TAX NEWS - DECEMber 2009

NOL carryback: IRS provides guidance on extended NOL carryback election

The Internal Revenue Service November 20 issued much-anticipated guidance allowing businesses with net operating losses (NOLs) for 2008 or 2009 to carry back those losses for up to five years, rather than the current-law two years. The extended carryback period was enacted as part of the Worker, Homeownership, and Business Assistance Act of 2009, which was signed into law by President Obama on November 6.

Rev. Proc. 2009-52 prescribes rules governing when and how an election to carry back an NOL for three, four, or five years may be made by:

- Businesses that have not have not claimed a deduction for an NOL;
- Businesses that previously claimed a deduction for an NOL; and
- Businesses that previously filed an election to forgo the NOL carryback period.

The extended carryback period is available to any taxpayer with business losses, except those that received payments under the Troubled Asset Relief Program. It is also available to life insurance companies with losses from operations. Now that guidance has been published, businesses can begin filing carryback applications or refund claims.