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 ?
Less the tax benefit related to tax loss carry-backs due to recent changes in tax law
Under SSAP 10R, the admissibility test is increased from 10% to 15% of adjusted surplus, and the admissibility test increases the loss carry-back allowance from one year to three.
The income tax benefit for the quarter ended April 30, 2010 was primarily attributable to net operating loss carry-backs identified and recognized during the period.
86 per diluted share, primarily related to the recognition of fiscal 2009 tax net operating loss carry-backs realized through the recent change in tax laws which increased the number of historical years that companies can carry back losses.
To that end, we applaud the prompt congressional passage of a bill to amend the tax treatment of net operating loss carry-backs.
The larger net loss was due, in part, to increased investments in product development and a tax rule change limiting the availability of tax loss carry-backs in 2003 as discussed below.
5 million resulting from capital loss carry-backs generated through the sale of Zapata's shares of Viskase Corporation (Nasdaq:VCIC) and other securities.
Also, the Company reduced its income tax expense by $786,000 for over-accruals of taxes relating to credits, net operating loss carry-backs, and the results of IRS examinations for prior years.
89 per share, primarily related to the recognition of a tax net operating loss carry-back realized through a change in tax laws, which increased the number of historical years that companies can carry-back losses.