{"id":4375,"date":"2014-12-08T06:13:53","date_gmt":"2014-12-08T12:13:53","guid":{"rendered":"https:\/\/whitlockco.websitepreview.dev\/?p=4375"},"modified":"2021-08-18T14:25:03","modified_gmt":"2021-08-18T19:25:03","slug":"deferred-tax-assets-nol-carryforwards","status":"publish","type":"post","link":"https:\/\/whitlockco.com\/deferred-tax-assets-nol-carryforwards\/","title":{"rendered":"Deferred Tax Assets and NOL Carryforwards"},"content":{"rendered":"<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-8200 size-full\" src=\"https:\/\/whitlockco.com\/wp-content\/uploads\/2014\/12\/Deferred-Tax-Liability-Concept.jpg\" alt=\"Deferred Tax Liability Concept\" width=\"1000\" height=\"750\" srcset=\"https:\/\/whitlockco.com\/wp-content\/uploads\/2014\/12\/Deferred-Tax-Liability-Concept.jpg 1000w, https:\/\/whitlockco.com\/wp-content\/uploads\/2014\/12\/Deferred-Tax-Liability-Concept-300x225.jpg 300w, https:\/\/whitlockco.com\/wp-content\/uploads\/2014\/12\/Deferred-Tax-Liability-Concept-768x576.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<p>When examining loan applications of potential small business borrowers, it\u2019s important for lenders to consider the potential impact of deferred tax assets on a business\u2019 financial performance.<\/p>\n<p>That\u2019s because it\u2019s possible for businesses to use deferred tax assets to make their financial picture look better than it really is. Many companies that have experienced recent losses are now utilizing deferred tax assets in the form of net operating loss (NOL) carryforwards. These can be carried forward for up to 20 years and back for up to two years.<\/p>\n<p>Utilizing deferred tax assets and NOL carryforwards is a legitimate small business tax-reduction strategy. However, lenders should assess how reasonable it is that the business will be able to realize the benefit in the future. Or put another way, how realistic is it that the business will have future operating income that the NOL carryforward can offset? Also, deferred tax assets are usually deducted by lenders when calculating the tangible net worth of a borrower.<\/p>\n<p>Another thing to keep in mind is that deferred tax assets and NOL carryforwards will not appear on the financial statements of S corps, partnerships and LLCs. Nor will they appear on compilations, though GAAP requires that they be included in the reviewed and audited financial statements of regular C corporations. They will appear on a separate schedule accompanying small business tax returns.<\/p>\n<p>Related Post:\u00a0<a href=\"https:\/\/whitlockco.com\/how-to-defer-taxes-on-sales-of-business-equipment\/\">How to Defer Taxes on Sale of Business Equipment<\/a><\/p>\n<p>Here are two takeaways regarding deferred tax assets and NOL carryforwards:<\/p>\n<ol>\n<li>If a borrower presents financial statements with significant deferred tax assets and NOL carryforwards, this might possibly raise a red flag. Dig a little deeper to determine how reasonable it is that they will be realized in the future.<\/li>\n<li>Just because you don\u2019t see deferred tax assets and NOL carryforwards on a borrower\u2019s financial statements doesn\u2019t mean they\u2019re not there. If a borrower has experienced recent losses, ask about any possible NOL carryforwards that aren\u2019t disclosed. Considering them in your underwriting analysis could make the business a better credit risk.<\/li>\n<\/ol>\n<p>Please <a href=\"https:\/\/whitlockco.com\/consultation\/\">contact The Whitlock Co.<\/a>\u00a0or call\u00a0<a href=\"tel:1-417-881-0145\">417-881-0145<\/a> if you have any questions about this topic.<span style=\"font-weight: 400;\">We serve Kansas City, Springfield, and Joplin in Missouri. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When examining loan applications of potential small business borrowers, it\u2019s important for lenders to consider the potential impact of deferred tax assets on a business\u2019 financial performance. That\u2019s because it\u2019s possible for businesses to use deferred tax assets to make their financial picture look better than it really is. Many companies that have experienced recent [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":8200,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[30],"tags":[37,476,38,65,477,66,302],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Deferred Tax Assets and NOL Carryforwards by Missouri CPAs<\/title>\n<meta name=\"description\" content=\"Read about Deferred Tax Assets and NOL Carryforwards written by The Whitlock Co. and our team of CPAs and business advisors.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/whitlockco.com\/deferred-tax-assets-nol-carryforwards\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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