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2021 Tax Loss Nightmare: Return of the TCJA NOL Rules


The Tax Cuts and Jobs Act (TCJA) ugly net operating loss rules, which were laid dormant by the CARES Act, reappear in tax year 2021 to limit your tax loss benefits.

You’ll most often see an NOL when you have a net business loss for the tax year.

You are now stuck with the TCJA rules for NOLs starting in tax year 2021.

The TCJA rules are not in your favor:

  • You cannot carry back your NOL, but you can carry it forward an indefinite number of years, and
  • Your NOL can offset only up to 80 percent of your taxable income before your 20 percent Section 199A deduction.

The TCJA changes take away your ability to get immediate tax savings from your business losses.

Since you can’t carry back your NOL, you must be proactive to get immediate value from your loss. Consider these five strategies to create taxable income and lock in your loss immediately:

  1. Convert your traditional IRA to a Roth.
  2. Take a taxable traditional IRA distribution if you are not subject to penalties for early withdrawal.
  3. Offset depreciation recapture on the sale of vehicles and other equipment.
  4. Accelerate income into 2021.
  5. Fix depreciation errors that increase your taxable income.

If you are looking at a business loss this year and would like to see if you can take advantage of it now, please contact me.

If you have any questions about whether or not this applies to you please email Morey at

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