| Legislative Update |
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Have your clients paid taxes within the last five years?
Would they like them back? Now they can.
That's right, President Obama extended this lucrative tax break to include 2009.
All businesses are now eligible to carry their 2009 net operating losses (NOL) back for up to 5 years and claim a refund from the IRS for the taxes paid in previous years. If your client does not have an NOL or would like a larger NOL, a cost segregation study should be explored. The additional depreciation generated from the study will help with their NOL position which means a larger refund of previous taxes paid.
5-Year Carryback Period for 2009 NOLs For All Businesses
The American Recovery and Reinvestment Act of 2009 benefited small businesses that were having financial difficulties by allowing them to use their 2008 NOL back to a maximum of five years. Prior to this they could only be carried back for two years. The Worker, Homeownership and Business Assistance Act of 2009 was signed into law on November 6th and extended this provision for the 2009 tax return. It also expanded the applicability of the NOL carry back by making all businesses eligible. Previously, only a partnership, corporation or sole proprietorship that had average annual gross receipts of less than $15 million for 2008 and the previous two years were eligible.
The taxpayer must make a non revocable election to use the 5 year carryback period prior to the due date, including extensions, of the 2009 tax return. The amount of the NOL that can be carried back to the 5th tax year cannot be more than 50 percent of the taxpayer's taxable income.
We Can Help
Cost segregation creates additional depreciation deductions and in many cases will put the taxpayer in a NOL position or create a larger NOL. The recently signed stimulus extender will give businesses more opportunity to use the entire NOL and create a tax refund, thus increasing their cash flow and helping them through the current economic crisis. |
