Carryback

(redirected from Net Operating 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 ?
7) Income tax benefit attributable to the recent tax law changes increasing the net operating loss carryback period to five years.
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).
Will the Budget include the repeal of the alternative minimum tax, an extension of the net operating loss carryback provision, or bonus depreciation?
Expand the Net Operating Loss Carryback Period to Five Years
Losses in excess of these amounts are considered capital losses; a loss in excess of a taxpayer's taxable income for a given year may be treated as a business loss available for net operating loss carryback or carryover and not subject to any section 1244 limitations.
29 per diluted share, for the reversal of previously accrued interest expense resulting from a favorable settlement with the Internal Revenue Service of a net operating loss carryback.
It also modifies the net operating loss carryback provisions to prevent a taxpayer from carrying certain capital losses generated in the short period.
Furthermore, in the case of a net operating loss carryback, a capital loss carryback, or one of the credit carrybacks discussed in the preceding paragraph, a variation of the 45-day rule under section 6611(e) applies, so that no interest is payable if the overpayment attributable to such a carryback is refunded within 45 days of the date when the claim for such overpayment is filed.
During the fourth quarter of fiscal 2004, the Company settled its dispute with the Internal Revenue Service regarding the disallowance, and related interest thereon, of a net operating loss carryback refund received by the Company in fiscal 1997.
The tax benefit of $1,047,000 in the third quarter of 1998 resulted from a reduction in the tax valuation allowance based on management's estimates related to GIANT's ability to realize these benefits, primarily related to a Federal net operating loss carryback.
As disclosed in previously filed annual and quarterly reports, the accrued interest relates to a protest regarding the disallowance by the IRS of a net operating loss carryback refund received during fiscal 1997.
The election to forgo the net operating loss carryback period under Sec.

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