Tax Time—WIN WHEN YOU LOSE
It's a fact of business life that not every year is profitable. While the lean ones present challenges on how to pay bills, retain employees, and stay afloat, from a tax perspective, there is a silver lining to these unprofitable periods. You can use losses to save on taxes in your profitable years. Here's how to do it.
Net operating losses (NOLs) aren't separate, additional loss deductions; they reflect the fact that deductions, expenses, and losses from the operation of your business exceed your business revenues.
Only individuals and C cor-porations can have net operat-ing losses. Partnerships, limited liability companies, and S corporations don't have NOLs. Instead, the share of the busi-ness's losses is passed through to owners who compute NOLs on their personal returns.