IR-2009-105, Nov. 20, 2009
Most businesses may use losses incurred during the
economic downturn to reduce income from prior tax
years, under a revenue
procedure issued today by the Internal Revenue
Service.
The relief provided under the
Worker, Homeownership, and Business Assistance Act
of 2009 differs from similar relief issued earlier
this year in that the previous relief was limited to
small businesses.
The current relief is applicable
to any taxpayer with business losses, except those
that received payments under the Troubled Asset
Relief Program. The relief also applies to a loss
from operations of a life insurance company.
Taxpayers under the procedure may
elect to carry back a net operating loss (NOL) for a
period of three, four or five years, or a loss from
operations for four or five years, to offset taxable
income in those preceding taxable years. An NOL or
loss from operations carried back five years may
offset no more than 50 percent of a taxpayer's
taxable income in that fifth preceding year. This
limitation does not apply to the fourth or third
preceding year.
The procedure applies to taxpayers
that incurred an NOL or a loss from operations for a
taxable year ending after Dec. 31, 2007, and
beginning before Jan. 1, 2010. |