Tax Law Changes May Limit Benefits of New Loss Carryback Perk

Multinational companies should think carefully about how carrying back losses to more profitable years will impact their international tax strategy.

The stimulus law (Public Law 116-136) restored the ability for companies to use net operating losses as retroactive tax offsets, an appealing option as the Covid-19 pandemic decimates the economy. But companies that already opted into foreign income deductions or elected to pay a new transition tax in installments could see more limited benefit, and they may end up with a higher U.S. tax bill.

“My clients are getting excited that they can carry back and get ...