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Lev
Lev, Tax Advisor
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What is the carry forward period for a corporation net operating loss under the IRS rules

Resolved Question:

What is the carry forward period for a corporation net operating loss under the IRS rules of the "old law vs. new law"

Does the NEW law rule supersede the old law rule, or if the loss spans the period of change which rule applies?
Submitted: 3 years ago via Cornell Legal Info Institute.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!
For tax years beginning in 2010, eligible small business credits (ESBCs) offset both regular tax and the alternative minimum tax (AMT). Any unused ESBCs are carried back five years and are used to offset both regular tax and AMT in the carryback years.
That is a major change in the tax law.
A corporation can elect to carry an NOL forward instead of first carrying it back. Make this election by attaching a statement to a timely filed tax return (including extensions) for the tax year of the NOL indicating that the corporation is electing to relinquish the entire carry back period under section 172(b)(3) for any NOLs incurred in that tax year.
See more details in instructions for the form 1139 - http://www.irs.gov/pub/irs-pdf/i1139.pdf
the NEW law rule doesn't supersede the old law rule - but temporary provides additional tax benefits for qualified corporations.
Any such loss not applied in the preceding years can be carried forward up to 20 years.

Customer:

Actually, my question deals with a net operating loss that occurred in fical year 1994. The old law was a three (3) year carry back, and a fifteen (15) year carry forward.

Customer:

It is my understanding that in 1997, the law changed to three (3) year carry back and twenty (20) years carry forward. The import of my question is: Does the new law, (any and all current rules) supercede the 1994 carry forward rule, thus making a NOL that occurred in ficsal year 1994 available for twenty (20) years?

Customer:

HI

LEV :

For 1997 changed - see here - http://www.irs.gov/pub/irs-prior/p536--1997.pdf


For an NOL occurring in a tax year beginning after August 5, 1997, the carryback period is reduced to 2 years and the carryforward period is increased to 20 years. However, the carryback period remains 3 years for the part of an NOL that:
1) Is from a casualty or theft, or


2) In the case of a farm business or other qualified small business, is attributable to a Presidentially declared disaster.


These changes do not affect NOLs from previous years.


You need to treat NOLs differently based on the year if which they were generated.

Customer:

Can you provide me a link to the publication that discusses the rule for the 1994 net operating loss, and the rule for the 1997 change, along with the current rule?

LEV :


The NOL year is the year in which the NOL is generated. For 1997 tax year - see IRS publication 539 page 6 - When To Use an NOL - http://www.irs.gov/pub/irs-prior/p536--1997.pdf
For 2995 tax year - see same publication - http://www.irs.gov/pub/irs-prior/p536--1995.pdf page 3 - Generally, you carry back an NOL to the 3 tax years before the NOL year (the carry back years), and then carry forward any NOL remaining for up to 15 years after the NOL year (the carry forward years).


Customer:

OK...one last item. Can you recommend an accountant or tax attorney with this type of related experience for some private consultation?

Customer:

If so, please email their contact information to me. XXXXX@XXXXXX.XXX

LEV :

Unfortunately - Just Answer policies prevent experts from contacting customers in other ways but only via posts on this web site. As you see – your email was automatically removed because all posts become available for general public.
As long as you are not in litigations - you do not need a tax attorney. Any local accountant will be able to accomplish tasks related to NOLs. I do not think you need any specific recommendations.
Sorry if you expected a different answer.

Customer:

That is ok...actually I will use this service again as you answered my questions directly. Good job...

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23173
Experience: Taxes, Immigration, Labor Relations
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