Utilization
  6. Example Use Case 1

Example Use Case 1

Taxable Income + Special Deduction = 28,000

Current year: 2021

Current period: P12

Current entity: LE105

Utilization Rules:

Table 28-5 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  
  1. 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.
  2. 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.
  3. 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.
  4. The Total utilized amount will be offset in the Current Provision for the Tax Loss Carryforward accounts.