TAX NEWS - 
2010
Extended Loss Carryback: Regs address extended loss carryback for consolidated groups
The IRS previously issued guidance (Rev. Proc. 2009-52) allowing most businesses to elect to extend the standard two-year carryback period for an additional period of up to three years for NOLs arising in a single tax year ending after December 31, 2007, and beginning before January 1, 2010. The revenue procedure explained how a taxpayer that previously elected to forgo the carryback period for a loss could revoke that election to take advantage of this extended carryback period.
These regulations clarify that a consolidated group may elect to carry back a consolidated NOL arising in a consolidated return year ending after December 31, 2007, or beginning before January 1, 2010, to the extended carryback period.
Additionally, the regulations permit a group to revoke a prior election under reg. section 1.1502-21(b)(3)(i) to make an election under section 172(b)(1)(H). The amount of NOL that may be subject to a five-year carryback is limited to 50 percent of the group's taxable income for the fifth preceding tax year. The regulations provide guidance on determining taxable income for purposes of the 50 percent limitation.
The regulations also provide guidance on elections to waive either the entire carryback period or the extended carryback period for preacquisition consolidated return years of acquired members. Both carryback waiver elections apply only if:
(1) the acquiring consolidated group makes a section 172(b)(1)(H) election, and
(2) part of the consolidated NOL is attributable to a member acquired from another group. Depending on the facts of a particular group, either of the two carryback waiver elections could produce the same result.
The regulations are effective June 23, 2010.
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