California Seeks New Limits to Net Operating Loss Deductions

California would collect nearly $16 billion in additional revenue from corporations under a new plan limiting the use of net operating loss deductions that was folded into Gov. Gavin Newsom’s revised budget proposal.

The revised budget also includes a “clarification” that appears to respond to the state’s loss in litigation brought by Microsoft Corp. that resulted in the California Office of Tax Appeals finding the tech giant is owed a $94 million income tax refund tied to its treatment of repatriated earnings.

Newsom’s budget, initially presented in January, included a proposal to conform to the 2017 federal tax law by ...