What is a Capital Loss Carryover?
A capital loss carryover is a loss that is considered to be deductible, but cannot be deducted in the current tax year. Usually, this situation occurs when a corporation has already reached the maximum amount of allowances for deductions of that type for the covered period. Rather than simply abandoning the deduction on the loss, it is possible to claim the deduction for the following period, resulting in a carryover from one period to a later period. Companies do experience a capital loss carryover of some sort from time to time. In general, there will be at least a few laws that control the amount of capital loss that any one company can claim during the tax period. Once that amount has been reached, it is impossible for the company to declare any further capital loss and use it to reduce the amount of net profit experienced by the company. This situation helps to eliminate the possibility of excessive loss claims that result in totally wiping out any tax obligation on the part of a
