Rules on NOL Carryforward Loosened Somewhat.(tax rules)(Brief Article)

Here's a reminder: Effective for losses arising in tax years beginning after Aug. 5, 1997, the carryback period generally is now two years, not three years, then forward 20 years. The principal exception for individuals is for casualty losses, which still may be carried back three years. For businesses, there are many more exceptions and rules. See the instructions for IRS Form 1045.

There is now a little slack in the rules concerning election to carry forward. The general rule is that the loss must be carried back, unless an election to carry forward is filed with a timely return. The new break is this: If the return was filed on time without the taxpayer having made that election, the election may still be made by attaching the election to an amended return filed within six months of the due date of the return (excluding extensions). Include the phrase "Filed pursuant to Sec. 301.9100-2" on the election statement. See the instructions to IRS Form 1045.

Amend Return to Claim Education Credits

An election to claim education credits may now be made on an amended return. The original proposed regulation required that the credit be claimed on a timely return (including extensions) for the year that the credit was claimed. However, the IRS has determined that for 1998 and later years, a taxpayer may elect to claim an education tax credit by attaching Form 8863 to an amended return that is filed in a timely manner (Notice 99-31, as discussed in the May 28, 1999 issue of RIA's Weekly Alert.)

News on Building Component Deductions

The IRS has issued guidance on fast depreciation deductions for nonstructural building components. "Component depreciation" fell by the wayside years ago, but recent IRS guidance allows for separating the Sec. 1245 property and depreciating it accordingly. Sec. 1245 property includes branch electrical wiring and special electrical equipment relating to special functions (even if it is permanently installed), as well ...