A net operating loss (NOL) occurs when a company’s deductible expenses exceed its taxable income. This results in a negative taxable income and allows the company to carry the loss forward to future years to offset taxable income. The NOL can be used to reduce the company’s tax liability in the future, providing a financial benefit.
A net operating loss (NOL) is a tax term that refers to the amount by which a company’s tax-deductible expenses exceed its taxable income in a given year.
An NOL is calculated by subtracting a company’s deductible expenses from its taxable income for a given year.
Yes, an NOL can be carried forward to future years to offset taxable income and reduce a company’s tax liability.
An NOL can be carried forward for up to 20 years.
Yes, an NOL can be carried back to previous years to offset taxable income and reduce a company’s tax liability for those years.
An NOL can be carried back for up to two years.
Yes, an NOL can be used to offset capital gains in the same year or in future years.
No, an NOL cannot be used to offset passive income.
Yes, an NOL can be used to reduce state taxes in some states.
No, an NOL cannot be transferred to another company. It can only be used by the company that generated it.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 13th April 2024.
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