A net operating loss:

a. may be carried back 2 years or carried forward up to 20 years.

b. must always be carried back 2 years.

c. must always be carried forward 20 years.

d. occurs when a company reports a net loss in their income statement.

a. may be carried back 2 years or carried forward up to 20 years.

Explanation:

As a tax relief to a firmn which current year ended in a loss the government allow to deduct this from the future profit up to 20 years or to reduce the tax obligation for the previous two years

This makes the tax system more just as it is not considering only the good years of the organizations. It also has a particular importance in business which the first years are losses (vineyard or walnuts until the wine is done or the trees generate enough production to pay up the cost) as they can later reduce their gain to compensate for the first years.