Net operating loss

Under U.S. Federal income tax law, a net operating loss (NOL) occurs when certain tax-deductible expenses exceed taxable revenues for a taxable year.[1] If a taxpayer is taxed during profitable periods without receiving any tax relief (e.g., a refund) during periods of NOLs, an unbalanced tax burden results.[2] Consequently, in some situations, Congress allows taxpayers to use the losses in one year to offset the profits of other years.

  1. ^ Kieso, Weygandt J. and Terry D. Warfield. Fundamentals of Intermediate Accounting, John Wiley & Sons, 2006. p.699 ISBN 0-471-75272-X
  2. ^ Donaldson, Samual A. Federal Income Taxation of Individuals: Cases, Problems and Materials, ThomsonWest, 2 ed. 2007. p.301 ISBN 978-0-314-17597-7