Partial Loss Refundability: How Are Corporate Tax Losses Used?
Using tax return data for1993–2003, we measure how US corporations use tax losses over time. For firms included in our dataset, we find that: (1) approximately 50–60 percent of tax losses are used over a ten–year window as a carryback refund or loss carryforward deduction; (2) approximately 10–20 percent remain to be used; and (3) approximately 25–30 percent are never used. Moreover, many tax losses are used only after a substantial delay. Hence, we find that certain firms and industries incur a significant penalty from the partial loss refund regime due to the erosion in the real value of their tax loss.
Volume (Year): 59 (2006)
Issue (Month): 3 (September)
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