Question 1

What are the NOL carryforward rules under TCJA?

Accepted Answer

Under the Tax Cuts and Jobs Act (TCJA), NOLs arising after 2017 have unlimited carryforward (no 20-year expiration), but can only offset 80% of taxable income. Pre-2018 NOLs retain their 20-year carryforward and can offset 100% of taxable income.

Question 2

What was the CARES Act impact on NOLs?

Accepted Answer

The CARES Act temporarily allowed 5-year carryback for NOLs arising in 2018-2020, and temporarily removed the 80% limitation, allowing 100% offset of taxable income. These provisions expired, and post-2020 NOLs return to the TCJA rules.

Question 3

How does the 80% limitation work?

Accepted Answer

Post-2017 NOLs can only offset 80% of taxable income in any given year. For example, if you have $100,000 taxable income and a $100,000 NOL, you can only use $80,000 of the NOL, leaving $20,000 taxable income. The remaining NOL carries forward.

Question 4

Do corporations and individuals have different NOL rules?

Accepted Answer

C corporations are generally not subject to the excess business loss limitation that applies to individuals. However, both are subject to the 80% limitation on post-2017 NOLs. Individuals may also face basis, at-risk, and passive activity limitations.

Type	Carryforward	Offset Limit	Carryback	Expires
Pre-2018 NOL	20 years	100%	None (generally)	Yes
Post-2017 NOL	Unlimited	80%	None	No

Year	Taxable Income	Offset Limit	NOL Used	After NOL	Remaining NOL
2021	$ 50000	$ 40000	$ 40000	$ 10000	$ 60000
2022	$ 80000	$ 64000	$ 60000	$ 20000	$ 0

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