Carryback

(redirected from Loss 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 ?
TEI supports lengthening the net operating loss carryback period from two years to five years, effective for taxable years ending in 2008 or 2009 (or, at the election of the taxpayer, taxable years beginning in 2008 or 2009).
The tax loss carryback provision is a morsel of the roughly $145-billion economic stimulus plan being negotiated by the administration and Congress, which would include rebates of several hundred dollars for individuals and couples, and so-called bonus depreciation to allow companies to deduct 50 percent of business investments they make this year.
Schedule of Computation of Realizable Tax Benefits Carryback Current Carryforward Year 19X0 Year X1 Years 2-16 Pretax income (loss) $120 $(150) Future income exclusive of reversing temporary differences N/A N/A $250 Permanent difference Tax-exempt interest (50) N/A Temporary differences Accelerated depreciation (70) 70 Warranty accrual 80 (80) Tax (deductible) before loss carryback-carryforward $120 $(190) S240 Loss carryback (120) 120 Loss carryforward 70 (70) Taxable (deductible) $ - $ - 170 Tax rate 34% 34% 34% Tax before credit $ - $ - S 58 Tax credit - - <58> Tax $ - $ - $ - Journal Entry Refundable income taxes ($120 x .
6511(d)(2) further prescribes that in the case of an NOL or capital loss carryback, the statute of limitation to claim a refund is three years from the fifing date of the return that originates the carryback claim.
Both courts held that the loss carryback and the refund claims were property of the estate and transferrable at the time the bankruptcy petition was filed.
He cited the proposed 50% bonus depreciation provision and operating loss carryback provision--both are measures which NAIOP supports and both should provide some much-needed relief.
It would extend unemployment benefits, lengthen the net operating loss carryback period and extend expiring energy tax incentives, including those for consumers making residential improvements such as new windows, doors and furnaces.
Extending the capital loss carryback period to five years.
It started with a substantial income tax refund that the company received as a result of amended Internal Revenue Code net operating loss carryback provisions in late 2009.
i]f the claim for credit or refund relates to an overpayment attributable to a net operating loss carryback or a capital loss carryback, in lieu of the 3-year period of limitation prescribed in subsection (a), the period shall be that period which ends 3 years after the time prescribed by law for filing the return (including extensions thereof) for the taxable year of the net operating loss or net capital loss which results in such carryback, or the period prescribed in subsection (c) in respect of such taxable year, whichever expires later.
While a refund should be forthcoming within 90 days after the Form 1139 is filed, the corporation could instead extend the payment period by filing Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback.