Say a firm has a net loss of 8803 in one month and 6573 in the second month. In month three, it makes a profit (before income tax) of 20824. There are no dividends and the retained profits at the start of the month are -6573. How do I calculate income tax for that month, assuming we are taking into account the previous net losses?
Can't tell you about Australia.
In the USA, losses are carried forward. Any profits will offest those losses.
If the profits exceed the losses with a net gain, only then will there be a tax obligation.
The losses will carry forward until a net profit is realized, even from one year to the next.
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June 29th, 2009 at 8:06 pm
Can't tell you about Australia.
In the USA, losses are carried forward. Any profits will offest those losses.
If the profits exceed the losses with a net gain, only then will there be a tax obligation.
The losses will carry forward until a net profit is realized, even from one year to the next.
References :
June 29th, 2009 at 8:13 pm
roughly speaking…net loss from the previous 2 months:
-8803 + -6573 = -15376 then this loss gets off set again the 3rd month's profit: 20824 - 15376 = 5448
5448 is the amount the firm would need to tax on…
References :