tax loss carryforward

Carryforward

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.

tax loss carryforward

References in periodicals archive ?
The company noted that last year's results were affected by its March 1997 initial public offering and ``the continuing benefit from the company's significant tax loss carryforward.
In addition, the adjustments will not affect the Company's tax loss carryforward.
Management believes for analysis purposes, until the tax loss carryforward is fully utilized, an appropriate measure of the Company's financials is its income before minority interest and incomes taxes.
The elimination of the tax loss carryforward will allow the Corporation to distribute all future net realized capital gains to Stockholders," he said.
10 monthly dividend is contingent upon either (i) the Fund maintaining a tax loss carryforward or (ii) receiving exemption from Rule 19b-1 allowing the Fund to make multiple capital gain distributions in a year.
He noted that the Corporation's tax loss carryforward has virtually been eliminated by realized capital gains taken in 2006.
This decrease in net income primarily reflects $641,500 in non-cash income that was reported in the quarter ending September 30, 2005 in relation to a recalculation of the future utilization of the Company's federal income tax loss carryforward.
Zino said that Tri-Continental would not distribute a capital gain this December because the Corporation continues to have a tax loss carryforward from net realized capital losses incurred during the severe market downturn of 2000-2002.
The company incurred this expense in connection with its tax planning following a determination that although the company's tax loss carryforward is still available for federal income tax purposes, it had expired for Arizona state income tax purposes.
1 percent, which can largely be attributed to the meanwhile almost complete capitalization of tax loss carryforwards available in the USA in particular.
NORDIC BUSINESS REPORT-29 November 2006-KappAhl AB obtains tax loss carryforwards by acquiring companies(C)1994-2006 M2 COMMUNICATIONS LTD http://www.
In a typical case, the "debtor" issuing the instruments would be a tax-indifferent party that would not be paying taxes currently, owing either to its status as a tax-exempt entity or, in the case of a commercial enterprise, to large tax loss carryforwards.