Luther industries has outstanding tax loss carryforwards of $ 72 million from losses over the past four years. if luther earns $15 million per year in pretax income from now on, in how many years will luther first pay taxes?

Luther will have to pay some taxes after four years i.e five years from now

Explanation:

Data provided in the question:

Outstanding tax loss carryforwards = $72 million

Number of years the tax loss carry-forwards will last

= ( Tax loss carry-forward ) ÷ ( Annual pretax income )

= ( 72 million ) ÷ ( 15 million per year )

= 4.8 years

Thus,

Luther will not pay taxes for the next four years

Hence,

Luther will have to pay some taxes after four years i.e five years from now.

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