What is the carryback and carryforward period for Net Operating Losses (NOL) for corporations?

The carryback and carryforward periods for Net Operating Losses (NOL) for corporations have specific time frames set by tax law. Under the Tax Cuts and Jobs Act (TCJA), most corporations are allowed to carry an NOL forward to offset future taxable income for a period of up to 20 years. However, they cannot carry it back to offset income from prior years, except in certain circumstances.

The traditional understanding prior to the TCJA involved a two-year carryback and a 20-year carryforward period for corporate NOLs. Given the changes implemented by the TCJA, which eliminated the carryback feature for most taxpayers (corporate NOLs), the focus shifted primarily to the carryforward provision.

Understanding these timeframes is crucial for corporations as they strategize their tax positions and plan for future profitability. The carryforward capability allows businesses to take advantage of losses in years when they may have taxable income, effectively providing tax relief and aiding in cash flow management.

Hence, the correct response highlights that corporations have the ability to carry an NOL forward for up to 20 years.