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IRS Provides NOL Guidance

The Internal Revenue Services  has recently issued guidance for taxpayers with net operating losses that are carried back under the CARES Act. The IRS has also provided a six-month extension of time for filing NOL forms.

Revenue Procedure 2020-24 (PDF) waives the carryback period for taxable years beginning Dec 31, 2017 and before Jan. 1, 2021. It enables taxpayers to disregard certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period. The IRS has also waived or reduced a carryback period, or revoked an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

The six-month extension for NOLs, outlined in Notice 2020-26 (PDF), applies to the need to file Forms 1045 required for on individuals, trusts, and estates or Form 1139 required for corporations for NOLS for taxable years that began during calendar year 2018 and ended on or before June 30, 2019.

In addition, Revenue Procedure 2020-23 (PDF) allows partnerships to file amended partnership returns using a Form 1065, U.S. Return of Partnership Income, by checking the “Amended Return” box and issuing amended Schedules K-1, Partner’s Share of Income, Deductions, Credits, to each of its partners.

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