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Questions and Answers
What is a net operating loss (NOL)?
What is a net operating loss (NOL)?
- A tax term that refers to a situation where a taxpayer's deductions equal their income for a tax year.
- A tax term that refers to a situation where a taxpayer has no income or deductions for a tax year.
- A tax term that refers to a situation where a taxpayer's deductions exceed their income for a tax year. (correct)
- A tax term that refers to a situation where a taxpayer's income exceeds their deductions for a tax year.
What is the limit on the amount of NOL that can be carried forward each year?
What is the limit on the amount of NOL that can be carried forward each year?
- 60% of your taxable income for the year
- 70% of your taxable income for the year
- 80% of your taxable income for the year (correct)
- 50% of your taxable income for the year
Can NOLs be used to offset capital gains or other non-taxable income?
Can NOLs be used to offset capital gains or other non-taxable income?
- NOLs can be used to offset capital gains, but not other non-taxable income.
- NOLs can be used to offset other non-taxable income, but not capital gains.
- No, NOLs can only be used to offset taxable income from a trade or business, from rental real estate, or from certain passive activities. (correct)
- Yes, NOLs can be used to offset any type of income.
