Snatching tax relief from a revenue defeat – A review of the net operating loss rules
Abstract: Even in an improving economy, a business can find that its operating expenses and other deductions for a particular year exceed its income — otherwise known as incurring a net operating loss (NOL). Under the Internal Revenue Code, a corporation or individual may deduct an NOL from its income. But it’s essential to carefully follow the rules. This article discusses how an NOL may be carried back or forward and whether AMT liability can be offset with NOLs just as regular tax liability is. A sidebar looks at how a company’s chosen business structure can notably complicate the application of NOL rules.