Effective July 1, 2015, the net operating loss carryback (NOL) will be eliminated and the carryover will be limited to 72% of the carryover. La. Acts 2015, No. ___( HB No. 624 (Rep. Jackson) amending La. R.S. 47:287.86) and La. Acts 2015, No. ____(HB No. 218 (Rep. Broadwater) amending La. R.S. 47:287.86).
Under the bills, the NOL is curtailed based upon when a taxpayer’s return is filed. All returns claiming a NOL deduction filed on or after July 1, 2015 will be subject to the 72% limit regardless of the taxable year to which the return relates. However, the filing of an amended return on or after July 1, 2015 amending a return filed before July 1, 2015 will receive the full NOL if the NOL was properly claimed on the original return. Thus, a late filed original 2013 return filed after July 1, 2015 will be subject to the reduced NOL deduction even though other taxpayers got full deductions for timely filed 2013 returns. Additionally, 2014 returns under extension will not get the full deduction if the returns are not filed before July 1, 2015. A taxpayer that loses the benefit on a return filed after July 1, 2015 and for which a valid extension to file was granted prior to July 1, 2015 is allowed to proportionally recoup the disallowed NOL deduction for each taxable year beginning during calendar years 2017, 2018, and 2019.
Taxpayers should consider filing income tax returns for 2014 and earlier years before July 1, 2015 claiming the proper amount of the NOL deduction even if the returns will have to be amended after July 1, 2015.
Note: HBs 218 and 624 have not been signed by the Governor; however, it is very likely that HBs 218 and 624 will become law.
The Louisiana Legislature made numerous changes to business exclusions, exemptions, deductions, and credits. Many of these changes are effective July 1, 2015. This article addresses only two of the major changes enacted by the Louisiana Legislature during the 2015 regular session.
For more information or questions about tax law changes during the 2015 regular session, contact Chris Dicharry.