Wynn Sheet Metal reported an operating loss of $100,00 for financial reporting and tax purposes in 2006. The enacted tax rate is 40%. Taxable income, tax rates and income taxes paid in Wynn's first four years of operations were as follows:
2002 $60,000 30% $18,000
2003 $70,000 30% $21,000
2004 $80,000 40% $32,000
2005 $60,000 45% $27,000
Prepare the journal entry to recognize the income tax benefit of the opearting loss. Wynn elects the carryback option.
