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 ?
The carry back provision will allow your contribution to benefit from tax relief at 40 per cent.
The first case decided after Libson Shops was a First Circuit decision in which the court expanded the scope of its holding in Newmarket, holding that the surviving corporation in a reorganization could carry back post-reorganization losses against the pre-reorganization income of the absorbed corporation even where the two corporations conducted separate businesses.
Mitigating the Results of Failing to Properly Carry Back an NOL
They have until April 5 to make a contribution and the deadline for them to make the election to carry back or carry forward is January 31, 2007.
If you carry back contributions to the previous year, you will receive relief at the higher rate of tax being the rate you paid that year.
Of course, a taxpayer that can carry back an NOL, but does not wish to do so, must make a timely election to waive the entire carryback period under IRC Sec.
The cable will transmit electricla power down to the observatory and carry back real-time information from the instruments.
The report also shows that the carry-back provision could further decimate the housing market by providing an incentive for builders to dump existing inventory at any price, knowing they could carry back the loss.
If a taxpayer makes the election to carry back an NOL to the fifth preceding year, the NOL carryback is limited to 50% of the taxable income in the fifth preceding year.
The Tenth Circuit Court of Appeals upheld a district court's ruling that a company could not carry back a loss because the statute of limitations had passed.
In a recent case, one of the many farmers with a RAP was able to eliminate the higher tax rate he was paying by making use of fact he had not paid the maximum contribution to his pension policy in any of the past seven years Part of their appeal has been the fact they have a valuable feature, namely carry back Investors could soon be saying RIP to the RAP, a form of pension saving especially popular among farmers.
As a result, Ultrak is allowed to carry back its 2001 net operating losses to the 1996 and 1997 tax years, permitting a refund of federal taxes previously paid for such years.