tax loss carryforward

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.

tax loss carryforward

References in periodicals archive ?
The elimination of the tax loss carryforward will allow the Corporation to distribute all future net realized capital gains to Stockholders," he said.
4 million (18 cents per share) in recognition of tax loss carryforward.
10 monthly dividend is contingent upon either (i) the Fund maintaining a tax loss carryforward or (ii) receiving exemption from Rule 19b-1 allowing the Fund to make multiple capital gain distributions in a year.
He noted that the Corporation's tax loss carryforward has virtually been eliminated by realized capital gains taken in 2006.
The tax benefit from a tax loss carryforward and the cumulative effect of the adoption of an accounting change for income tax amounted to $539,299 or $.
Zino said that Tri-Continental would not distribute a capital gain this December because the Corporation continues to have a tax loss carryforward from net realized capital losses incurred during the severe market downturn of 2000-2002.
The company incurred this expense in connection with its tax planning following a determination that although the company's tax loss carryforward is still available for federal income tax purposes, it had expired for Arizona state income tax purposes.
I came to Spectrum to turn a company with a valuable patent portfolio and substantial tax loss carryforward into a significant player in the high growth communications industry.
Aristotle cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the following: (i) the ability of Aristotle to obtain financing and additional capital to fund its business strategy on acceptable terms, if at all; (ii) the ability of Aristotle on a timely basis to find, prudently negotiate and consummate additional acquisitions; (iii) the ability of Aristotle to manage any to-be acquired businesses; (iv) the ability of Aristotle to retain and utilize its Federal net operating tax loss carryforward position; and (v) general economic conditions.
Last year's third quarter net income also benefited from a lower tax rate due to the use of a tax loss carryforward which resulted in a 22.
The ruling was requested in order to preserve an estimated $331 million tax loss carryforward.
Given the December enactment of new Canadian tax legislation and the amalgamation of its Canadian subsidiaries, the company now expects those tax loss carryforwards to be utilized in future years.