The IRS on May 27 posted to its Coronavirus Tax Relief and Economic Impact Payments website frequently asked questions (FAQs) providing guidance for C corporations planning to file Form 1120X, Amended U.S. Corporation Income Tax Return, or Form 1139, Corporation Application for Tentative Refund, on or after June 1, 2020, to carry back net operating losses (NOLs) to years in which the alternative minimum tax (AMT) applies.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for a carryback of any NOL arising in a tax year beginning after December 31, 2017, and before January 1, 2021, to each of the five tax years preceding the tax year in which the loss arises.
Analyzing this provision of the CARES Act has been a source of confusion for taxpayers since the AMT no longer is imposed on C corporations in tax years beginning after December 31, 2017 (post-2017 years), but does apply to such taxpayers in tax years beginning before January 1, 2018 (pre-2018 years).
Taxpayers that file Forms 1120X or Form 1139 before June 1 to carry back NOLs to years in which the AMT applies do not need to take action to comply with the guidance in the FAQs. However, taxpayers that file such Forms 1120X or 1139 on or after June 1 should follow the guidance set forth in the FAQs or risk the possibility that the processing of their refund claims may be delayed.
IRS guidance related to CARES Act policy and procedures continues to evolve and can have implications on NOL and AMT refund claims. Taxpayers that file Form 1120X or Form 1139 to carry back net NOLs to years in which the AMT applies before June 1 do not need to take action to comply with the guidance in the new FAQs. However, taxpayers that file such Forms 1120X or 1139 on or after June 1, 2020, should follow the guidance set forth in the FAQs.