ModeldrillTax losses carried forward
A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.
The task
Losses can be carried forward to shelter later profits. Fill the schedule: losses available at the start of each later year (row 7), losses used (row 8: the smaller of what is available and this year's profit, never below zero), losses available at the end (row 9: start less used plus any new loss), taxable income (row 10) and tax (row 11).
What this exercise teaches
The pool fills in loss years and drains in profit years, so tax stays at zero until the losses run out. Real rules often cap how much can be used per year; a cap is one more MIN.
A hint if you get stuck
Losses used: MIN(available, MAX(0, earnings)). A new loss adds MAX(0, -earnings) to the pool. Taxable income is the positive earnings less what was used.
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