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In 2010, Salt Lake Resorts Inc. generated a capital gain of $300,000 and no other taxable income or loss.

I need help with this corporate taxation problem:

In 2010, Salt Lake Resorts Inc. generated a capital gain of $300,000 and no other taxable income or loss. In 2012, the corporation suffered a net operating loss of $50,000, which was carried back to 2010. Salt Lake Resorts Inc. did not make an election to carry forward only. The corporation has large tax preferences. The IRS claims that (1) no tax benefit results from the carrback, and (2) the NOL is nevertheless used up. Salt Lake Resorts believes that either a tax benefit results or it can carry forward the $50,000 net operating loss to 2013. Is the IRS right? Why?

This question was asked on Jan 15, 2013.

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