JR Co. reported a pretax book operating loss of $135 million in 2016. There were...
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JR Co. reported a pretax book operating loss of $135 million in 2016. There were no permanent or temporary differences. Taxable income in JR Co.s two previous years of operations were $80 million in 2014 and $15 million in 2015. JR Co. elects the carryback option when calculating its taxes and the carryforward for any remaining tax benefit. The enacted tax rate is 40%. As a result of that accounting, JR Co. will have:
a. A 2016 tax refund of $38 million and a deferred tax asset of $16 million.
b. A 2016 tax refund of $54 million and a deferred tax asset of $0.
c. A 2016 tax refund of $16 million and a deferred tax asset of $38 million.
d. A 2016 tax refund of $0 and a deferred tax asset of $54,000.
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