Net operating loss - rental activity

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I have someone who is a real estate professional with respect to multible real estate holdings. An aggregation election had been made in a prior year.

Does anyone have any authority that a net operating loss sustained in 2008 or 2009 qualifies for the five year carryback period.

All I have found so far was a CCH article in "Practioners' Corner" a few months ago.

Many thanks

Steve

Reply to
steve
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Does this help?

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5329,00.html And the actual law is at
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SEC. 1211. 5-YEAR CARRYBACK OF OPERATING LOSSES OF SMALL BUSINESSES.

(a) In General- Subparagraph (H) of section 172(b)(1) is amended to read as follows:

`(H) CARRYBACK FOR 2008 NET OPERATING LOSSES OF SMALL BUSINESSES-

`(i) IN GENERAL- If an eligible small business elects the application of this subparagraph with respect to an applicable 2008 net operating loss--

`(I) subparagraph (A)(i) shall be applied by substituting any whole number elected by the taxpayer which is more than 2 and less than 6 for `2',

`(II) subparagraph (E)(ii) shall be applied by substituting the whole number which is one less than the whole number substituted under subclause (I) for `2', and

`(III) subparagraph (F) shall not apply.

`(ii) APPLICABLE 2008 NET OPERATING LOSS- For purposes of this subparagraph, the term `applicable 2008 net operating loss' means--

`(I) the taxpayer's net operating loss for any taxable year ending in 2008, or

`(II) if the taxpayer elects to have this subclause apply in lieu of subclause (I), the taxpayer's net operating loss for any taxable year beginning in 2008.

`(iii) ELECTION- Any election under this subparagraph shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extension of time) for filing the taxpayer's return for the taxable year of the net operating loss. Any such election, once made, shall be irrevocable. Any election under this subparagraph may be made only with respect to

1 taxable year.

`(iv) ELIGIBLE SMALL BUSINESS- For purposes of this subparagraph, the term `eligible small business' has the meaning given such term by subparagraph (F)(iii), except that in applying such subparagraph, section 448(c) shall be applied by substituting ` $15,000,000' for `$5,000,000' each place it appears.'.

(b) Conforming Amendment- Section 172 is amended by striking subsection (k) and by redesignating subsection (l) as subsection (k).

(c) Anti-Abuse Rules- The Secretary of Treasury or the Secretary's designee shall prescribe such rules as are necessary to prevent the abuse of the purposes of the amendments made by this section, including anti-stuffing rules, anti-churning rules (including rules relating to sale-leasebacks), and rules similar to the rules under section 1091 of the Internal Revenue Code of 1986 relating to losses from wash sales.

(d) Effective Date-

(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall apply to net operating losses arising in taxable years ending after December 31,

2007.

(2) TRANSITIONAL RULE- In the case of a net operating loss for a taxable year ending before the date of the enactment of this Act--

(A) any election made under section 172(b)(3) of the Internal Revenue Code of 1986 with respect to such loss may (notwithstanding such section) be revoked before the applicable date,

(B) any election made under section 172(b)(1)(H) of such Code with respect to such loss shall (notwithstanding such section) be treated as timely made if made before the applicable date, and

(C) any application under section 6411(a) of such Code with respect to such loss shall be treated as timely filed if filed before the applicable date.

For purposes of this paragraph, the term `applicable date' means the date which is 60 days after the date of the enactment of this Act.

Reply to
removeps-groups

I saw this same - or very similar - question somewhere else, and it seemed to come down to whether the "landlord" who in your case is a "real estate professional" for income tax purposes is a "proprietor" for the eligible small business rules in the NOL section, IRC section

172. It may have been a discussion on taxalmanac.com. Sorry I can't remember where.... LoTax
Reply to
LoTax

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