If a company's operating expenses are greater than the gross profits/revenues, the company has an operating loss. For tax purposes, net operating losses (NOLs) are typically applied to prior year returns or carried over to future years. If you have an NOL for the year, TurboTax will alert you so you can decide how to apply that loss (carry forward or carry back).
Read more here: IRS Pub 536 - Net Operating Losses (NOLs)
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