As we move through the economics of the pandemic and the resulting massive and complex stimulus, one rather innocuous-sounding provision may be a huge financial benefit to businesses, both small and large. In the CARES Act, the Net Operating Loss (NOL) provisions were changed, as well as the Excess Loss Limitation (ELL) Rules. Under the rules of the Tax Cuts and Jobs Act (TCJA), a business with a Net Operating Loss could only carry-forward losses to future profitable years, and only carry forward 80% at a time. With a disaster like COVID-19, companies could incur devastating losses in 2020. Under the old rules, they would not be able to fully offset those losses, and only on a carry-forward basis. The new rule lets businesses go back five years and offset prior income to receive a quick refund of past taxes, which they may have paid at higher rates. This amounts to an enormous, and hidden, stimulus for businesses.
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