Tax Year

  

Categories: Tax

"Over what period of time are we taxing your operating profits, Mr. Corporation?" That's the tax year. And in almost everywhereland, a tax year runs from January 1 to December 31. That's the year in which profits are assessed for tax purposes. They are then paid n months later. And yes, many or most corporations and individuals pay taxes quarterly, and then "true up" the amount they owe at the end of the year.

Some companies, though, run from Valentine's Day to February 13. Why? A romantic view of...taxes? Others run from July 1 to June 30. Why? Eh, maybe because they're in industries which are just very quiet that time of the year (winter coat sales?) and they like making life difficult for everyone else.

And it's not a bad idea to have an off-calendar-year tax year. Think about the poor accountants who have everyone yelling at them the same week to finish their taxes. Were things staggered, it'd be way better throughout for those people leading lives a lot like James Bond's. Or actually, just the opposite.

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Finance: What is Tax Loss Carry-Forward?328 Views

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finance a la shmoop what is a tax loss carry forward

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all right well feel bad about losing money in your business last year

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well this law will help make you feel a whole lot better you had been going [guy sinking in bath]

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along swimmingly making ten million bucks a year in your hot tub pimp out

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biz where you are the premier provider of turbo Jets neon lights spa caddies [fancy hot tub]

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massaging floor inserts and literal wet bars but then Kanye launched a competing [alcoholic beverages]

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business called hot and wet by Kanye and the next year well you lost six million [Hot and Wet by Kanye building]

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bucks well on your 10 million of taxable profits in a year you had been paying 30

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percent tax or 3 million bucks in taxes to show net income or earnings of 7

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million dollars well you lost 6 million dollars last year so you paid no tax and

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no the government doesn't rebate you 30% in taxes like they don't write you a

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check for 30% of 6 million or 1.8 million years that you lose money

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running your business but they do allow you to carry forward that loss into the

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next year or the next or the next usually up to 7 years total in most

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cases so that tax loss of 6 million bucks then comes in handy the following

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year when Kanye's hot tubs are found to be administering second-degree burns to [Hot and Wet news paper]

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its buyers and you once again make 10 million dollars in taxable profits only

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this time you have 6 million dollars of tax loss carry forward that gets first

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subtracted from the 10 million before you have to even think about taxes so in

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this case you pay taxes on just 4 million dollars or 30% of 4 million or

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just 1.2 million in taxes to net 2.8 million in net income essentially the

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government splits your losses and lets you take the taxable part of losses into

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the future so that the lows are not so low and well as far as Kanye is

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concerned the highs are not so high [Kanye in court]

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