During the year sea corporation reported gross income operations of $100,000 and operating expenses of $150,000. sea corporation also received dividend income of $90,000 from a domestic corporation in which sea is a 20% shareholder.
what is the amount of sea corporation's net operating loss?
a. $32,000
b. $0
c. $23,000
d. $40,000

The correct answer is A. $32,000.

Explanation:

Corporation's net operating profit/loss is calculated by subtracting all expenses incurred from all income/revenue earned during the period. However, income tax expense is not dedcuted to calculate net operating income.

net operating loss = income from operations- operating expenses + dividend income

net operating loss = 100,000 -150,000 + (90,000 + 20%)

                              = ($ 32,000)