07 Jun 2022
Carry That Weight! Tax Loss and Tax Credit Carryforwards
In allowing a taxpayer to carryforward and carryback its net operating losses, the IRC recognizes the variability in corporate profits and the many reasons for this variability, especially for newly formed and restructured businesses. The IRC does not totally whipsaw taxpayers who have taxable years that produce losses that follow or precede profitable years. Instead, it allows taxpayers to offset their profits for tax purposes, at least to some extent, in one taxable year with the losses incurred in other taxable years.
Related Content
- Tax Treatment of Net Operating Losses (NOLs) of Corporations
Discover how the tax treatment of NOLs was significantly modified by the Tax Cuts and Jobs Act of 2017 (TCJA), Pub. L. No. 115-97, and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No. 116-136. This practice note also discusses the limitations on how a corporation can carry forward its NOLs following a "change in ownership" in the corporation under I.R.C. Section 382.
- NOL Rights Plans
Learn how, while the purpose of rights plans has been to protect a company’s stockholders from abusive takeover tactics, in recent years a significant number of companies have adopted “NOL rights plans” to protect against certain ownership changes that could impair a company’s ability to use its NOLs to offset future taxable income.
Practical Guidance Updates
Featuring the latest updates from your Practical Guidance account.
- Tax Key Legal Developments Tracker (Federal)
- Stay informed on new developments:
- Business Entities. IRS announces that under I.R.C. § 613A(c)(6)(C), the applicable percentage for purposes of determining percentage depletion on marginal properties for calendar year 2022 is 15%. Notice 2022-24, I.R.B. 2022-21.
- Excise Taxes and Credits. IRS publishes the inflation adjustment factor and reference price for calendar year 2022 for the renewable electricity production credit under I.R.C. § 45. The notice also provides the credit amounts for calendar year 2022 under section 45. Notice 2022-20, I.R.B. 2022-21.
- Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.
- Check out the new Practical Guidance Author Center! Learn about the 1500+ leading attorney authors contributing to our 21 practice areas, and find out how you can Become a Practical Guidance Author.
- The Practical Guidance Journal Spring 2022 Edition features guidance for employers on COVID-19 vaccination, testing, and employee health data protection; climate change disclosure market trends; and updates related to the Secured Overnight Financing Rate (SOFR).
- New and Recently Updated Practical Guidance Content
- Business Tax Credits for Small Businesses
- Capital Gains Ruling Blurs Limits of States’ Tax Reach
- Lifestyle Spending Account Compliance Considerations
- Ninth Circuit: Tax Return Considered Filed When Sent in Response to IRS Inquiry
- The Russia-Ukraine War’s Impact on Global Workforce Mobility
- New-Hire Reporting State Law Survey
Experience results today with practical guidance, legal research, and data-driven insights—all in one place.
Experience Lexis+