CFA Practice Question

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CFA Practice Question

A firm that has never been profitable would likely choose to carry forward an operating loss up to twenty years. True or False?
Correct Answer: True

A firm that has never been profitable should only carry the loss forward against taxable profits over the next 20 years. Such a firm has no taxable profits from prior years to provide a carryback.

User Contributed Comments 10

User Comment
stranger in this situation the adjustment will be made in the future years
kalps 20 year carry forward allowed under US tax rules
AdriGul 20 years tax loss carry forward?? I though it was limited to 2 back and 5 forward.
Nightsurfer I just looked online. Apparently, it is 20 years.
chamad It really depends on the local tax law.
magicchip 20 in the US
johntan1979 Isn't that amazing? (Sarcastic tone)

Take out all the leverage risk you want, make huge losses, let big GOV bail you out with taxpayers' money, and pay no taxes for 20 years.
Inaganti6 @Johntan1979 Rob a store go to jail. Run a massive corporation into the ground, pay no price. When you do naughty things, better have the law on your side ;)
jfermin315 sounds like Trump work
Ewan2015 This has changed under new tax law is indefinite but if never profitable this should be false as it is unlikely that they have sufficient objective evidence of a future tax profit that would allow them to use the NOL therefore they should have a full VA.
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