Internal Revenue Service Addresses Questions Related to NOL Carryback Provisions
By Michael D. Haun & Sean C. Honeywill
In recently released Notice 2010-58, the Internal Revenue Service provides guidance in the form of questions and answers addressing specific issues related to two net operating loss (NOL) provisions enacted in 2009.
The first provision, aimed at small businesses, was enacted as part of the American Recovery and Reinvestment Tax Act of 2009, and amended Code Section 172(b)(1)(H) to allow an eligible small business (i.e., those with gross receipts of no more than $15 million) to elect to carry back an NOL arising in 2008 for a period of 3, 4 or 5 years (ARRA election). The ARRA election is irrevocable and may be made for only one taxable year.
The second provision, which is not limited to small businesses, was enacted under the Worker, Homeownership, and Business Assistance Act of 2009, and amended Code Section 172(b)(1)(H) to allow taxpayers to elect to carry back a NOL arising in 2008 or 2009 for a period of 3, 4 or 5 years (the WHBAA election). Like the ARRA election, the WHBAA election is irrevocable and may be made for only one taxable year. However, a taxpayer that made or makes an ARRA election may also make a WHBAA election.