United States

California FTB issues NOL carryback payment extension guidance

TAX ALERT  | 

On Dec. 1, 2015, the California Franchise Tax Board issued a news release providing additional information regarding the state’s adoption of the federal provisions that allow corporations expecting a net operating loss (NOL) carryback to extend the time for payment of taxes for the preceding taxable year.

A corporation, S corporation, water’s edge filer, or exempt organization that expects to generate a NOL in tax year 2016 may file FTB Form 3593, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback, after the start of tax year 2016 but before the due date for the corporation’s 2015 income tax return in order to extend the time for payment of any remaining tax due for tax year 2015.  The payment amount that can be postponed cannot exceed the expected overpayment from the carryback of the projected NOL.

This payment extension can provide a significant cash flow benefit for taxpayers that have not fully paid the estimated amount of tax due for the current tax year before year end and project that they will generate a NOL in the subsequent tax year.  Taxpayers in this situation should review FTB Form 3593, and consider whether to file for a payment extension.

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