Taxes on operating loss?
In example 7 under Capital Budgeting, the solution shows an “Operating Income Before Taxes” as -$30K. The margin tax rate is 30%. “Taxes on Operating Income” as -$9K, and “After Tax Operating Income” as -$21K.
How can they get back $9K in taxes if they have an operating loss? My understand is that the loss would be carry forward to future profitable years as a tax shield.
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