Two Convenient Locations:
San Diego Office: (619) 283-7113
Julian Office: (760) 765-0343
Net Operating Loss Five-Year Carryback
IR-2020-67, April 9, 2020
WASHINGTON - The Internal Revenue Service today issued guidance providing tax relief under the CARES Act for taxpayers with net operating losses. Recently the IRS issued tax relief for partnerships filing amended returns.
COVID Relief for taxpayers claiming NOLs
There are exceptions to the 2 year Carryback period. For 2008, small businesses (gross receipts under $15 million) may Carryback a NOL 3, 4, or 5 years. The Worker Homeowner and Business Assistance Act expanded this 5 year Carryback period to include all taxpayers (not just a small business taxpayer). Under this new law, the amount of an NOL that may be carried back to the fifth taxable year preceding the NOL year is limited to 50% of taxable income for such taxable year).
Generally, a taxpayer may elect the 3, 4, or 5 year Carryback period for only one taxable. However, an eligible small business that timely made an election to carry a 2008 NOL back 3, 4, or 5 years may also make an election to carry a 2009 NOL back 3, 4, or 5 years.
If an eligible small business did not timely elect to Carryback its applicable 2008 NOL 3, 4 or 5 years under prior law, the taxpayer may still elect to make such an elction subject to the new law rules such as the 50% of taxable income limitation for the 5th taxable year preceding the loss year.
The NOL Carryback/Carryforward Chart summarizes these rules.
Julian Office: 4367 Highway 78, Ste. 112, Santa Ysabel, CA 92070 (760) 765-0343 (760) 765-0150 Fax
San Diego Office: (By Appointment Only) 3751 37th St., #2, San Diego, CA 92105 (619) 283-7113 (619) 284-7113 Fax
Correspondence: P.O. Box 1934, Julian, CA 92036 E-mail: rebecca(at)luerscpa.com jan(at)luerscpa.com
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