News Archive

Rules changed for business losses

Filed Under: Business on December 04, 2009

Normally, a business can carry back a net operating
loss (NOL) for only two years before carrying it
forward for up to 20 years. The “American Recovery and
Reinvestment Act of 2009.” signed earlier this year,
allowed a carryback for three, four, or five years to
qualified small businesses for NOLs in tax years
beginning or ending in 2008. To qualify for the longer
carryback period, the business had to have average
gross receipts of $15 million or less.

NEW LAW. A new law signed November 6, 2009, expands the
longer carryback period to include businesses of any
size. The longer carryback is generally available for
NOLs incurred in either 2008 or 2009.

One important restriction: An NOL carried back to the
fifth year is limited to 50% of the taxable income for
the year. Any remaining NOL may offset income in the
remaining four years.

These rule changes are important if your business
suffered a loss in 2008 or 2009. For a complete
discussion of how the changes affect your company’s tax
situation, give us a call.

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