Limits on Business Losses and Net Operating Loss Carrybacks
This act reinstates and makes permanent limitations on excess business losses for non-corporate taxpayers. It also modifies the rules for carrying back net operating losses for 2019 and 2020, specifically disallowing this benefit for certain large corporations and entities that paid significant dividends or had high executive compensation. The aim is to prevent undue tax benefits for the wealthiest.
Key points
Limits on deducting business losses for individuals and non-corporate entities are restored and made permanent, potentially affecting the taxes paid by business owners.
Rules for carrying back net operating losses for 2019 and 2020 are changed, meaning some companies cannot use this benefit if they paid large dividends or had high executive compensation.
The changes apply to tax years beginning after December 31, 2017, which may impact already filed tax returns.
Expired
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