The current economic downturn has prompted lawmakers to reconsider the loss carryback rules under the Worker, Homeownership and Business Assistance Act of 2009. This would provide tax relief to all businesses except for companies receiving payments under the Troubled Asset Relief Program (TARP). Most businesses have an opportunity to use business losses from prior tax years under this rule.
The previous carryback rules limited loss carrybacks to two years. Now, taxpayers can elect to carryback a net operating loss (NOL) for a period of one to five years, or a loss from operations for four or five years to offset taxable income in those preceding tax years. However, losses carried back five years may offset no more than 50 percent of the taxable income in the fifth year.
Taxpayers must do several things to make the special carryback election. First, the taxpayer must have the federal income tax return of the NOL year or an amended return for the applicable NOL. Second, the statement must clarify that the taxpayer is electing to use the new NOL rules under Revenue Procedure 2009-52. Third, the taxpayer must state that they are not a TARP current recipient for the years, 2008 and 2009. Finally, the taxpayer must specify the length (3, 4, or 5 years) that they will elect for the NOL carryback period.
More Internal Revenue Service specifics on Revenue Procedure 2009-52 and other tax advice can be found at http://www.irs.gov/newsroom/article/0,,id=217370,00.html.
Drew Miles wants you to avoid tax scams by documenting everything right. Drew grew up working in a family business on Long Island, NY. After passing the New York State Bar, Drew established his own firm where he practiced for 18 years. In 2006, he set out to concentrate solely on his commitment to serve his clients and expand Pathfinder’s scope of programs.
His unique approach combines what he has learned, not only from his formal legal education, but also his “informal” business education and 25 years of entrepreneurial experience, in the development of programs designed to educate people in the fine art of building and preserving wealth.
Drew is an author, teacher, and international speaker. His highly acclaimed book, Zero to Success, chronicles the steps every new business owner must take to ensure success. He has been featured in Forbes, the Dallas Morning News, American Banker, and Yahoo Finance. To date, he has helped over 5,000 business owners save over $100 million dollars in taxes. That’s why he’s known throughout the United States and Canada as the “Tax Saving Attorney”.