(redirected from Loss Carryforwards)


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.


1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. Thus, a loss in one year would be carried forward to a future year and used to offset profits up to the amount of the carryforward. Carryforwards are especially useful to firms operating in cyclical industries such as transportation. Also called tax loss carryforward.
2. In taxation of individuals, net capital losses exceeding the annual limit of $3,000 that may be carried to succeeding years so as to offset capital gains or ordinary income. There is no limit on the amount of capital losses that may be used to offset capital gains in any one year, only on the amount of losses in excess of gains that may be used to offset income. Also called carryover.
References in periodicals archive ?
Based on the amended merger agreement and assuming no redemptions, the combined company will have an initial enterprise value of approximately USD 1,037 million, based on approximately 69.0 million fully diluted shares of common stock outstanding at USD 10.00, estimated net debt of approximately USD 405 million and an adjustment for certain net operating loss carryforwards.
Frontier Communications Corporation ("Frontier") (NASDAQ: FTR) has announced that its board of directors adopted a shareholder rights plan designed to protect the availability of Frontier's net operating loss carryforwards ("NOLs") under the Internal Revenue Code ("Section 382 Rights Plan"), the company said.
Schmitt Industries announced that the Company's Board of Directors has adopted a stockholder rights plan in an effort to protect its net operating loss carryforwards under Section 382 of the Internal Revenue Code.
The corporation and/or its shareholders have net operating losses (NOLs) or capital loss carryforwards that absorb any gain recognized on the liquidating distribution: Shareholders may have capital loss carryforwards from other activities or investments that can be used to offset the gain.
In order to protect iGo's ability to utilise its net operating loss carryforwards, iGo had previously amended its certificate of Incorporation to limit the ability of any group or person to acquire 5% or more of iGo's common stock (subject to certain exceptions, including acquisitions approved by the board) by any group or person.
The utility benefits from constructive regulation and cash savings from operating and maintenance (O&M) expense reductions and net operating loss carryforwards (NOLs) at parent CMS Energy Corporation (CMS), which will be used to help fund growth capex.
HeidelbergCement released a statement in response to the United States' recent tax overhaul that reduced the federal corporate tax rate from 35 percent to 21 percent as well as changed the regulations regarding the utilization of loss carryforwards.
Both bills also make changes to the treatment of loss carryforwards. The House bill provides that loss carryforwards may offset only up to 90% of taxable income in any given year.
The Tax Court also held that Hardy had no passive loss carryforwards from 2006 and 2007 available to offset passive income for 2008-2010.
* Capital loss carryforwards can offset future capital gains, which won't be taxed, and losses still unused can be deducted each year, up to $3,000 (or $1,500).
The net benefit also included a $178,000 benefit related to the Company's ability to fully offset alternative minimum taxable income with alternative minimum net operating loss carryforwards that were generated in fiscal year 2008.