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Carry-Back Net Operating Losses and Save

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Timothy P. Burkhard
Foster Swift Business & Corporate Law Update
Spring 2010

Recent tax law changes expand opportunities to use net operating losses. The Worker, Homeownership, and Business Assistance Act of 2009 allows businesses that had a net operating loss in 2008 or 2009 to use those losses to recoup taxes paid in the prior five years. Under prior law, such losses could be carried back only two years.

There are, however, limitations on this tax benefit. Subject to certain exceptions, such an election may be made for only one tax year. Additionally, a net operating loss carried back to the fifth year before the loss year is generally limited to 50% of the available taxable income for that year and certain other limitations apply.