USA Year Net Loss and Tax Provision question

Jan 19, 2012
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Could someone please clarify and provide professional opinion for the follwong situation? We have a very small business and company switched to C-Corp status back in May of 2011 and incurred Net Operating Loss (net loss before taxes) for May-Dec period of 2011. By default we were accruing tax expense at estimated 36% for profitable months (Dr. Tax Exp, Cr. Tax Liab.) and entry was booked by default the opposite way at the same 36% for loss months (Dr. Tax Laib, Cr. Tax Exp). Since we had a net loss for 8 months ending in Dec 2011 we ended up with credit balance in Tax Expense acct and debit balance in tax liability account. Do we need to make an adjustment in 2011 books (financial reporting, not tax reporting yet) to adjust tax expense and liability accts back to “0”, or should we leave it as is in consideration of potential NOL benefits (carryback, carryforward)?
Your opinion is greatly appreciated!

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