NOL
A net operating loss is a tax loss calculated under applicable tax rules. Eligible losses may be carried to other tax periods subject to those rules; a carryforward is not a cash balance or a dollar-for-dollar tax saving.
Also called Net operating loss, Net operating loss carryforward
NOL in round numbers
Hypothetical: a target has US$20m of eligible tax-loss carryforwards. That does not establish that a buyer can deduct all US$20m against its own income or in one period. The usable deduction depends on applicable limits and future taxable income; any tax saving then depends on the relevant tax rate and rules.
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| Quantity | Meaning |
|---|---|
| Eligible carryforward | US$20m of tax losses |
| Usable deduction | Amount permitted for the relevant entity and period |
| Tax saving | Depends on usable deduction, tax rate and other rules; not US$20m automatically |
Terms Related to NOL
Impairment · Purchase price allocation · Adjusted basis · All of the glossary