The only way a tax loss carryforward can be recognized in the current year is when an entity has incurred net losses during the past three calendar years and has no ability to carry any of the loss back.

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Tax loss carryforward can be recognized in the current year even if an entity has not incurred net losses in all of the past three calendar years, and it does not require an inability to carry any of the loss back. The rules for tax loss carryforwards vary by jurisdiction but generally allow businesses to apply current year losses to future tax years, regardless of the specific conditions mentioned.

The Only Way a Tax Loss Carryforward Can Be Recognized