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Income Tax Prov. for Federal & State with Losses

Income Tax Provision for Federal & State tax

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Trying to "get my feet wet" in tax provision. I understand state taxes are a deduction in arriving at federal taxable income. But struggling with understanding what happens when there's a loss both at federal and state levels. Assuming no permanent/temporary differences (besides NOLs) what would a state income tax loss have at the federal level when you also have taxable losses at the federal level? 

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Brett Layton, CPA
By bltaxes
Mar 8th 2017 18:32

The state taxes paid should have already been a federal deduction on the return. Generating a state refund should result in Federal taxable income. Which should be considering in valuing the Federal NOL. Just a guess. These are Hypo calculations as Book income with temporary differences does not equal the tax return. Usually these interactions are not considered material. What do you think? For provision work I have always like PWC guide. I am out of the tax provision game currently.

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