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December 28, 2019
Question

NOL CarryOver Deduction 80% Limit

  • December 28, 2019
  • 1 reply
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I have a Delaware C-corp that had a NOL in 2018. I am now doing a NOL carryover for the 2019 tax year. In IRS's publication 542 the IRS says: "If the NOL available for a carryback or carryforward year is greater than 80% of the taxable income for that year (100% for NOLs arising in tax years beginning before 2018), the corporation must modify its taxable income to figure how much of the NOL it will use up in that year and how much it can carry over to the next tax year." 

 

The 2018 NOL carryover is less than 80% of my corporation's 2019 taxable income. However, the sum of my corporation's losses for the 2019 year and the 2018 NOL carryover is greater than 100% of my corporation's 2019 taxable income.

 

Does this mean I can only deduct 80% of my corporation's 2019 taxable income with the NOL (from 2019 and the 2018 carryover)?

 

Or does the 80% limit rule only apply to the NOL carryover from 2018?

    1 reply

    December 28, 2019

    The 80% limit applies to losses arising in tax years after 2018 and beyond.