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This creates a greater need for loss carryforward and carryback rules, which allow firms with unsteady profits to offset income from profitable years against the losses of unprofitable years.

Cardinal Health’s use of the “carryback” tax break draws attention to what some see as a shortcoming of the $2 trillion U.S. coronavirus bailout known as the Cares Act.

The Dublin, Ohio-based Cardinal Health said earlier this month it planned to collect a $974 million cash refund because it claimed its opioid-related legal costs as a “net operating loss carryback” — a tax provision Congress included in last year’s coronavirus bailout package as a way to help companies struggling during the pandemic.

The “carryback” tax break permits any company that lost money in 2018, 2019 or 2020 to apply those losses to previous, more profitable years.

Some form of this provision, called a “carryback” of net operating losses, has been permitted by the U.S. tax code for over a century to help businesses that face ups and downs to even out their taxes.