The IRS has released guidance (Revenue Procedure 2021-14
) on applicable elections for farming loss net operating losses (NOLs) within the meaning of Section 172(b)(1)(B)(ii).
The NOLs addressed by the guidance arise under the rules in the Tax Cuts and Jobs Act (TCJA), which generally repealed NOL carrybacks and provided for indefinite carryover. Farming loss NOLs, however, retained the two-year carryback period under prior law with an election to available to waive the carryback. The Coronavirus Aid, Relief, and Economic Security (CARES) Act then modified the general treatment of NOLs for tax years 2018, 2019 and 2020, to provide for a five-year carryback and repeal of the 80% limitation of usage against taxable income for all NOLs, including farming loss NOLs. The regular NOL carryback waiver provisions under Section 172 remained for such CARES years.
The COVID-Related Tax Relief Act subsequently amended the CARES Act for farming loss NOLs to provide an election whereby taxpayers with farming loss NOLs could elect to not have the terms under the CARES Act applied. Revenue Procedure 2021-14 provides guidance on the time and manner of such elections, as well as guidance on the ability to revoke a waiver of carryback made under the TCJA given the later changes made by the CARES Act.
Washington National Tax Office
+1 202 521 1503
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.