Carryback

(redirected from Loss 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 ?
While interest rates are currently low, the accelerated depreciation may provide enhanced net operating loss carryback opportunities or guarantee that the deduction may be used to reduce taxes if 2010 or 2011 is profitable.
Both courts held that the loss carryback and the refund claims were property of the estate and transferrable at the time the bankruptcy petition was filed.
He cited the proposed 50% bonus depreciation provision and operating loss carryback provision--both are measures which NAIOP supports and both should provide some much-needed relief.
Lengthen the Net Operating Loss Carryback Period to Five Years
It would extend unemployment benefits, lengthen the net operating loss carryback period and extend expiring energy tax incentives, including those for consumers making residential improvements such as new windows, doors and furnaces.
* Extending the capital loss carryback period to five years.
6511(d) (2) (A) provides that [i]f the claim for credit or refund relates to an overpayment attributable to a net operating loss carryback or a capital loss carryback, in lieu of the 3-year period of limitation prescribed in subsection (a), the period shall be that period which ends 3 years after the time prescribed by law for filing the return (including extensions thereof) for the taxable year of the net operating loss or net capital loss which results in such carryback, or the period prescribed in subsection (c) in respect of such taxable year, whichever expires later.
This $2,000 would then be eliminated by the administrative loss carryback. At the close of the estate on June 1, 1993, the unused $10,000 administrative loss would not transfer to the debtor.
However, the deduction is limited to 30% of the individual's adjusted gross income without regard to any net operating loss carryback ("contribution base").
Taxpayers can apply for a refund based on a loss carryback by either filing an amended return or filing an application for tentative refund on the appropriate forms.
170(b)(1)(A), an individual's annual itemized deduction for cash contributions to public charities cannot exceed 50 percent of the individual's contribution base (adjusted gross income, without any net operating loss carryback).