Word: carrybacks
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Congress is moving to make those tax losses even more valuable. Typically, when a company loses money, it can apply for a refund of the taxes it has paid on profits over the past two years. However, Congress is moving closer to extending the so-called tax loss carryback provision to five years, instead of two. Senate majority leader Harry Reid recently threw his support behind the extension of the tax refund, adding it to a bill that would extend unemployment benefits. On Nov. 2, the Senate voted to close debate on the bill, which means a final vote...
...extension would mean big bucks for corporate America. And unlike "carryforwards," which can only be realized if a company returns to profitability, carrybacks generate immediate cash, as long as the company has earned money in the past half-decade. The Joint Committee on Taxation recently estimated that the carryback extension would result in refunds of $33 billion to companies...
...House Speaker Nancy Pelosi said recently that she may support a tax change, called a "loss carryback," that would allow money-losing companies to more quickly get tax refunds. Another provision under consideration would extend tax breaks that would allow companies to quickly write off the costs of new purchases. Though many of these provisions could be acted upon before the end of the year, another stimulus proposal to send more federal money to cash-strapped states in 2011 is likely to be put off another year. The February stimulus bill provided about two years of additional state funding. (Read...
...think the carryback extension is a good idea," says Mark Silverman, a prominent tax lawyer at Steptoe & Johnson. "It's been done in the past, and it ought to be done again...
...companies could soon be eligible for billions of dollars more. A bill was proposed in the House of Representatives in late November by Congressman Steve King, a Republican from Iowa, that would extend the tax-carryback rule to five years, which means companies could get their tax payments refunded all the way back to 2003. And the rule would be eligible for losses that occurred in 2008 or 2009. That means a company with a large enough loss, after the proposed rebate, could effectively not pay taxes for seven years. Senator Olympia Snowe, a Republican from Maine, has proposed...