An operating loss must be carried back two years, starting with the earliest of the two years, before it can be carried forward.

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The requirement to carry back an operating loss depends on the tax laws of the specific country and the time period in question. In the United States, for example, the Tax Cuts and Jobs Act of 2017 eliminated the option to carry back most net operating losses (NOLs) arising in tax years ending after December 31, 2017, allowing them to be carried forward indefinitely. However, the CARES Act of 2020 temporarily reinstated the carryback for NOLs generated in 2018, 2019, and 2020, allowing them to be carried back five years. Tax laws and regulations can vary significantly by jurisdiction and over time.

An Operating Loss Must Be Carried Back Two Years, Starting