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Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Capital Gains and Losses
Satisfied Customers: 286
Experience:  Director
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If a limited company has made a loss for the last 4 years,

Customer Question

HiIf a limited company has made a loss for the last 4 years, then makes a small profit in the 5 year, can you off the loss from the previous 4 year against the profit and pay no corporation tax?If you can, on the P&L would you just show profit before tax of £x, tax nil, profit after tax, same as profit before tax?
Thanks
Submitted: 5 months ago.
Category: Capital Gains and Losses
Expert:  Matthew Breecher replied 5 months ago.

It depends, how has the limited company been reporting to the IRS? you did report as being in the US? Is it reporting as a partnership, a corporation, or a corporation with a subchater-S election.

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If a patnership or subchapter-S, all these flow through to the shareholder and it depends on other factors in the sharholders' return.

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If the LLC is a corporation, the losses are carried forward unless an election is made to carry-back. So you should have carry-forward loss to offset the profits.

Customer: replied 5 months ago.
The company is a UK company, registered and based in the UK.
Expert:  Matthew Breecher replied 5 months ago.

They allow the same carry-forward, and have the same offset rules (passive losses against passive gains, investment losses against investment gains). So, the answer is yes. In fact, this year they made it easier to allocate carry-forward losses to other type of profits in subsequent years.