Net Operating Loss (NOL) Carryforward
taxAlso known as: NOL, net operating loss
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
NOLs are generated by Schedule C losses, K-1 losses from partnerships/S-corps, or rental losses (subject to passive activity rules). Pre-2017 NOLs could carry back 2 years. Post-2017 reform: indefinite carryforward but 80% income offset cap (the "80% limitation"). Calculated on Form 1045 (carryback) or Schedule 1 line 8a (carryforward). NOLs are particularly valuable for startups with early-year losses — the loss can offset taxable income years later when the business becomes profitable. Many states do NOT conform to federal NOL rules.
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