What is the loss?

In some cases, if the business experiences a clean financial loss, it may be advantageous for tax purposes in some cases that the loss in future years. This accounting technique is called the loss of transmission because the tax loss is "transmitted" to the future tax year. Generally accepted accounting procedures allow loss to transmit up to seven years and in some cases up to 15 years. The use of the technique of loss transmission is ethical and legal and sometimes even necessary, but must be used wisely.

The purpose of the transfer of loss is to reduce its tax liability. For example, if the company experiences a negative net operating income (Noi) in a given year, but then has a positive Noi in one of the next few years, the company can require a loss in one of the profit years to reduce taxes paid from the profits of the year. This technique is particularly useful in businesses and sectors, which are usually cyclical, such as the industry. Individuals can also take advantage of loss. Any clean chapterLosses that exceed $ 3,000 in the US (USD) can be transferred to future years to balance later capital profits or normal income taxes. In one year there is an amount of capital losses that can be used to compensate for capital gains, unlimited.

However, a small amount of risk is associated with loss. In order for an individual or company to demand a loss in a later, profit year, a profit year must occur. If the company suffers financially and may not be in a few years, it would be an important consideration. Or, if there are several unprofitable years, there will be an opportunity to make a loss away. However, saving losses from one year for later use is often a wise choice if the profits are predicted.

Large corporations may want to think twicly by using the loss, as things can increase with increasing the size of the company. For example, a corporation whose shares are publicly municipalitiesHe will have to carefully consider the effect that he could have on her stocks, which could have a loss she could transfer. Profits and losses of the reported Internal Revenue Service (IRS) are the same as public shareholders. Although it may be advantageous to look only slightly profitable for the IRS, it may confuse or concerned shareholders who are not aware that the transmission has occurred. A company whose profits look strangely low for the investor may have a heavier time to attract investors to buy their shares.