tax umbrella

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Tax umbrella

Tax loss carryforwards from previous business losses that form a tax shelter for profits earned in current and future years.

Tax Umbrella

A tax loss carryforward from a previous year. A tax loss carryforward is a business loss in one year that may be used for up to five years to offset profits in future years. For example, if a business loses $800,000 in year one but makes a $1 million profit in year three, it may only be taxed for $200,000 in income for year three. The remaining $800,000 is a tax umbrella.

tax umbrella

A corporation's tax loss carryforwards that may be used to shelter profits in future years.