Franchise Tax Board Issues Legal Ruling Regarding Calculation of Net Operating Loss Carryover Periods

Morrison & Foerster LLP

California generally conforms to the federal provisions regarding net operating loss (“NOL”) deductions. However, California’s seemingly endless battle with budget deficits has resulted in periodic suspensions of California taxpayers’ ability – both personal and corporate – to take NOL deductions. For example, California suspended NOL deductions for the 2002 and 2003 taxable years. More recently, California generally suspended NOL deductions for the 2008 through 2011 taxable years.

Such suspensions are typically accompanied by extensions of the carryover period for NOL deductions denied in a given year, in whole or in part, because of the application of the suspension provisions to that year’s NOL. Corresponding with the most recent suspension, California extended the carryover period – set at 20 years for NOLs incurred in 2008 and later – as follows: one year for losses incurred on or after January 1, 2010 (and before January 1, 2011); two years for losses incurred on or after January 1, 2009 (and before January 1, 2010); three years for losses incurred on or after January 1, 2008 (and before January 1, 2009); and four years for losses incurred before January 1, 2008.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:

Morrison & Foerster LLP

Morrison & Foerster LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.