Business Tax Provisions of the Worker, Homeownership, and Business Assistance Act of 2009
On November 6, 2009, President Barack Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 (the “Act”). The significant tax changes applicable to businesses under the Act are summarized below.1
Net Operating Loss Carryback. A net operating loss (“NOL”) for a taxable year is the excess of business deductions over the business’ gross income for that taxable year. Under current law, a taxpayer may “carry back” an NOL to offset taxable income of the two tax years immediately prior to the tax year in which the NOL is incurred and may then carry forward any remaining portion of the NOL up to 20 years to offset taxable income in future tax years. Current law also provides that “eligible small businesses” may elect to carry back an “applicable 2008 NOL” for three, four or five years. An “eligible small business” is generally defined as a taxpayer with annual gross receipts of $15,000,000 or less in the tax year in which the applicable 2008 NOL arose. For purposes of the election, an “applicable 2008 NOL” is defined as the taxpayer’s NOL for any tax year ending in 2008, or, at the taxpayer’s election, any tax year beginning in 2008. The election to extend the carryback period is irrevocable and can be made only with respect to one tax year.
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