This Is Solution to Chapter Problems and Key Concept Questions

11. Capital Accounts can be Negative. Tax Basis can not be Negative so your Tax Basis will be "0", but the Loss can be carried forward under the At-Risk Rules.

According to sec100-50, the net capital gain or net capital loss for the income year is

A corporation cannot use net operating losses between C corporation years and S corporation years, with the only exception that net operating losses from C corporation years can reduce net recognized built-in gains from S corporation years.

25-7 If a loss cannot be accrued in the period when ti is probable that an asset had been impaired or a liability had been incurred because the amount of loss cannot be reasonable estimated, the loss shall be charged to the income of the period in which the loss can be reasonably estimated and shall not be charged retroactively to an earlier period. All estimated losses for loss contingencies shall be charged to income rather than charging some to income and others to retained earnings as prior period adjustments.”

As discussed above, if indicators of impairment exist for an asset (group) to be held and used, an entity determines whether the sum of the estimated undiscounted future cash flows attributable to the asset (group) in question is less than its carrying amount. If those undiscounted cash flows are less than

Section 360-10-35-17 of the Code states that an impairment loss shall be recognized if the carrying value of a fixed asset is not recoverable and exceeds its fair value. The carrying value of the fixed asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and disposal of the asset. An impairment loss shall be measured by the amount by which the carrying value exceeds the fair value.

Net capital loss carryovers but not carrybacks are deductible against capital gains in determining a corporation 's net operating loss for the year.
True

ASC 320-10-35-35: “In periods after the recognition of an other-than-temporary impairment loss for debt securities, an entity shall account for the other-than-temporarily impaired debt security as if the debt security had

According to ASC 450-20-25-1, “When a loss contingency exists, the likelihood that the future event or events will confirm the loss or impairment of an asset or the incurrence of a liability can range from probable to remote. As indicated in the definition of contingency, the term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly

An impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is

As per ASC 450-20-25-2, entities should accrue an estimated loss from a loss contingency by a charge to expense and a liability recorded only if both of the following conditions are met:

The new ‘Carry Forward’ rules allow unused Annual Allowance to be carried forward by up to three years. Where an individual wishes to use ‘Carry Forward’, the Annual Allowance for previous years is deemed to have been £50,000.[pic]

There presents some positive evidence to avoid the recording of valuation allowance. First, Packer, Inc has a profitable operation history from 1995 to 1997, despite a significant loss in 1994. This is agreed by FASB, which states that a “strong earnings history coupled with evidence indicating that the loss (for example, an unusual, infrequent, or extraordinary item) is an aberration rather than a continuing condition” is a piece of positive evidence (FASB 740-10-30-22). These profits may be carried forward into the future to offset net-operating loss. Secondly, Packer may not generate any significant U.S Federal tax net operating loss carry forwards in the near future because it has the ability to utilize tax planning, such as capitalization of R&D. Thirdly, Packer has never lost deferred tax benefits due to expiration of a US net operating loss carry-forwards.

(f) Passive loss allowed (attach Form 8582 if required) (g) Passive income from Schedule K–1 (h) Nonpassive loss from Schedule K–1

INVESTools should definitely capitalize these expenses. The practice of not capitalizing these expenses has led to routine recording of net losses