Net operating losses – Losing money might have a silver lining

Description

Abstract: If a business’s tax-deductible expenses exceed its taxable income in a given year, this results in a net operating loss (NOL). While no business wants to lose money, with proper planning the company might be able to use NOLs to reduce its tax liability. This article discusses the complex rules — and simple concept — behind this tax strategy, as well as the decision to carry NOLs back or forward. A sidebar offers examples of how NOLs can save taxes.