Hidden Stimulus in the CARES Act for Businesses: Net Operating Loss Carrybacks Can Bring Sweet Returns– June 11, 2020

Posted by Guest Blogger Leon LaBrecque, Sequoia Financial Group, LLC

As we move through the economics of the pandemic and the resulting massive and complex stimulus, one rather innocuous-sounding provision may be a huge financial benefit to businesses, both small and large. In the CARES Act, the net operating loss provisions were changed, as well as the excess loss limitation rules. Under the rules of the Tax Cuts and Jobs Act (TCJA), a business with a net operating loss could only carry forward losses to future profitable years, and only carry forward 80% at a time. With a disaster like COVID-19, companies could incur devastating losses in 2020. Under the old rules, they would not be able to fully offset those losses, and only on a carry forward basis. The new rule lets businesses go back five years and offset prior income to receive a quick refund of past taxes, which they may have paid at higher rates. This amounts to an enormous, and hidden, stimulus for businesses.

>> Read the full article on Forbes.com.

Leon C. LaBrecque, JD, CPA, CFP, CFA, is the Chief Growth Officer of Sequoia Financial Group, LLC. Contact him at llabrecque@sequoia-financial.com to discuss this topic further or visit www.sequoia-financial.com

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