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Publication Date: February 2008
Publisher: Center on Budget and Policy Priorities (Washington, D.C.)
Author(s): Aviva Aron-Dine
Research Area:
Keywords: Economic projections; Corporate finance; Tax code
Type: Report
Abstract:
A business experiences a “net operating loss†when its tax deductions exceed its income. Under current law, businesses may use their net operating losses to reduce their previous two years’ taxable income, in which case they receive refunds of taxes paid in those years. Businesses also may use these losses to reduce their taxable income in any of the next 20 years. Senator Reid’s proposal would extend the “carryback†period from two years to five years for net operating losses that were or are incurred in 2006, 2007, or 2008. A similar provision was included in the Senate Finance Committee version of the first economic stimulus package but was not included in the final legislation.