Loss carry-over when there are other timing differences

Abstract

In the literature only one author made a profound analysis of the combination of loss carry-back and/or carry-forward and the origination or reversal of other timing differences. This author, H.A. Black, made a pilot-study which resulted in the U.S.A. APB Opinion No. 11 issued in December 1967. In this Opinion the analysis of Black can be recognized in only one paragraph (paragraph 48) on the recognition of carry-forwards as offsets to deferred-tax credits. Black analysed three situations, which can exist under his preferred method (a combination of method 2 — assurance beyond any reasonable doubt — and method 3 — loss carry-forward as an offset to deferred-tax credits — mentioned in chapter 6). These three situations may also arise under the preferred method 4 of chapter 6 (prudent estimation of the value of loss carry-forward).