NOL Carryback for Corporations

[Ktouchi]

Hi all,  I am looking for guidance on carrying back NOLs and the effect that has on contributions deducted in the years carried back to.  I have a client with a large NOL that I want to carryback but do I need to preserve enough income in each of those years to keep the charitable contributions deduction?  

Thanks - KTP

[jklcpa]

4 hours ago, Ktouchi said:

Hi all,  I am looking for guidance on carrying back NOLs and the effect that has on contributions deducted in the years carried back to.  I have a client with a large NOL that I want to carryback but do I need to preserve enough income in each of those years to keep the charitable contributions deduction?  

Thanks - KTP

 

No, the contribution deduction on the original return is unchanged by the NOL carryback because that deduction on line 10 is specifically calculated without regard to any NOL carryback to that year.  In other words, do not recalculate that deduction.

This is covered in the instructions to form 1120, but that is more difficult to find at the moment because that document is currently under revision. An older version of the instructions states this as it pertains to calculating the deduction on line 10 of the 1120:

Quote

Limitation on deduction.

The total amount claimed cannot be more than 10% of taxable income (line 30) computed without regard to the following.
• Any deduction for contributions.
• The special deductions on line 29b.
• The limitation under section 249 on the deduction for bond premium.
• Any net operating loss (NOL) carryback to the tax year under section 172.
• Any capital loss carryback to the tax year under section 1212(a)(1).
• Any domestic production activities deduction.