Where Form 1120 C Losses 2023-2024

Beginning in 2018, there has been a change to the net operating loss carryover rules. In some sense, these new rules may actually be simpler than the old rules. The old rules were rife with changes from year to year, especially for special industries or special circumstances. However, now we are starting over with a simpler and cleaner slate. It is important to note that there are still some industry exceptions, but we will focus on what we have without dwelling on those exceptions from 2017 or prior years. Under the old rules, most taxpayers had the ability to carry back their losses for two years and carry forward for twenty years. If taxpayers believed that they would be in a higher tax bracket in future years compared to past years, they had the option to forgo the carry back period and only carry forward. This election was made when filing the original tax return, where the NOL (net operating loss) was created. However, there were exceptions to this rule for farming losses and certain casualties. Now, beginning in 2018, the two-year carry back is limited to farmers and property and casualty insurance companies. For other taxpayers, the new law states that the net operating loss carry forward can only offset 80% of taxable income for a given year. The remaining NOL can be carried forward indefinitely until it is used, with a 20-year limitation for property and casualty insurance companies. In contrast, farmers do not have the option to carry back their losses and they still abide by the old rules for the NOL carry forward. This means they have a two-year carry back and a 20-year carry forward. Property and casualty insurance companies, on the other hand, have different rules. They do not have a carry back but can fully offset...