Net Operating Loss


Operating Loss

The state in which a company's operating expenses exceed its income for a given period of time, usually a quarter or a year. A company can carry back or carry forward operating losses for a certain number of years, reducing the company's tax liability. This is positive, but an operating loss still means that the company is losing money, which cannot be sustained over the long term.

Net Operating Loss (NOL)

A NOL is the net loss for the year attributable to business or casualty losses. Depending on the nature of the loss, it may be carried back for two, three, or five years before the year of the loss. The loss is subtracted from the income reported on the return and the unused loss can be carried forward for up to 20 years.