Net Operating Loss - NOL
Categories: Tax, Accounting
Your company worked really hard all year. The elves stuff stockings. The union workers watched the elves stuff stockings. And your sales people got all the toys distributed at Walmart. But sadly, after all that effort, you still lost money. $12 million. That's the bad news.
The good? Well, that $12 million in net operating losses can be carried forward into next year as a tax hedge. That is, next year, when you renegotiate the union terms and they have to actually...work...then the company swings to a profit of $20 million. But that $12 million in loss from last year now carries forward, such that your company pays tax on only the $8 million of combined gains.
Bittersweet, except for the union workers, where it's just...bitter.