Category: Corporations
Subject: Personal Service Corporation
Title: NOL Carryback
IRC Sections: 172; 280H(e); 444
Filename: 1073.html
Date Produced: 8/97 Copyright 1998, The Tax Resource Group. All rights reserved. Telephone
800-578-3498. Internet: www.taxresourcegroup.com Background
Taxpayer is a calendar year personal service corporation (PSC). Taxpayer
has a net operating loss for a particular year. Issue
Can the loss be carried back against prior years? In essence, do the normal
NOL rules apply to personal service corporations? Answer
The NOL can be carried back to the three prior tax years under the normal
NOL rules. Note the assumption that the taxpayer files on a calendar year
basis. This conclusion would be different if the taxpayer had a taxable
year other than the calendar year. Discussion
IRC Section 172, the provision which allows and controls the net operating
loss deduction, does not prescribe any special rules applicable solely to
personal service corporations. My research indicates that there is only
one special rule affecting the net operating loss carrybacks and carryovers
of personal service corporations. That rule is Section 280H(e) which denies
any NOL carryback to or from a tax year in which a personal service corporation
has made an election under Section 444 to have a tax year other than the
required calendar year. | 
