1120 Corporation taxes

[parvitstax]

Can someone explain how Corps are taxed? 

I have seen a client in 2 years report $150k total in losses. The 3rd year (this year) they made $100k. The tax due says $0. If I increase the $100k to let's say $160k ($10k more than all the losses they've accumulated) then they start to owe taxes. Is that normal? Do corporations losses carryover forever until they finally generate an overall profit? 

[dkh]

Yes Corporations can have NOL carryforwards.  Why would you not know that if you are preparing the returns?

[parvitstax]

So if they have a loss of $150k from the first 2 years of operation and they make $40k every year starting the 3rd year. They will not pay taxes until the 6th year (4 years of profit)?

What do you mean by "how would you not know that"? I am confused by that. 

[IRonMaN]

It means if you are going to prepare corporate tax returns, you need to become familiar with corporate tax laws.  

[dkh · Accepted solution]

If you are preparing a C Corp return in ProSeries there is a NOL Worksheet that requires questions to be answered regarding the NOL.     Hence, my questions how do you not know how to deal with a corporate loss.    I suggest you go to irs.gov to get Form 1120 instructions. 

[parvitstax]

I looked at the NOL worksheet and no questions were required for me to answer so I see how easily that could have been overlooked. Thanks for answering my question in the Proseries Community to help people like myself understand topics better.