Net Operating Loss Deduction

Net Operating Loss Deduction means:
a deduction in one tax year of a net operating loss (NOL) generated in another year. A NOL from a prior year may be shown as a deduction on the current year's tax return. Net operating losses from the taxpayer business generally are carried back for two years (triggering a refund of taxes paid) unless the taxpayer specifically elect to carry them forward to future tax years. A special provision that allowed 2008 and 2009 losses to be carried back for as many as five years was not extended. A NOL was even be deducted in a year before its occurrence by filing an amended return (Form 1040X or 1120X) or an application for tentative refund (Form 1045 or 1139).