IRS releases guidance on new five-year NOL carryback.

• Author: Nevius, Alistair M.
• Position: Net operating loss

The IRS has issued guidance on how eligible small businesses can take advantage of the increased net operating loss (NOL) carryback provisions enacted in the American Recovery and Reinvestment Act of 2009, RL. 111-5 (ARRA) (Rev. Proc. 200919). Under those provisions, eligible small businesses may carry back a 2008 NOL up to five years instead of the otherwise available two-year limit. Eligible small businesses are those with average gross receipts of $15 million or less for the three-year period ending in 2008.

In the revenue procedure, the Service prescribed how businesses may elect the longer carryback period under Sec. 172(b) (1)(H). A business may make the election for an NOL occurring in a tax year either beginning or ending in calendar 2008; the choice is irrevocable. Businesses that have not yet filed a return for the NOL year may make the election by attaching a statement to their return. For an NOL year beginning in 2008, the business must file the return with the statement by the return's due date, including any extensions. However, for an NOL year ending in 2008 or before February 17, 2009 (the date of ARRAs enactment), the return with statement must have been filed on or before April 17, 2009.

Businesses that have already filed a return for the 2008 NOL tax year with a...