The Worker, Homeownership, and Business Assistance Act of 2009 expanded the Net Operating Loss (NOL) Carryback Election for up to five years to ALL U.S. businesses. The previous act applied only to eligible small businesses with gross receipts of $15 million or less.

Under the new act, businesses can carryback NOL's from either 2008 or 2009, but not both years. However, eligible small businesses (with gross receipts of $15 million or less) that elected to carryback a 2008 NOL under the 2009 Recovery Act may also make an election to carryback a 2009 NOL. The NOL can be carried back 5 years, but it may only offset 50% of the taxable income in the 5th year preceding the loss.

To take advantage of the new expanded NOL provision, the election must be made by the due date (including extensions) for the tax return. For calendar year taxpayers, that is September 15, 2010. If a taxpayer had elected before November 6, 2009 to forego an applicable NOL carryback, the election may be revoked before the due date (including extensions) for filing the return.

If you have any questions regarding the information in this article, or have any other issues you would like to discuss, please feel free to contact the DZH Phillips tax department at 415.781.2500 or email cpas@dzhphillips.com.