Carryback

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Carryback

Carryback

In accounting, a way for a company to reduce its tax liability by applying a net operating loss to previous years in which it made a profit. If a company deducts more than its net income in a given tax year, it may take the difference between the deduction and the net income (a negative number) and apply it as a deduction on taxable income for the previous five years. For example, if a company makes $1,000,000 in one year, and loses $500,000 the following year, it may only be liable for a $500,000 profit on the year it makes a profit. That is, it may receive a tax refund on part of what it paid for the profitable year. See also: Future Income Tax.

carryback

A business operating loss that, for tax purposes, may be deducted for a certain number of prior years, usually no more than three. A business uses a carryback to recover taxes paid on income earned in prior years. For example, if a firm experiences a year of large losses following a period of profitable operations, it may use the losses to cancel out profits from preceding years on which taxes have been paid. When the taxes a company paid on profits are canceled because of a carryback, the firm is issued a refund by the Internal Revenue Service. Also called carryover, tax loss carryback.
References in periodicals archive ?
1398(g)(1) and (i) each provide that a debtor succeeds to loss carryovers under Sec.
When considering carrybacks and carryovers, the apportionment rules apply only if the loss would be carried over to a separate return year, a condition not present in United Dominion.
A branch can have any or all of NOLs, NOL carryovers and a net unrealized built-in loss, the use of which could be affected by an ownership change.
Using the carryovers by deferring current qualifying distributions may be impractical, because the foundation may not be able to presently carry out its charitable mission.
382 change in ownership will place limits on the use of the carryovers.
Because Target's loss carryovers could generally be used to offset only the income of its successor, Acquiring, it made sense to compute the Sec.
parent cannot use the foreign corporation's NOL carryovers when it is domesticated in the U.
1371(b)(1) does prohibit the carryover of NOLs from a C to an S year.
Exhibit 1: 10% charitable contribution limit with no NOL or ATNOL carryovers Regular tax AMT Taxable income before $ 1,000,000 $ 1,000,000 charitable contribution deduction and NOL carryover AMT preference items N/A $ 50.
In addition, taxpayers may need to consider state restrictions on types of income to which loss carryovers may be applied.
In response to a question, he said that as recently as two weeks ago a Big-4 tax partner advised that excess credit carryovers can offset the tax liability arising from the 15-percent income inclusion.
Last year's rules, in which a player who won a hole claimed that skin, would have left Montgomerie this year's first-day leader with $75,000, Norman and Woods next with $25,000 and three carryovers.