To mitigate the effect of the annual accounting period concept,the tax law permits the carryback and carryforward to other years of the net operating loss of a particular year.

Question

Quizplus · Accepted Answer

The statement is true. The purpose of net operating loss (NOL) carryback and carryforward provisions is to allow businesses to smooth out their taxable income over multiple years and mitigate the effect of the annual accounting period concept. This allows businesses to reduce their tax burden in years with losses and increase their tax payments in years with profits.

To Mitigate the Effect of the Annual Accounting Period Concept,the