What does net operating loss mean on the CPA exam?
Net operating loss. A year in which allowable deductions exceed gross income. Post-2020 losses carry forward indefinitely and offset at most 80 percent of a later year's taxable income.
Defined against Sec. 172.
Which CPA exam sections use net operating loss?
Net operating loss appears in 6 CPA exam sections: AUD, BAR, FAR, ISC, REG, TCP.
Other names for net operating loss
NOL
Related terms
- excess business loss: The amount by which a noncorporate taxpayer's aggregate business deductions exceed business income plus a threshold.
- capital loss: Loss on the sale of a capital asset.
- taxable income: The figure the tax rates are applied to: gross income, less the deductions the Code allows.
- ordinary loss: A loss deductible against ordinary income without the capital loss limits.
- gross income: All income from whatever source derived, unless the Code specifically excludes it.
- built-in loss: Loss that already existed in property before it changed hands, measured at the transfer date.