CARES Act Guidance to Taxpayers with Net Operating Losses

Published April 13, 2020

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On April 9, 2020 the IRS issued guidance providing tax relief under the Coronavirus Aid, Relief, and Economic Security (CARES) Act for taxpayers with net operating losses.

Revenue Procedure 2020-24 (link below) provides guidance to taxpayers with net operating losses that are carried back under the CARES Act by providing procedures for:

  • waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021,
  • disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and
  • waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

In Notice 2020-26 (link below), the IRS granted a six-month extension of time to file Form 1045 or Form 1139, as applicable, with respect to the carryback of a net operating loss that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019.  To carryback a net operating loss, individuals, trusts, and estates file Form 1045 and corporations file Form 1139.

Revenue Procedure 2020-24:

Notice 2020-26

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Nothing in this document should be construed as providing tax advice.  Please consult with your own professional tax advisor.  In addition, this document represents the information that we have up to the date the presentation was made and cannot be relied upon for additional updates beyond that date.

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