Tenn. Comp. R. & Regs. 1320-06-01-.21 - LOSS CARRYOVERS

(1) Net operating losses may be carried forward fifteen (15) years as net operating loss carryovers.

(2) The term "net operating loss" is defined by T.C.A. § 67-4-2006 of the excise tax law as the excess of allowable deductions over total income allocable to this state for the year of the loss. The loss is the same as that reported for federal income tax purposes before any operating loss adjustment and special deductions provided for in the Internal Revenue Code, and the loss is subject to the adjustments (additions and subtractions) provided for in § 67-4-2006. The amount of the loss that may be carried forward will be subject to the following adjustments:

(a) There shall be added to the net loss as determined for excise tax purposes all nonbusiness earnings, all interest, dividends excluded from net earnings pursuant to § 67-4-2006 and any other income excluded from net earnings pursuant to § 67-4-2006.

(b) With respect to taxpayers doing business both within and without Tennessee, adjustment shall be made to reflect the apportionment of the loss on the basis of business done within and without the State of Tennessee during the loss year. After making the adjustment as provided in subparagraph (a) hereof, the loss deductible for Tennessee excise tax purposes shall be that portion of the total loss apportioned to this state by the applicable statutory apportionment formula.

(c) The net loss so determined must be offset against the net earnings from business done within the state for the succeeding year, and if not completely offset by the net earnings from business done within the state for such year, the remainder of such net loss may be offset against the net earnings from business done within the state during the following year. In no case may any portion of such loss be carried forward and used to offset net earnings for any period beyond the applicable net loss carryover period as provided in paragraph (1) above, and in applying the loss carryovers where losses for more than one year are involved, the most remote year will be applied first.

Notes

Tenn. Comp. R. & Regs. 1320-06-01-.21

Original rule certified June 7, 1974. Amendment filed August 13, 1974; effective September 12, 1974. Repealed and refiled July 22, 1977; effective August 22, 1977. Amendment filed November 6, 1984; effective December 6, 1984. Amendment filed March 9, 1990; effective April 23, 1990. Amendments filed June 28, 2016; effective 9/26/2016.

Authority: T.C.A. §§ 67-1-102, 67-4-805, and 67-4-2006.