2021 Year-End Tax Planning with NOLs

With “Build Back Better” still being debated, and likely punted to 2022, it’s important to counsel your clients during their year-end tax planning to not lose sight of tax changes in place for the 2021 tax year and on the horizon for 2022. Key to this understanding is exploring the tax treatment of net operating losses (NOLs) under I.R.C. Section 172, including the significant modifications to NOL tax treatment contained in the Tax Cuts and Jobs Act of 2017 (TCJA), Pub. L. No. 115-97, and the more recent Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No. 116-136.

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 Related Content 

• NOL Changes and Opportunities in the CARES Act and Revenue Procedure 2020-24
  Find out how the CARES Act provided beneficial NOL carryback planning opportunities, changing the NOL rules under Section 172 and related provisions by providing for a temporary repeal of the 80% limitation for NOLs and allowing a five-year NOL carryback. 

• NOL Rights Plans
  Learn how, in recent years, a significant number of companies have adopted “NOL rights plans,” intended to protect against certain ownership changes that could impair a company’s ability to use its NOLs in offsetting future taxable income.

Practical Guidance Updates 

Featuring the latest updates from your Practical Guidance account.    

• Tax Key Legal Developments Tracker (Federal)
  Stay informed on new developments: 
  • Business Entities. IRS provides guidance relating to section 80201 of the Infrastructure Investment and Jobs Act (IIJA), Pub. L. No. 117-58 (Nov. 15, 2021), which reinstates, effective July 1, 2022, the excise taxes imposed on certain chemical substances by I.R.C. Sections 4661 and 4671. I.R.S. Notice 2021-66.
  • Business Entities. IRS releases optional 2022 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. R.S. Notice 2022-03.
  • Practice, Procedure, and Controversy. IRS is requesting applications from individuals with experience in such areas as state tax administration; cybersecurity and information security; tax software development; tax preparation; payroll and tax financial product processing; systems management and improvement; implementation of customer service initiatives; public administration; and consumer advocacy to be considered for selection as members of the Electronic Tax Administration Advisory Committee (ETAAC). 86 Fed. Reg. 70,609 (Dec. 10, 2021).
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