Stites & Harbison, PLLC

The IRS has issued a news release to remind eligible small businesses (ESBs) that time may be running out for them to elect a longer net operating loss (NOL) carryback under the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5).  Generally, eligible individuals have until Oct. 15 to make the election; eligible calendar-year corporations have until Sept. 15.

This election may be particularly helpful to any eligible small business with a large loss in 2008. A small business that chooses this election can benefit by:

• Offsetting the loss against income earned in up to five prior tax years,
• Getting a refund of taxes paid up to five years ago,
• Using up part or all of the loss now, rather than waiting to claim it on future tax returns.

Also, the ARRA provides other tax benefits to small businesses, including the following:

• Faster Write-Offs, Including Bonus Depreciation, for Certain Capital Expenditures.  A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.  Bonus depreciation and the section 179 deduction are claimed on Form 4562. Further details are in the instructions for this form.
• Expanded Net Operating Loss Carryback.  The deadline is discussed above.
• Exclusion of Gain on the Sale of Certain Small Business Stock.
• Estimated Tax Requirement Modified.
• COBRA Credit.

Please do not hesitate to contact us regarding the tax benefits listed above.

Contact:

Allen N. Bradley, Member, Business & Corporate Services Group, Atlanta office