Differentiate between a loss carryback and loss carryforward. Explain
the way in which carrybacks and carryforwards affect the reporting of
deferred tax assets and deferred tax liabilities.
A tax loss carry forward is a provision in the Tax Code to allow a business to use a to use a net operating loss in one year to offset a profit in one or more future years. This provision is also called a tax loss carry forward. You can elect to carry forward an NOL up to 20 years.
A tax loss carry back is a similar type of provision, which allows the business to carry a net operating loss back to offset profits in previous years.
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