In short
A net operating loss (NOL) arises when allowable business deductions exceed income for the year. Losses from tax years after 2017 are generally carried forward indefinitely and can offset up to 80% of taxable income in a later year.
Key takeaways
- There is generally no carryback, except for certain farming losses.
- An ownership change of more than 50 percentage points limits the use of a corporation's net operating losses each year.
- For individuals, mainly business losses (not personal deductions) create a net operating loss.
Where it's tested
REG: C Corporation Taxation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A C corporation has a $500,000 NOL carryforward arising in 2023. Its taxable income before the NOL deduction is $400,000 this year. What NOL deduction is allowed?