The income tax benefit associated with a loss carryback or carryforward is recorded as an adjustment to income tax expense in the year of the loss.

Question

Quizplus · Accepted Answer

This is true. The income tax benefit from a loss carryback or carryforward is recorded in the year of the loss as an adjustment to income tax expense. This means that if a company incurs a net operating loss (NOL) in one year, they can carry that loss back to offset taxable income in prior years, or they can carry it forward to offset taxable income in future years. The tax benefit associated with this loss is recorded as a reduction in income tax expense in the year the loss is carried back or carried forward.

The Income Tax Benefit Associated with a Loss Carryback or Carryforward