The deduction of a net operating loss (NOL) incurred in one tax year in another tax year. This mechanism allows businesses to adjust their taxable income by carrying losses forward or backward to reduce tax liabilities.
Nonbusiness income refers to earnings derived from passive sources such as interest, dividends, and nonbusiness capital gains, primarily used in taxation to calculate the net operating loss deduction. It includes income from investment assets separate from apportionment in multistate corporations.
