In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) modifies several provisions enacted by the Tax Cuts and Jobs Act of 2017 (TCJA) to put cash in the hands of businesses. These modifications permit taxpayers to claim favorable adjustments in prior taxable years and accelerate deductions available in the current year.
For instance, the CARES Act modifies the net operating loss (NOL) carryback rules, including:
- Providing a five-year carryback for tax years beginning in 2018, 2019, and 2020
- Providing a two-year carryback for fiscal year businesses with tax years beginning in 2017 and ending in 2018
- Extending the time for taxpayers with taxable years beginning before Jan. 1, 2018, and ending after Dec. 31, 2017, to file Form 1139, “Corporation Application for Tentative Refund,” for NOL carrybacks
In addition, the CARES Act accelerates refunds of the remaining corporate alternative minimum tax (AMT) credit to 2019 and allows a corporation to elect to recover any remaining corporate AMT credit in 2018.
To get the most out of these changes, taxpayers will need to determine the quickest and most efficient way to access the tax benefits.