Accounting Mystery Tip

Example of carryback:

• Assuming 4 years of profitable taxable income of 100.
• Carrybacks can only be taken for two years, so let us assume 70 comes from the last two years. 
• And then in year 5, a loss of 300.
• Assuming a tax rate of 40%. Then you will take 300 – 28 (40% of 70 this is the carryback amount) – 108.8 carryfoward (carryforward amount of taking ([300-28] *.4), giving us a net loss of 163.2K.