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)