The Internal Revenue Service issued guidance on excess business loss limitations and net operating losses following law changes in the Tax Cuts and Jobs Act.
The act modified existing tax law on excess business losses by limiting losses from all types of business for noncorporate taxpayers.
An excess business loss is the amount by which the total deductions from all trades or businesses exceed a taxpayer’s total gross income and gains from those trades or businesses, plus $250,000, or $500,000 for a joint return.
Excess business losses that are disallowed are treated as a net operating loss carryover to the following taxable year.
Most taxpayers no longer have the option to carry back a net operating loss. For most taxpayers, NOLs arising in tax years ending after 2017 can only be carried forward. Exceptions apply to certain farming losses and NOLs of insurance companies other than a life insurance company.
For more, go to IRS.gov