In 2019 and prior years, farmers that generated a loss had two options: 1) carryback back the net operating losses 2 years, or 2) they could waive the carryback period and carry the farm losses forward.
The CARES Act (passed at the end of March 2020) made additional changes for farm losses and provided that losses arising in tax years beginning after 12/31/17 and before 1/1/21 can be carried back 5 years. While this is a good change it caused a problem for those farmers who already made elections under the 2-year rule.
The COVID Relief Bill (signed into law December 27, 2020) allows farmers who elected to carry back a loss 2 years prior to the CARES Act to retain the 2-year carryback. The new law also allowed a farmer who had previously elected to waive the NOL carry back to now revoke this election and carry back qualified losses.
Please reach out to your Wegner CPAs tax specialist if you have questions on how to maximize the utilization of NOL carrybacks.
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