IRS Releases Guidance on Expanded NOL Carryback Rules


The IRS on Friday provided guidance on the new expanded five-year net operating loss (NOL) carryback rules, which were recently amended by the Worker, Homeownership, and Business Assistance Act, PL 111-92. The guidance is contained in Revenue Procedure 2009-52, and it explains how a taxpayer elects to carry back an NOL for three, four or five years.

 

In February, the American Recovery and Reinvestment Act, PL 111-5, amended IRC § 172 to allow eligible small businesses to carry back 2008 NOLs for a period of three, four or five years (instead of the usual two-year limit). The Worker Act expanded this treatment to include NOLs incurred in 2009 and allowed all businesses—not just eligible small businesses—to make the election. The Worker Act limits the amount that can be carried back to the fifth year to 50% of the taxpayer’s taxable income for that carryback year. The election is not available to TARP recipients or members of a TARP recipient’s affiliated group.

 

A taxpayer makes the election by attaching a statement to the taxpayer’s return (or amended return) for the tax year in which the NOL arises. Details are provided in section 4 of the revenue procedure.

 

The election must be made by the return filing due date (including extensions) for the taxpayer’s last tax year beginning in 2009. The election is irrevocable.

 

CHECKLIST

Boost your LinkedIn profile

LinkedIn is No. 1 when it comes to business-related social media. Be prepared when an unexpected career opportunity arises by following these tips for keeping your LinkedIn page current.

PRACTICE MANAGEMENT

Millennial women: How to woo a new generation of employees

Ambitious, educated, and tech-savvy, Millennial women make ideal employees. Win them over with flexibility and clear paths to advancement.

PROFESSIONAL ISSUES

Belicia Cespedes: A CPA at 17

Through hard work and determination, Belicia Cespedes earned the credential before she was even eligible to vote.