Section 7 Current Year Loss

• Library: Tax Law 2009

In Brown Group, Inc. v. Administrative Hearing Commission, 649 S.W.2d 874 (Mo. banc 1983), the Supreme Court of Missouri held that the “federal taxable income” could not be less than zero. This meant that a taxpayer could not use a current year federal loss to offset the additions to federal taxable income required by § 143.121.2, RSMo Supp. 2007. The Court’s ruling in Brown Group was based in part on its view that a taxpayer would receive a double benefit from its net operating losses if it could take them into account in the current year because net operating losses may be carried over or carried back to other tax years in accordance with I.R.C. § 172.

The Brown Group holding was reversed by the Missouri legislature in 2004 by S.B. 1394. This bill added subsection 5 to § 143.431, RSMo Supp. 2007, which provides that...