Future Income Tax

Future Income Tax

In accounting, a way for a company to avoid taxes following years in which it had a net operating loss. 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 up to 7-10 years. For example, if a company loses $500,000 in one year, and makes $1,000,000 the following year, it may only be liable for a $500,000 profit.
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With current income tax rates at their lowest levels in nearly 50 years, does it make good "tax sense" to take an income tax deduction based on policy premiums at today's lower rates, thereby creating a future income tax liability based on policy cash values at tax rates that almost certainly will be higher?
An enterprise recognizes a deferred tax asset or a deferred tax liability for the future income tax effects of the difference between an asset's or liability's tax basis and its reported amount in the financial statement.
An NOL can be used in two ways: it can be carried (1) back up to two years, to generate a refund (with the exception of the three-year carryback for casualty-loss-related NOLs described above); or (2) forward for up to 20 years, to reduce future income tax liabilities.
The balance sheet approach requires an enterprise to recognize as a deferred tax asset or a deferred tax liability the future income tax effects of the difference between the financial statement carrying amount of an asset or liability and its tax basis.
4m variation in the foreign exchange loss, lower interest income despite higher cash balances on hand, and lower future income tax recoveries from the renunciation of exploration expenses to flow-through subscribers.
Future income tax rates on investment income, dividends, earned income, and long-term capital gains are expected to rise significantly by 2013.
If Warren contributes low-basis assets, there will be more BIG and built-in future income tax liability.
The company expects its future income tax liability at January 1, 2009 to increase by approximately $0.
Projections should be made using reasonable earnings assumptions for clients' current retirement balances and assumptions about their future income tax brackets under different life expectancy scenarios.
Some advisers recommend that the trust donor explicitly waive the right to recover the donor's future income tax payments from the trust fund in the trust agreement.
Because of a future income tax recovery of $676,304 recognized earlier in the year, net earnings totaled $730,031 for the first nine months of 2006, or $0.
tax group was no longer necessary to maintain the remaining portion of its future income tax asset related to capitalized losses within the U.

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