Net Operating Loss Carry Over and Carry Back – IRS Publication 536 – IRC 172 + 6511

Generally speaking a net operating loss (NOL) for any tax year may be carried back two years and forward 20 years under Internal Revenue Code Sec. 172(b)(1)(A). A three-year carry back period applies to NOLs arising from property losses of individuals due to fire, storm, shipwreck, or other casualty, or from theft. It also applies to small businesses (average…

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How to Account for Net Operating Loss when Merging Entities

You can merge both a profitable entity with an entity that has a Net Operating Loss assuming that both entities have common ownership or sufficient overlap and a limited history of owner shifts. The Net Operating Loss of the dissolved entity can be utilized for the surviving entity according to Section 381 of the Internal…

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LOOKOUT SMALL BUSINESS OWNERS FILING IRS Form 1120-S or 1065 – Net Operating Loss (NOL) Carry backs trigger Alternative Minimum Tax (AMT)

Please be advised that Net Operating Losses carried back to previous tax years can trigger an Alternative Minimum tax liability in the previous tax year that the loss was carried to, even if you originally did not have a tax liability in the year the loss was carried to. More importantly the Internal Revenue Code…

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