Have a Tax Question? Ask a Tax Expert
Taxpayers can carry net operating losses back and get a tax refund or carry them forward and reduce their future tax liability. Proper use of net operating losses requires careful attention to the rules in the tax code and regulations.
The IRS allows taxpayers to carry back NOL's and deduct them in the three preceding tax years and carry forward the remaining balance and deduct it from taxable income in the 15 succeeding tax years.
If you found this answer helpful, please press the "Accept" key. Positive feedback is also greatly appreciated.
Thanks for the question.
Are you referring to the number of years that you can carry back a loss and carry forward a loss?
I just re-read what I typed in my first answer to you, and realize now that I did give you the wrong years. The carryback period is 2 years and the carry forward is 20 years.
If you choose to carry back the NOL, you must first carry the entire NOL to the earliest carryback year. If your NOL is not used up, you can carry the rest to the next earliest carryback year, and so on.
If you do not use up the NOL in the carryback years, carry forward what remains of it to the 20 tax years following the NOL year. Start by carrying it to the first tax year after the NOL year. If you do not use it up, carry the unused part to the next year. Continue to carry any unused part of the NOL forward until the NOL is used up or you complete the 20-year carryforward period.
I hope this helped. If so, please press the "Accept" key. Sorry for the typo in the first response. Thanks again.