IRS Unveils Guidance on Net Operating Loss Carryback For Small Firms
The IRS stressed that taxpayers can make the election for only one tax year, either beginning or ending in 2008. If the taxpayer makes an unallowable second election on a tentative carryback claim (Form 1139), the agency said a letter with specific langauge will be used to reject the claim.
"The new net operating loss provision could throw a lifeline to struggling businesses, providing them with a quick infusion of cash," Commissioner of Internal Revenue Douglas Shulman said in a news release. "We want to make it as easy as possible for small businesses to take advantage of these key tax benefits."
The IRS said it expects record numbers of small businesses to be eligible for the refunds, and it is putting in "special steps to ensure timely processing of these refunds."
Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns, the IRS said.