Can you give an example of a situation of “loss carry-back”?
A loss carry back gives the companies the benefit of off setting current period losses against previously paid taxes.
This provides the companies increased cash flow during economic degrowth.
In the present year the company had an operating loss of $200000. So the company can carry back this loss and off set against net operating income od $200000.
At this point the company can apply for a refund and get back the tax earlier paid on $200000.
For a company or individual, carryback period is limited to 3 years.
This is how the concept of loss carry back works.
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