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17 June, 16:19

In 2019 Hill Corporation reported a net operating loss of $10,300 that it carried forward to 2020. In 2019 Hill also reported a net capital loss of $4,200 that it carried forward to 2020. In 2020, ignoring any carryovers from other years, Hill reported a loss for tax purposes of $58,500. The current-year loss includes a $12,700 net capital gain. What is Hill's 2020 net operating loss?

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  1. 17 June, 18:40
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    Hill's 2020 net operating loss is $62,700

    Explanation:

    The computation of the net operating loss is shown below:

    = Tax purpose loss + net capital gain - difference of net capital loss and net capital gain

    = $58,500 + 12,700 - $8,500

    = $62,700

    The difference between net capital gain and net capital loss is shown below:

    = $12,700 - $4,200

    = $8,500

    For computing the net operating loss, we add the net capital gain and deduct the difference to the tax purpose losses
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