NOL Treatment on Federal Corporate and Individual Tax Returns: Challenges for Preparers

Changes Under the CARES Act, the Proposed 382 Regulations, Calculating the Section 382 Limitation

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, June 16, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax preparers with a thorough and practical guide to the reporting challenges and planning opportunities involved in net operating loss (NOL) calculations for individual and corporate federal tax returns after the liberalization of NOL deductions under the CARES Act.

Description

The recent CARES Act requires a fresh look at NOLs. Before the 2017 tax act, taxpayers could choose to carryback an NOL two years and receive an immediate refund or carryforward the loss up to 20 years. Then under the 2017 tax act, carrybacks were eliminated and losses were carried forward indefinitely. Now losses for 2018-2020, for calendar year taxpayers, can be carried back a generous five years.

Under the 2017 tax act, the carryforward deduction was limited to 80% of taxable income. Now this limitation has been suspended for losses incurred for tax years beginning after 2020. Understanding these continually changing rules and tracking these NOL carryforwards present constant challenges for tax professionals.

Businesses continue to face several restrictions in computing NOLs. Ownership changes made under Section 382 impose special restrictions on the use of the NOL as a tax attribute. Loss deductions annually cannot exceed a limitation calculated under 382 based on the value of the loss corporation's stock and the applicable federal long-term rate.

Proposed regulations issued in September 2019 significantly limit a corporation’s ability to utilize losses if it has net unrealized built-in gains (NUBIGs). Understanding how to calculate the limitation and the impact of the proposed regulations on these companies is critical for advisers working with these businesses.

Listen as our experienced panel of tax advisers provides a thorough and practical guide to mastering NOL calculations, planning opportunities under the CARES Act, and the proposed 382 regulations.

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Outline

  1. Net operating losses – an overview
    1. New carryback rules
    2. Foregoing the carryback
  2. Special issues with NOLs for corporate return taxpayers
  3. Section 382 ownership change restrictions and limitations
  4. Restrictions and allowances in calculating and using NOLs for individual taxpayers
  5. Pass-through allocations

Benefits

The panel will address these and other problematic aspects of NOLs:

  • New procedures for submitting Forms 1139 and 1045
  • When Section 382 change in ownership limitations apply
  • The effect of the proposed regulations on Section 382 limitations
  • Challenges in allocating NOLs to shareholders of pass-through entities

Faculty

Hadwen, John
John Hadwen, CPA

Principal
Baker Newman Noyes

Mr. Hadwen leads the firm’s tax practice’s Partnership/Subchapter-K group. He specializes in federal and...  |  Read More

Phillips, Patrick
Patrick Phillips

Senior Manager
RSM US

Mr. Phillips is a Senior Manager in RSM’s Washington National Tax practice, focusing on Mergers and Acquisitions...  |  Read More

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