[rayiner]

Exactly. Carryover losses are a way of dealing with the fact the tax code seeks to impose taxes on a continuous variable (gains in wealth) but samples at discrete intervals (yearly). They’re necessary to avoid distortion that would result if a company with -$50 one year and $70 the next were taxed much more heavily than one that earned $10 two years in row. The alternative would be to give refunds for losses.