Industry Beat
Industry Beat January 2010 Construction Equipment Distribution www.cedmag.com 19 Expanded Loss Carryback Option May Provide Dealers with Cash AED's Start Us Up USA! campaign scores victories with NOL law and extension of the home purchase tax credit, both important dimensions to CE industry recovery agenda. The relief provided under the Worker, Homeownership, and Business Assistance Act of 2009 differs from similar relief issued earlier this year in that the previous relief was limited to small businesses (less than $15 million in revenue). Under the new law, almost all businesses may elect to carry back a net operating loss (NOL) for a period of three, four or five years, to offset taxable income in those preceding years. Tax refunds could provide an important influx of cash to help dealers as they weather the current reces-sion, said Steven G. Pierson, CPA and shareholder in Seldon Fox Ltd. Record numbers of businesses are expected to be eligible for the refunds. Pierson participated in an AED webinar to address dealer questions on the carryback law on Nov. 13, 2009. According to the law, the IRS has 90 days in which to examine the application, discover any errors or omissions and to determine the amount of the decrease in tax. The decrease in tax is applied against unpaid tax first, with any remainder credited or refunded within 90 days. Some Stipulations A business can elect up to a five-year carry back of net operating losses incurred in either 2008 or 2009 (but not both). Small companies (with less than $15 million in revenues) that already availed themselves of the five-year carry back for 2008 may also take advantage of this carry back potential for 2009. The current relief is applicable to any taxpayer with business losses, except those that received payments under the Troubled Asset Relief Program. An NOL or loss from operations carried back five years may offset no more than 50 percent of a taxpayer's taxable income in that fifth preceding year. This limitation does not apply to the fourth or third preceding year. The procedure applies to taxpayers that incurred an NOL or a loss from operations for a taxable year ending after Dec. 31, 2007, and beginning before Jan. 1, 2010. Common Questions Answered According to Pierson, one of the most common questions people ask is if they can change a prior decision to waive a carryback, and now carry back the loss. The answer is `yes,' said Pierson. Under the old law this decision was irrevocable, but under the new law, you can do it for this purpose. As with all tax questions, it's best to consult with your accountant to determine if this is a good option for your business. For complete details of the new law visit www.irs.gov/pub/irs-drop/rp-09-52.pdf. The NOL carryback provision is an important component of the construction equipment industry recovery agenda and should help jump-start the equipment industry. LiuGong Appoints Anderson Machinery Company as an Authorized Dealer in the State of Texas LiuGong Construction Machinery has announced the continued expansion of its dealer network with the appointment of Anderson Machinery Company in the state of Texas. Anderson Machinery will represent LiuGong from their branch offices in Corpus Christi, Austin, Victoria and Pharr, Texas. LiuGong Construction Machinery's North American headquarters are based near Houston; visit . www.liugongna.com Steve Pierson, CPA