NASE Blogs

Small Biz Deductions - Net Operating Loss Carryback And More

Mar 31, 2009

Posted by Kristin Oberlander - Here is some timely tax information release by the the IRS:

Small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision in the American Recovery and Reinvestment Act to get a refund of taxes paid over the past five years instead of the usual two.

To accommodate the change in tax law, the IRS has updated the instructions for Form 1045 and Form 1139, which small businesses will use to take advantage of the carryback provision.

IRS Form 1045, Instructions
IRS Form 1139, Instructions

An IRS news release and question-and-answer document have more information on the net operating loss carry back provision.

More Help for Small Business
The Recovery Act also includes the following business-related provisions:
• Sec. 179 Deduction Increases to $250,000: An expanded Sec. 179 deduction allows small businesses to write off up to $250,000 of qualified investment in 2009.
• Reduction of Estimated Tax Payments: Normally, small businesses have to pay 110 percent of their previous year’s taxes in estimated taxes. The Recovery Act permits small businesses to reduce their estimated payments to 90 percent of the previous year’s taxes.
• Extension of Bonus Depreciation Deductions Through 2009: Bonus depreciation is extended through 2009, allowing businesses to take a larger tax deduction within the first year of a property’s purchase.
• Capital Gains Tax Break for Investment in Small Business: Investors in small business who hold their investments for five years can exclude from taxation 75 percent of their capital gains.

Read more about the American Recovery and Reinvestment Act of 2009.

Have your own tax questions? Ask the NASE’s TaxTalk!