Loss carryback refund (net corporate tax negative)

Tax Topics
1

Corporation completed a loss carryback.

Resulted in $3,000.00 refund. Corporation received refund.

Tax provision for the current year: $1,500.00.

Previously when I’ve been in a tax situation like this the tax amount owing in the current year is greater than the refund amount from a loss carry back which leaves the net corporate tax expense amount positive.

However, in this situation, net corporate tax expense is -1,500.00 (1500-3000).

JE:
DT Cash $3,000.00
CT Corporate income tax expense $3,000.00

T2:
S125 GIFI 9990 Current income taxes: -1,500.

Does anyone forsee this being an issue specifically on the T2?

(No financial statements will be produced for this engagement just the tax return.)

2

One way to do is to enter the amount of $-1,500 (negative) on line 9990 on Schedule 125 (recommended). The other one would be to make an adjustment to retained earnings (prior period adjustment) in Schedule 100.

Atul

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A negative amount (recovery) is fine in 9990.
The GIFI balance sheet entry is probably 1066.

The Feds don’t seem to get too fussed about GIFI codes…these are mostly for running through their data analysis programs to flag items for audit potential. I’ve seen (as I’ve mentioned before) some CPAs simply reporting a small business’ total assets/liabilities and total income/expenses. CRA didn’t seem to care.

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Thank you both for your helpful replies.