generally, excess net operating loss from the 2019 tax year will be.....
In reference to the above statement, net operating loss for income tax computation purpose means when company’s allowable deductions exceed its taxable income within a tax period. Such operating loss can be carried forward to upcoming years and can be offset from future profits until the loss is fully recovered.
However, a net operating loss to a maximum limit of 80% can be carried forward to the next year , for example in 2019 a company had a net operating loss of 10,000 USD again in year 2020 the company made a taxable profit of 12,000 USD , so the net taxable income of 2020 will be 12000 USD less 8,000 USD = 4,000 USD, here 80% of 10,000 USD is being reduced from 2020 profit in order to calculate the net taxable income for the year 2020.
The purpose of this tax provision is to allow and give companies a chance to strengthen their financial condition in the year of loss.
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