Carryback

(redirected from Loss Carrybacks)
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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 ?
1 million related to net operating loss carrybacks.
11 per share, before any special income tax adjustments that might become necessary due to changes in the tax law as it relates to tax loss carrybacks.
There is no income tax benefit in 1996 due to the Company's utilization of net operating loss carrybacks as a result of the 1995 net loss.
Indeed, the language of the proposed regulations might even be interpreted as denying a current deduction for a payment of state income tax on the ground the payment is contingent because the taxpayer may ultimately receive a refund of all or part of one year's tax by reason of net operating loss carrybacks.
The restatement to the previously reported financial results for 2001 was to the provision for income taxes in order to restate the calculation of the tax benefit attributable to the alternative minimum tax net operating loss carrybacks available for 2001.
A corporation cannot include net operating losses (NOLs) or capital loss carrybacks or carryovers when computing its taxable income.
As a result of net operating loss carrybacks, the Service has charged restricted interest for 1982.
It's also important for the lawyer and CPA to address the collection issue, checking for statutes of limitations on refunds, credits, net operating loss carrybacks and so forth.
The situation was complex due in part to a number of credit and loss carrybacks that affected the computations.
The utilization of net operating loss carrybacks in the first quarter of last year, along with the cumulative effect of the change in accounting principle, resulted in a net loss for that period of $13.
For background information, see Tax Clinic, "Hotel Chain Entitled to $22 Million in Specified Loss Carrybacks," TTA, January 2001, p.
3 /PRNewswire/ -- Stewart Information Services Corporation announced today that year-end transactions involving its investment portfolio will reduce 1994 fourth quarter earnings by approximately $800,000, or 14 cents per share, while allowing the company to recover certain tax loss carrybacks and increase future income from its portfolio.