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| Loss Carryback |
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An accounting technique with which a company retroactively applies net operating losses to a preceding year's income in order to reduce tax liabilities present in that previous year. |
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Loss carrybacks are similar to loss carryforwards, except companies apply their net operating losses to preceding rather than subsequent years' incomes. GAAP stipulates that a loss carryback can be applied only to the three years preceding the loss. For instance if a company were to record a net operating loss in year five, the company could apply a loss carryback to any of years two to four. |
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