Net Operating Loss (NOL)
Definition
A US tax loss arising when deductible expenses exceed taxable income. NOLs can generally be carried forward to offset future taxable income, subject to limitations that have changed over time.
Related Terms in US Tax
Capital Loss Carryover
A US provision allowing capital losses that exceed the amount deductible in a year to be carried forward to offset capital gains and limited ordinary income in later years.
Reasonable Compensation (S-Corp)
The IRS requirement that an S-corporation owner-employee be paid a reasonable salary for their work before taking profit distributions, preventing avoidance of payroll taxes by underpaying wages.
De Minimis Safe Harbor
A US tax election letting businesses expense lower-cost asset purchases immediately, up to a per-item threshold, rather than capitalising and depreciating them, simplifying fixed-asset accounting.
Fiscal vs Calendar Year
A calendar tax year runs January to December; a fiscal year is any 12-month period a business chooses for reporting and tax. The choice affects filing deadlines and how seasonal results are presented.
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