Net operating loss carryforwards

Net operating loss carryforwards

Application of losses to offset earnings in future years.

Carryforward

In accounting, a way for a company to reduce its tax liability by applying losses to future tax years in which the company makes a profit. That is, carryforward allows companies to apply losses to profits that have not yet occurred and thereby reduce the taxes they pay on those profits. Carryforward is limited to seven years. For example, suppose a company loses $500,000 in year one, then nets $1,000,000 in year five. The company may carry forward the losses and only be liable for taxes on $500,000 of its profit in year five.

Independent contractors who file Schedule C with the IRS are required to use carryforwards, which is useful since most independent contractors lose money in their first few years of business. Some publicly-traded companies opt not to use it, as appearing to reduce profits may scare off potential investors who do not realize that the profits upon which taxes are paid do not equal the company's actual profits.
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As of January 2012, the Company had a federal net operating loss carryforward of approximately $240 million, as well as state net operating loss carryforwards and federal and state tax credits that can be carried forward to future years.
Another potential adverse consequence of failing to file a return is being barred from claiming passive loss and net operating loss carryforwards in subsequent years.
For example, in general, if more than 50% of the stock of a company changes hands within a specified period, future utilization of any existing net operating loss carryforwards of the company may be limited or prohibited.
The earnings include an accrual for federal tax expense of $4 million on a fully taxed basis; however, the company will not pay such accrued federal taxes because of substantial net operating loss carryforwards.
But some Board members believe that asset recognition for net operating loss carryforwards should be subject to a higher threshold because of the inherently greater uncertainties surrounding a company with a history of losses.
Nasdaq:VNDA) reported today that it has received a private letter ruling (PLR) from the Internal Revenue Service (IRS) regarding certain income tax issues associated with the availability of Vanda's net operating loss carryforwards for tax purposes.
For consolidated groups with the right fact pattern, this could produce a higher-than-anticipated absorption of net operating loss carryforwards in 1999.
Companies had net operating loss carryforwards and future deductible temporary differences in one or more jurisdictions (among different states within the United States or foreign countries) with profits and deferred tax liabilities in other jurisdictions.
The unbundling of state net operating loss carryforwards from federal net operating loss carryforwards and the application of state and federal tax rates, respectively, to each component rather than applying a combined tax rate to the federal net operating loss carryforwards.
The company's net deferred tax asset represents primarily the estimated tax effect of net operating loss carryforwards.
D has substantial net operating loss carryforwards that D anticipates will otherwise expire unused.
The taxable income necessary to realize total deferred tax benefits is $686, consisting of $245 ($320 - $75) in net operating loss carryforwards and $441 in tax credit carryforwards ($150/.
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