Eller Company started operations on 1/1/X1 and has reported profits for its first three years.  X4 operations have resulted in a $100,000 operating loss for tax purposes.  Which of the following statements are true?

I.    If Eller "carries back" the $100,000 loss, a deferred tax asset will result.

II.   If Eller "carries forward" the entire $100,000 loss, a $100,000 tax benefit will be shown on its X4 income statement.

A .None are true

B I only

C. II only

D. I and II

The correct answer is A.

I thought statement II is correct? How to make II correct then?? Thanks