what is the difference between a loss carryforward and carryback 
a loss carryforward allows a business to carryover a loss to the net operating income to reduce its tax liability this loss can be carried forward over the next 20 subsequent years by contrast a loss carryback allows a firm to apply a loss to a previous year s tax return this results in an immediate refund of the taxes paid in that year the bottom lineif a business reports a loss in a given year the carryforward tax provision allows this company to apply this loss to its future net operating income over the next 20 years this is one way that companies have the potential to significantly reduce their tax burden if they report positive net income over this time horizon importantly it is most effective to apply this loss sooner than later due to inflation impacting the purchasing power of money instead of waiting to carryforward a loss 