Which of the following statements is correct regarding the Net Operating Loss (NOL) rules for C corporations for tax years beginning after 2020?

Answer options:

NOLs can be carried back 2 years and forward 20 years.

NOLs can offset 100% of taxable income in future years.

NOLs can be carried forward indefinitely but are limited to 80% of taxable income.

NOLs expire after 20 years.

How to approach this question

Current NOL Rule: No Carryback. Indefinite Carryforward. 80% Income Limit.

Full Answer

C.NOLs can be carried forward indefinitely but are limited to 80% of taxable income.✓ Correct

For tax years arising after Dec 31, 2017, the TCJA eliminated the 2-year carryback (except for farms/insurance) and allows indefinite carryforwards. However, the deduction is limited to 80% of taxable income (for years after 2020).

Common mistakes

Applying the old 2/20 rule or the 100% offset rule.

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