Final answer:
The statement was true under prior tax law, but current laws allow an indefinite carryforward of NOLs with a limit of offsetting up to 80% of taxable income annually.
Step-by-step explanation:
True or False - A taxpayer can carry any Net Operating Loss (NOL) incurred forward up to 20 years is a statement that was true under the old tax law provisions prior to the Tax Cuts and Jobs Act of 2017. However, for losses arising in tax years beginning after December 31, 2017, the law has changed.
A taxpayer can now carry forward a NOL indefinitely to offset future taxable income, but can only offset up to 80% of taxable income in any given year. Prior to the 2017 tax reform, taxpayers were able to carry back NOLs two years and carry them forward up to 20 years to offset taxable income. It is important for taxpayers to stay updated with the current tax laws as they may change with new legislation.
An NOL occurs when a taxpayer's allowable deductions exceed their taxable income, resulting in a negative taxable income. This can happen due to factors such as business losses or investment losses. The NOL can be carried forward to offset future taxable income and reduce tax liability.