Carryback

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Related to carry-over: carry through, get along, disillusion, carry-over effect, carryover basis

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 ?
Airport projects from Fairbanks to Barrow will tally up to about $50 million for 2003, of which $40 million will come from 2002 carry-overs.
The bill sets rules for calculating loss carry-overs, deferred deductions and deferred income.
Singh won 90,000 Canadian dollars (pounds 41,000) by sinking a six-foot putt to win the ninth, the result of four carry-overs, while Garcia collected one skin worth 15,000 dollars (pounds 6,800).
having cleared their carry-overs, are suddenly looking for stock.
7 billion in 2012 before gap-closing measures and prior-year carry-overs.
We encourage the government to issue similar remedial relief where the SRLY rules overlap with section 384 thereby limiting the use of credit carry-overs.
The agency had 21,071 cases assigned in FY97, some carry-overs from the previous years and others that are still in progress, as well as those cases that were rejected.
4 billion in 2012 before additional gap-closing measures and prior-year carry-overs.