carry-back

A carry-back is an exceptional relief measure in that it permits a departure from the basic annual accounting rule. The carry-back provisions 'were enacted to ameliorate the unduly drastic consequences of taxing income strictly on an annual basis. They were designed to permit a taxpayer to set off its lean years against its lush years, and to strike something like an average taxable income computed over a period longer than one year.' The significant feature of a carry-back is that it permits an adjustment of an earlier liability upon the basis of subsequent events.