On Friday, November 6, President Barack Obama signed into law a bill that extends unemployment benefits and the first-time homebuyer tax credit. The bill also includes a provision that both extends and expands net operating loss (NOL) carryback for businesses. The bill received strong bipartisan support, passing 98-0 in the Senate and 403-12 in the House.
The new NOL provision allows any business with a loss in either 2008 or 2009 to claim refunds of taxes paid within the prior five years. There is no limit on carrybacks for the first four years of the carryback period. For year five, the carryback is limited to 50 percent of a company's taxable income in that year.
A limited NOL provision was enacted in February as part of the American Recovery and Reinvestment Act (ARRA). It excluded businesses with more than $15 million in annual gross receipts and allowed only a two-year carryback of losses.
The National Association of REALTORS® and its coalition partners favored extending and expanding NOL carryback, arguing that it would give all U.S. companies access to a much-needed and quick infusion of cash and would be particularly helpful to real estate companies struggling to make payroll, maintain commercial properties, and stave off foreclosure or bankruptcy.