The Lou Zer Corporation generated a net operating loss of $5,000 in 2001. Assume that the current tax law allows the loss to be carried back three years to reduce previous years' taxes and that previous tax returns reveal the following information:
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a. What is the amount of tax refund that Lou Zer can apply for as a result of the 2001 loss?
b. How would your answer differ if the tax law permitted the loss to be carried back only two years?