Wynn Farms reported a net operating loss of $270,000 for financial reporting and tax purposes in 2021

Finance Mar 05, 2022

Wynn Farms reported a net operating loss of $270,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows:

	Taxable Income		Tax Rates		Income Taxes Paid
2017	$	82,000	30	%	$	24,600
2018		92,000	30			27,600
2019		190,000	40			76,000
2020		40,000	45			18,000

Required:
1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss.
2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.

Please correct answer only wit explanation. Thank you so much!