A net operating loss (NOL) is the result when a company’s allowable deductions exceed its taxable income within a tax period. The IRS has recently passed the Tax Cuts & Jobs Act (TCJA) which also sheds some light on the tax rules for Net Operating Loss (NOL).
Prior to the TCJA, Net Operating Losses (NOLs) generated allowed taxpayers to carry back the loss two years and/or carry it forward up to 20 years, as well as fully offset taxable income if not limited by the IRC section 382 limitations.
The TCJA has eliminated the two-year carryback provision that was allowed prior to the newly enacted legislation. Under the TCJA, taxpayers will carry forward the NOL indefinitely and not be limited to a 20-year carryforward provision. However, NOLs generated from a farming loss and NOLs of insurance companies other than a life insurance company are allowed to retain the two-year carryback provision.
Ahuja & Clark, PLLC (A&C) brings to their clients more than 20 years of experience in advisory, tax consulting, and accounting services. Headquartered in Plano, Texas, A&C serves local, nationwide and international clients.
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A&C has served many industries including but not limited to healthcare, professional services, farming, retail, restaurants, and technology.
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