The tax benefit of a net operating loss carried back two years represents a current receivable for income tax to be refunded.

Question

Quizplus · Accepted Answer

When a business incurs a net operating loss in a tax year, it can carry back that loss to the two previous tax years to offset any taxable income and potentially receive a refund of taxes paid in those years. This results in a tax benefit and creates a receivable for income tax to be refunded.

The Tax Benefit of a Net Operating Loss Carried Back