Loss Carryforward
 |
Definition of 'Loss Carryforward'An accounting technique that applies the current year's net operating losses to future years' profits in order to reduce tax liability. Generally accepted accounting principles (GAAP) specify that loss carryforwards can be used in any one of the seven years following the loss. |
 |
Investopedia explains 'Loss Carryforward'For example, if a company experienced a negative net operating income (NOI) in year one but positive NOI in one of the next two to seven years, the company could reduce its tax expense for one of those years by applying the loss experienced in the first year.In the past, some equities have had large options redemptions that have caused share prices to plummet dramatically. Due to the increased amount of shares outstanding, investors who sell off their shares during that time will incur capital losses. Investors can carry forward these losses in order reduce tax liabilities on future capital gains. |
Related Definitions
Articles Of Interest
-
Understanding The Income Statement
Learn how to use revenue and expenses, among other factors, to break down and analyze a company. -
Zooming In On Net Operating Income
NOI is a long-run profitability measure that smart investors can count on. -
Seek Out Past Losses To Uncover Future Gains
Tax loss carry-forwards can help reduce the tax burden of owning a profitable fund. -
Advanced Financial Statement Analysis
Learn what it means to do your homework on a company's performance and reporting practices before investing. -
Has Income Tax Become A Class Tax On The Poor?
With more than 33% of American families falling close to the poverty line despite their adult members holding full-time employment, a rising number of citizens are being forced to pay a rate ... -
Making It Big On Wall Street
Read about some of the most glamorous Wall Street jobs and what it takes to land one. -
Depreciation: Straight-Line Vs. Double-Declining Methods
Appreciate the different methods used to describe how book value is "used up". -
Quants: The Rocket Scientists Of Wall Street
Blend math, finance and computer skills to command a high - and well deserved - salary. -
Build A Baby Berkshire
Get a piece of Warren Buffett's profit by using Form 13F to coattail his picks. -
How The 2014 Obama Budget Could Affect Your Finances
Depending on which estimate you believe, Obama's proposed budget would raise the tax bill of a household with a yearly income of $50,000 to $75,000 between $63 and $100 per year. However, that’s ...
Free Annual Reports
