Use of NOL Deductions for Corporate & Individual Taxpayers – Suspended

Recently passed legislation in California, under Senate Bill 175 - Taxation, might preclude some corporate and individual taxpayer claims for NOL deductions in 2024 beginning on January 1, 2024 and before January 1, 2027. This suspension may affect those California corporate and individual taxpayers who have a net or modified adjusted gross income greater than $1 million. This is not the first time that California has suspended or limited claims for NOL deductions. Additionally, this legislation places an annual $5 million cap on the utilization of income tax credits, including the California pass-through entity elective tax credit. For any income tax credit that is prohibited due to this annual limitation, there is an additional carryover period that is equivalent to the number of taxable years that the credit was denied.

It is unclear as to whether the Governor of California will end the NOL deduction suspension and annual tax limitation sooner than January 1, 2027 as it depends on the state revenue meets required minimums.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)