MAXIMIZE THE ADVANTAGE OF THE EXTENDED NOL CARRYBACK ELECTION

For many taxpayers, the 2009 legislation that allows most taxpayers to carry back net operating losses (NOLs) for tax years beginning or ending in 2008 or 2009 for an extended three-, four-, or five-year carryback period represents a potential source of cash that may be critically needed as they str...

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Bibliographic Details
Published in:Practical Tax Strategies 2010-04, Vol.84 (4), p.204
Main Authors: Stewart, Dave N, Gardner, Robert L, Randall, Boyd C
Format: Article
Language:English
Subjects:
Alternative minimum tax
American Recovery & Reinvestment Act 2009-US
Carryback
Federal legislation
Fiscal years
Net operating losses
TARP funds
Tax planning
Tax returns
Taxable income
Taxpayers
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Summary:For many taxpayers, the 2009 legislation that allows most taxpayers to carry back net operating losses (NOLs) for tax years beginning or ending in 2008 or 2009 for an extended three-, four-, or five-year carryback period represents a potential source of cash that may be critically needed as they struggle to work their way out of the economic downturn that began in 2008. This extended carryback election, however, is not without its pitfalls. In making the decision to elect the extended carryback period, the choice of which year to use as the source year must be examined. Taxpayers must also carefully analyze the decision whether to use the entire five-year carryback period or a lesser period. The compliance issues surrounding the accelerated filing of the original tax return in addition to the filing of a possible tentative refund claim to expedite the processing of the refund is not a trivial matter. Finally, the issues and traps dealing with consolidated returns and the Section 382 limitations that might exist as a result of the Section 1 72(b)( 1 )( H ) extended carryback election should be carefully and thoughtfully considered.
ISSN:1523-6250