Video: Corporations: Net Operating Losses and Capital Loss Limitations Overview

In this lesson, Nick Palazzolo, CPA, breaks down the intricacies of Net Operating Loss (NOL) and Capital Loss Limitations for corporations, drawing parallels and distinctions from similar concepts applicable to individuals. Through a detailed analysis, he coaches on how to calculate the current year's corporate NOL and capital losses, demonstrating the preparation of a tailored NOL carryforward schedule. With particular focus on C Corporations, Nick elaborates on the critical impacts that charitable contributions and dividends received deductions have on NOL and the consequent tax implications. Moreover, he examines strategic tax planning considerations around NOLs, including when to carry losses back or forward in light of fluctuating tax rates, ensuring to fortify the understanding with practical, examination-focused insights.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Welcome to our lesson on Net Operating Loss and Capital Loss Limitations. If you're thinking this sounds similar to a lesson that we've seen already, more so dealing with the individuals when it comes to this, you're completely right. Just like in our prior lesson, we had the computation of tax liability and credits for corporations, we have that for individuals. So too do we have a lesson specifically dedicated to these concepts, but for corporations. You're gonna hear carry a loss back X amount of years, carry it forward X amount of years. That's what we're dealing with here. Let's dive into our learning objectives and see what we have. First off, we're gonna wanna calculate the current year net operating or capital loss of a corporation. Well, you don't know what you can carry back or forward if you don't know what the loss is, so that makes sense. We also want to prepare a net operating or capital loss carry forward schedule for a C Corp. That is hinting very much at a SIM, carrying loss back two years because it makes sense to. We've got a whole schedule of years one to 10. Where are you gonna apply it? What does it make sense to apply it to? Does it make sense to apply, let's say we're in year three to year two and then carry forward for a various amount of years? That's something we're gonna see, we're gonna practice. That's very much a heavy SIM area there. We also wanna analyze the impact of charitable contribution and or dividends received deduction on the net operating loss and calculation of tax for a C Corp here. This is gonna be very important as well. The charitable contributions and dividends received deduction, they always kind of

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