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How to treat NOLCO in this Pandemic

Digesting RR 25-2020

 

 

Net Operating Loss per RR 25-2020


Net Operating Loss (Section 34 (d) (3) & RR 14-2001


As to definition
Net operating Loss refers to the excess of allowable deduction over gross Income of the business in a taxable year.
 
Net operating Loss refers to the excess of allowable deduction over gross Income of the business in a taxable year.
 
As to period of
carry over
Net operating loss for taxable years 2020 and 2021 shall be allowed to carry over the same as a deduction from its gross income for the next five (5) consecutive taxable years immediately following the year of such loss.
Any taxable year immediately preceding the current taxable year, which had not been previously offset as deduction from gross income shall be carried over as a deduction from gross income for the next three (3) consecutive taxable years immediately following the year of such loss.
 
As to presentation
of NOLCO
Shall be separately shown in the taxpayer’s income tax return (also shown in the reconciliation Section of the Ta Return)
Shall be separately shown in the taxpayer’s income tax return (also shown in the reconciliation Section of the Ta Return)
As to presentation of unused NOLCO
Shall be presented in the Notes to Financial Statements showing in detail the taxable year in which the net operating loss was sustained or incurred and any amount thereof claimed as NOLCO deduction within three (5) consecutive years immediately following the year of such loss.
 
The NOLCO for taxable years 2020 and 2021 shall be presented in the Notes to Financial statements separately from the NOLCO for other taxable years.
 
Shall be presented in the Notes to Financial Statements showing in detail the taxable year in which the net operating loss was sustained or incurred and any amount thereof claimed as NOLCO deduction within three (3) consecutive years immediately following the year of such loss.
 
As to failure to
comply presentation
Disqualify the taxpayer from claiming NOLCO
Disqualify the taxpayer from claiming NOLCO


 

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