Revenue Procedure 2009-52 issued November 20, 2009

President Obama signed the Worker, Homeownership and Business Assistance Act of 2009 (WHBA) into law on November 6.

The Internal Revenue Service very quickly issued Rev. Proc. 2009-52 providing guidance for taxpayers electing to carry Net Operating Losses back under the provisions of the legislation.

The Act modifies the extended net operating loss carry back provisions contained in the American Recovery and Reinvestment Tax Act of 2009 (ARRT) passed in February.

The earlier tax act provided that a taxpayer could elect to carry back it’s net operating loss three, four or five years.

Significant to small business owners in the new legislation is the Act’s limitation of the net operating loss carry back in the fifth year to 50% of the taxpayer’s taxable income.

A procedural difference also exists in making the election.  Under ARRT the election was made by simply filing the application for refund.  (i.e. Form 1045, 1139, etc.)

Under WHBA, an affirmative election statement must be attached to the application.

The full text of the Revenue Ruling can be found on the IRS’ website at www.irs.gov.

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