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Louisiana Limits Use of Net Operating Losses and Reduces Tax Deductions and Credits

Summary

In June 2015, Louisiana Governor Bobby Jindal (R) signed into law several bills that, together, modify the state’s corporation income tax net operating loss (“NOL”) provisions, and reduce certain deductions/subtractions from gross income, expense deductions and credits that a taxpayer subject to corporation income tax may claim. It also imposes stricter limitations on the availability of the individual income resident credit for taxes paid to other states. Lastly, the new law significantly changes certain aspects of the penalty provisions.

Details
Changes to Corporation Income Tax NOL Carryovers (Act 103/H.B. 218, June 19, 2015)

The new law modifies the use of NOL carryovers in the following ways:

  • Extends the carryforward period for net operating losses to twenty (20) years from fifteen (15) years;
  • Eliminates the three (3) year carryback period; and
  • Reduces the NOL utilization by 28% of the total NOL carryover amount available for use in the current year.

These changes to the NOL carry forward and carry back provisions apply to an NOL deduction claimed on an original return filed after June 30, 2015. The change does not apply to an amended return filed on or after July 1, 2015, relating to a NOL deduction properly claimed on an original return filed prior to July 1, 2015.

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This article originally appeared in BDO USA, LLP’s “BDO Knows: SALT” newsletter (August 2015). Copyright © 2015 BDO USA, LLP. All rights reserved. www.bdo.com.

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