Net Operating Loss Planning Under Current Tax Law: Planning Techniques and Challenges

Impact to Both Corporate and Noncorporate Taxpayers, Timing Issues and Other Considerations

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Wednesday, February 10, 2021

Recorded event now available

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Course Materials

This CLE/CPE course will guide tax counsel and advisers on key tax rules for net operating losses (NOLs) and their impact on tax planning for taxpayers. The panel will discuss changes to the NOL carryback and carry-forward rules and limitations under current tax law, its effect on leveraging reduced income tax rates and the qualified business income deduction, technical issues for taxpayers with pre-2018 NOL carry-forwards, and planning methods to ensure tax savings.

Description

The reduced corporate tax rate and deduction for pass-through business income place limitations on the use of NOLs applicable to many small and mid-size businesses. Tax counsel and advisers must understand changes to NOL carryback and carry-forward rules, their interaction with current tax law provisions, and available planning methods to reduce the impact of new limitations.

Before tax reform, NOLs were eligible for a two-year carryback with special extended periods for certain liability losses and farming activities and a carry-forward for up to 20 years to offset taxable income. Current tax law provides 5-year carryback opportunities for years beginning before Jan. 1, 2021, and then reinstates restrictions on the use of NOL deductions. Due to section 163(j) thin capitalization rules, many taxpayers that have not been subject to Section 382 in the past will now be subject to these rules.

In calculating the NOL amount, taxpayers must be mindful of further limitations relating to other tax law provisions, the timing of income and deductions in assessing tax liability, and primary factors to consider for specific acquisitions.

Listen as our panel discusses the use of NOLs under current tax law, the application of Sections 381 and 382 and practical approaches to leverage the deduction and carryover rules.

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Outline

  1. Net operating losses before and after tax reform
  2. Application of Sections 381 and 382
  3. Treatment of deferred interest under Section 163(j) and Section 382
  4. NOL limitations for noncorporate taxpayers
  5. Income and deduction timing issues when assessing tax liabilities
  6. Planning techniques in applying deduction and carryover rules

Benefits

The panel will review these and other challenging issues:

  • NOL rules and the impact on businesses
  • Understanding the application of Sections 381 and 382
  • Recognizing the treatment of deferred interest under Section 163(j)
  • Special considerations for noncorporate taxpayers
  • Timing issues for income and deductions when assessing future tax liability
  • Essential planning techniques in applying new deduction and carryover rules

Faculty

Cox, Patrick
Patrick M. Cox
Partner
Nixon Peabody

Mr. Cox is a partner within Nixon Peabody’s M&A and Corporate Transactions practice group and member of the...  |  Read More

Gruidl, Nick
Nick Gruidl
Partner, Washington National Tax
RSM US

Mr. Gruidl has experience working with both publicly held and privately held businesses. His client service focus...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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