What is Capital Loss Carryover?
Large size corporations, often incur certain losses in business which are sustained for a certain period of time and are eventually recovered. Capital loss, in a layman’s language is often defined as a substantial loss in business. There is no specific cause for this loss in business and a variety of reasons can be cited. For example, sale of an asset, at a value lesser than the book value, can be defined as a capital loss. Such losses are totaled by the end of the year when the profit and loss statement is completed. If the total monetary value of losses is greater than that of the profits, then the company is said to have incurred a ‘net capital loss’. In the United States of America, according to the guidelines and capital loss carryover rules, that are issued by the IRS and department of revenue, the amount of profit or income that can be taxed is reduced as a result of the capital loss. However, there is a certain limit to the amount that can be considered as a valid ground for ta
