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 ?
Thus, if S1 discontinued its business within two years after the purchase of P's sock by B, the continuity of business requirement of section 382(c)(1) could be satisfied with respect to the entire consolidated loss carryover by either P or S2.
A practitioner who is aware that a married taxpayer is in failing health should look for opportunities for the taxpayer to sell assets generating capital gain income to offset capital loss carryovers.
Going into 2017, Carl has a $23,000 net capital loss carryover.
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.
The first is the loss carryover resulting from the passive activity rules of Section 469; the second is the loss carryover from the gross income limitation of Section 280A.
This New Jersey 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.
She won't have to consider the tax consequences of taking profits as long as she has a capital loss carryover to use as an offset.
For instance, if the debtor sold stock that generated a $100,000 gain in March 2005, and files a Chapter 7 petition in June 2005, and if the debtor had a $120,000 capital loss carryover from 2004, the election would allow the debtor to avoid incurring a post-petition 2005 year tax liability since the short-year election will cause the carryover to be applied against the gain.
Any remaining carryover continues to be treated as a passive loss carryover to subsequent years.
If the beneficiary has a substantial loss carryover, the executor or trustee should consider a distribution of appreciated property without making the election and have the beneficiary sell the appreciated property when received.
5m in non-dilutive grants, contract awards from DARPA and the US Army and net operating loss carryover awards.