Glossary · Reading the business
Carryover losses
In short
These are business operating losses from prior years that can be used to offset future taxable income, reducing the business's tax burden.
What it means in a deal
While they can be a tax benefit, large carryover losses can signal past financial struggles. Understand their origin during due diligence. In an asset purchase, carryover losses typically stay with the seller, but in a stock purchase, they might transfer, which can be a tax advantage.
Related terms
Common questions about Carryover losses
- What if my personal tax returns show inconsistent income or losses from other ventures?
- Can the SBA 7(a) loan include funds to cover initial operating losses post-acquisition?
- Can an SBA 7(a) loan include funds for a cash reserve to cover initial operating losses?
- What if an applicant has a prior business failure that resulted in personal losses but not bankruptcy?
- What if the acquired business has a history of losses but strong projected growth under new ownership?
- If my previous business failed, resulting in personal losses, will this kill my SBA 7(a) loan chances?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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