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Congress Expands Favorable Tax Treatment of 2008 and 2009 Net Operating Losses

On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 (the Act), a piece of legislation widely known for extending unemployment benefits as well as the first-time homebuyer tax credit. No less important, however, the Act contains an enhanced and expanded net operating loss (NOL) carryback election that makes available to all businesses (with few exceptions) a five-year NOL carryback period for losses incurred in 2008 or 2009. A similar provision had been contemplated earlier this year for inclusion in the American Recovery and Reinvestment Act of 2009 (ARRA 2009), but was watered down prior to passage.

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