Colorado Company has provided you the following information.
Year Taxable income Income tax rate
2014 $390,000 35%
2015 $320,000 37%
2016 $400,000 40%
2017 ($1,200,000) 40%
Colorado Company has decided to use the loss carryback and carryforward provision as a result of the year 2017 loss. The enacted tax rate remains at 40% after year 2017. Colorado Company has determined that a valuation allowance is not necessary.
Prepare the journal entry on December 31, 2017 to record the carryback and carryforward decision.
