The weekend is here, but that won’t stop of from posting our last minute tax tips for 2020. Here is Tip #6. Thank COVID-19.

Let’s be real: there’s little to be grateful for with COVID-19, but one of the several exceptions is the potential opportunity to turn NOLs into cash for your business.

Two NOL opportunities come from the Coronavirus Aid, Relief, and Economic Security (CARES) Act:

  1. The CARES Act allows NOLs arising in tax years beginning in 2018, 2019, and 2020 to be carried back five years for refunds against prior taxes.
  1. The CARES Act allows application of 100 percent of the NOL to the carryback years.

Before the CARES Act, you could not carry back your 2018, 2019, or 2020 losses, and your NOL could offset only up to 80 percent of taxable income before your Section 199A deduction.

This could be a large tax savings given the right situation. We’ll see you tomorrow for the final tip of our 7 tip series.