Question

Discuss the computation of NOL remaining to be carried forward after the NOL has been applied in a carryback year.

Answer 1

When a company reveals operating expenses on company's ITR that overreach sales revenue of the company, a NOL has been made. The amount of Net Operating Loss to be carried forward is the surplus of Net Operating Loss over company's yearly taxable income to which the Net Operating Loss is being concerned. Although, this taxable income must be calculated with some changes:

1. Deduction is not granted for personal exemption
2. Deduction is not granted for the overflow of capital losses above capital profits.
3. Deduction is not granted for the Net Operating Loss which is being carried back.