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July 7, 2020

IRS issues temporary and proposed regulations on carryovers and carrybacks of consolidated NOLs

The IRS has issued temporary (TD 9900) and proposed (REG-125716-18) regulations addressing the ability to carry back consolidated net operating losses (NOLs) when one consolidated group acquires members of another consolidated group. In light of the CARES Act's retroactive extension of the carryback period under IRC Section 172 for tax years beginning after 2017 and before 2021, the temporary regulations allow these acquiring groups to waive all or part of the pre-acquisition portion of an extended carryback period for certain losses attributable to their acquired members. The proposed regulations withdraw and re-propose certain rules relating to the absorption of consolidated NOL carryovers and carrybacks. The temporary regulations are effective as of July 2, 2020.

A Tax Alert on the regulations is forthcoming.