Net Operating Losses (NOLs)
New Small Business Jobs Act Offers Benefits to All Businesses
On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010 , or H.R. 5297 (hereafter, “the Act”). Though many of the Act’s provisions focus on small businesses , the new law also contains tax incentives that apply to all businesses as well as new retirement savings incentives for individuals . It is important to note that some of these provisions offer taxpayers a very small window of opportunity, requiring action before the end of the year to take advantage of the savings. INCENTIVES FOR ALL BUSINESSES The Act enhances and extends a number of tax incentives that were originally included in the Economic Stimulus Act of 2008 (“the 2008 Stimulus Act”) and the American Recovery and Reinvestment Act of 2009 (“the. Read More.
IRS Finalizes Regulations on Section 108 Reduction of Tax Attributes for S Corps
IRC Section 108 provides mandatory relief provisions requiring bankrupt or insolvent taxpayers to exclude debt discharge income (COD income) from gross income. It also provides that certain tax attributes must be reduced by the amount of excluded COD income. If the excluded COD income exceeds the amount of tax attributes available for reduction, then the “excess” COD income disappears with no further tax consequences to the debtor. Special rules apply to S Corps. These rules provide that the mandatory relief provisions apply at the corporate level, including the determination of insolvency. COD income that is excluded from an S Corp’s income under these provisions for. Read More.
Consider Recent Tax Law Changes as You Prepare Your Tax Return
As tax time approaches, businesses in the real estate and construction sectors will have to reconcile a challenging 2009. However, several pieces of legislation were signed into law over the course of the year that can provide some assistance, particularly to the residential construction industry. Before starting on your 2009 tax return, you should be aware of the following provisions. New Net Operating Loss Carryback Provisions The longstanding rule related to carrybacks of net operating losses (NOLs) allowed losses to be carried back to the two preceding tax years. Any unused NOLs were then carried forward for 20 years (which. Read More.
Cost Segregation Can Enhance the Benefits of Expanded NOL Carryback Provisions
With the recently passed law extending the carryback period to five years for net operating losses, companies and individuals are looking for ways to maximize their available tax refunds. Accelerating tax deductions into 2009 through a cost segregation study can greatly enhance the available refunds. Cost segregation studies can be performed on new and old buildings to determine what portion of the building may be classified as personal property. Once a portion of a building is classified as personal property it can be depreciated over a much shorter tax life. When studies are done on buildings that have previously been placed in service, you can catch-up the depreciation on the reclassified personal property.. Read More.
New Law Extends and Expands NOL Carryback Provisions
On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) , extending and enhancing a popular but temporary tax incentive — the five-year net operating loss (NOL) carryback provisions . Under the new law, the expanded five-year NOL carryback, which was originally available to qualifying small businesses for their years beginning in 2008, has been extended and enhanced to include 2009 NOLs for nearly all businesses, regardless of size. Qualifying small businesses that utilized the five-year carryback provisions for their 2008 tax year may also take advantage of the five-year carryback provisions for 2009. The availability of quick refunds from 2008 and 2009 NOL five-year. Read More.
IRS Allows Additional Time for Small Businesses to Make NOL Carryback Election
On April 24, 2009, the Internal Revenue Service (IRS) issued Rev. Proc. 2009-26 to supersede previous guidance issued in March regarding the net operating loss (NOL) carryback election for “electing small businesses” (ESBs). This new guidance was issued in an apparent response to a large number of NOL carryback claims that were not appropriately elected on original tax returns. The new pronouncement allows additional time to make important NOL elections in many scenarios, specifically for tax returns that were filed by either the March 15th corporate deadline or the April 15th individual deadline. If the NOL carryback election was not appropriately made on a taxpayer’s original. Read More.