AMT may eliminate benefits of an individual's net operating loss

Article Abstract:

The Tax Reform Act of 1986 (TRA '86) created unintended consequences in the carryback and carryforward of net operating losses (NOL) as a result of alternative minimum tax (AMT) provisions Proper tax planning is necessary to avoid incurring unintended liabilities. There are two NOL systems, regular NOL and alternative tax NOL. NOL has a greater tax value in high income years and tax planners must consider the interaction between AMT and regular tax in carryback years before the effect of TRA '86. To obtain the maximum benefit between regular and AMT tax deductions, tax planners must make a proper determination of the regular NOL; compute the AMT NOL by modifying the regular NOL; and project the benefits of carrying the loss back with a consideration of the consequences of both regular tax and AMT.

Accounting and auditing, Minimum tax

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Coordination of NOL rules with prior years' taxes can maximize individuals' benefits

Article Abstract:

The net operating loss (NOL) regulations permit individual taxpayers to average losses and income across a period of time that surpasses the yearly accounting period. The Regulations and Revenue Rulings delineate the related administrative procedures and computations. A complete examination must be made of the individual status of the taxpayer for the planning of NOLs.

Economic aspects, Income tax

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