Scott B. Price, CPA

Net Operating Loss Changes

January 5, 2009

For taxable years beginning in 2008 and 2009 the California state legislature suspended the net operating loss deduction with an exception for “small” business with net business income less than $500,000. For any NOLS that are denied a loss in the 2008 or 2009 tax year due to this provision the carryover period is extended; if incurred in the 2008 tax year, the carryover period is extended by one year and if incurred in tax years beginning before January 1, 2008, the carryover period is extended by two years.

We will provide you guidance in the filing instructions for your tax return or separate estimated payments on how to comply with these new requirements if they are applicable to your situation.