Protecting and Preserving Net Operating Losses

Andrew J. DeJoseph, JD, LLM, CPA

Anet operating loss occurs when a taxable entity's expenses exceed its income. A net operating loss can be extremely valuable to a financially distressed entity because it can be carried forward and used to offset future taxable income or it can be carried back to a period when the entity was profitable and paid taxes. When a net operating loss is carried back, it can result in a tax refund after the filing of an amended tax return.