What does excess business loss mean on the CPA exam?
Excess business loss. The amount by which a noncorporate taxpayer's aggregate business deductions exceed business income plus a threshold. The excess is disallowed for the year and becomes a net operating loss carryforward.
Defined against Sec. 461(l).
Which CPA exam sections use excess business loss?
Excess business loss appears in the TCP section of the CPA exam.
Related terms
- net operating loss: A year in which allowable deductions exceed gross income.
- capital loss: Loss on the sale of a capital asset.
- built-in loss: Loss that already existed in property before it changed hands, measured at the transfer date.
- ordinary loss: A loss deductible against ordinary income without the capital loss limits.
- disallowed loss: A loss the Code refuses to let you deduct, typically on a sale to a related person or a wash sale.
- passive activity: A trade or business in which the taxpayer does not materially participate, plus most rental activity.