Carry-Forward

Definition

Moving an unused deduction or credit from one tax year to the next year or future years. It's the tax world's way of softening blows from bad years by letting you use them later.

Example Usage

The company had a $10 million net operating loss that it carried forward to offset future taxable income, reducing taxes for the next three years.

Origin

Formalized in tax codes in the early 20th century to allow companies to average income across years

Fun Fact

Some acquisitions are structured primarily to access target company tax loss carry-forwards—literally buying a company for its right to reduce taxes.

Source: IRS Publication 536 (Net Operating Losses)

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insured

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Diversification

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clawback provision

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duration

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