Net Operating Losses and the CARES Act: New Guidance Provided by the IRS

As of April 9th, the IRS has released several Notices and Revenue Procedures providing guidance on obtaining tax relief under the CARES Act for tax payers with net operating losses.

Revenue Procedure 2020-24 provides guidance to taxpayers with net operating losses (NOLs) that are carried back under the CARES Act. The guidance provides procedure for:

• waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021,

• disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and

• waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

The IRS also released Notice 2020-26 granting a six-month extension to file Form 1045 (for individuals, trusts, and estates) or Form 1139 (for corporations), with respect to the carryback of NOLs that occurred in any taxable year beginning during the calendar year of 2018 and ending before June 30, 2019.

The IRS also offered guidance for eligible partnerships in Revenue Procedure 2020-23. Thus revenue procedure helps explain the process for filing an amended partnership return, using Form 1065, The tax professionals at the Center For Legal, Financial, & Tax Planning can help you achieve the tax relief you deserve.Contact us at (618) 997-3436.