Carryback

(redirected from Loss Carryover)
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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 ?
This additional activity presents students with more real-world situations and requires them to verify certain carryover amounts from one year to the next, including capital loss carryovers from Schedule D, Capital Gains and Losses, passive activity loss carryovers from Form 8582, Passive Activity Loss Limitations, and investment interest expense carryover from Form 4952, Investment Interest Expense Deduction.
Carl can completely offset that gain with his loss carryover, so he owes no tax on his gains that year.
Generally, under Tax Act 2001, property acquired from a decedent after December 31, 2009, can be stepped up in basis by $1,300,000, assuming there are no built in losses or loss carryovers, for transfers to non spousal beneficiaries.
Many issues remain as to basis, suspended losses, or loss carryovers, to name a few.
If an investor has a bank of capital loss carryovers, rebalancing can be less taxing.
Any net operating loss for the taxable year of the discharge, and any net operating loss carryover to such taxable year, are the first attributes that have to be reduced.
A tax loss carryover is a valuable asset for a firm because it shelters some portion of the firm's future income from tax.
real estate rental) is disposed, will the passive loss carryovers be re-characterized as losses "not from a passive activity."(9) As will be discussed later, this is a key point to remember in tax planning for the year in which the property is disposed.
NJEDA's Technology Business Tax Certificate Transfer programme enables approved Technology and Biotechnology businesses with net operating losses to sell their unused Net Operating Loss Carryover (NOL) and unused Research and Development Tax Credits (R&D Tax Credits) for at least 80% of the value of the tax benefits to a profitable corporate taxpayer in the State of New Jersey that is not an affiliated business to turn their tax losses and credits into cash to buy equipment or facilities, or for other allowable expenditures.
The decedent's capital loss carryover terminates at death.
In permitting the carryover of NOLs post-merger, the Connecticut Superior Court articulated in Grade A Market "four elements that will give rise to a continuity of business enterprise between a merged corporation and a surviving corporation sufficient to support the deduction of a loss carryover." They were:
However, a $3,000 capital loss carryover will also be reported.