(a) Notwithstanding Sections 17276, 17276.1, 17276.2, 17276.4, 17276.5, 17276.6, and 17276.7 of this code and Section 172 of the Internal Revenue Code, no net operating loss deduction shall be allowed for any taxable year beginning on or after January 1, 2008, and before January 1, 2012.
(b) For any net operating loss or carryover of a net operating loss for which a deduction is denied by subdivision (a), the carryover period under Section 172 of the Internal Revenue Code shall be extended as follows:
(1) By one year, for losses incurred in taxable years beginning on or after January 1, 2010, and before January 1, 2011.
(2) By two years, for losses incurred in taxable years beginning on or after January 1, 2009, and before January 1, 2010.
(3) By three years, for losses incurred in taxable years beginning on or after January 1, 2008, and before January 1, 2009.
(4) By four years, for losses incurred in taxable years beginning before January 1, 2008.
(c) Notwithstanding subdivision (a), a net operating loss deduction shall be allowed for carryback of a net operating loss attributable to a taxable year beginning on or after January 1, 2013.
(d) The provisions of this section do not apply to the following taxpayers:
(1) For a taxable year beginning on or after January 1, 2008, and before January 1, 2010, this section does not apply to a taxpayer with net business income of less than five hundred thousand dollars ($500,000) for the taxable year. For purposes of this paragraph, business income means:
(A) Income from a trade or business, whether conducted by the taxpayer or by a passthrough entity owned directly or indirectly by the taxpayer. For purposes of this paragraph, the term “passthrough entity” means a partnership or an “S” corporation.
(B) Income from rental activity.
(C) Income attributable to a farming business.
(2) For a taxable year beginning on or after January 1, 2010, and before January 1, 2012, this section does not apply to a taxpayer with modified adjusted gross income of less than three hundred thousand dollars ($300,000) for the taxable year. For purposes of this paragraph, “modified adjusted gross income” means the amount described in paragraph (2) of subdivision (h) of Section 17024.5, determined without regard to the deduction allowed under Section 172 of the Internal Revenue Code, relating to net operating loss deduction.
(Amended by Stats. 2015, Ch. 303, Sec. 472. (AB 731) Effective January 1, 2016.)
Last modified: October 25, 2018