N.H. Code Admin. R. Rev 303.03

Current through Register No. 25, June 20, 2024

Section Rev 303.03 - Net Operating Loss Deduction

(a) Section 172 of the IRC for purposes of calculating the amount of any net operating loss deduction allowed under RSA 77-A:4II, XI, shall be followed, except:

(1) The carryback of loss required by IRC section 172 (b)(1) is not required for New Hampshire's purposes; and

(2) The amount is limited as provided in (c), (d), and (e), below.

(b) Net operating losses may be carried forward for 10 years following the loss year.

(c) Business organizations, subject to RSA 77-A:3, regarding the apportionment of income shall apportion any net operating loss carried forward using the formula provided in RSA 77-A:3 and Rev 304.

(d) Combined groups with more than one member subject to RSA 77-A shall:

(1) Calculate separate apportionment percentages for each business organization as follows:

a. The denominators used to calculate these percentages shall be the sales, payroll, and property denominators of the combined group for tax periods ending before December 31, 2022, and shall be the sales denominator of the combined group for tax periods ending on or after December 31, 2022; and

b. The numerators shall be the New Hampshire sales, payroll, and property of each respective business organization subject to RSA 77-A for tax periods ending before December 31, 2022, and shall be the sales numerators of each respective business organization subject to RSA 77-A for tax periods ending on or after December 31, 2022;

(2) Treat each business organization's apportioned share of the combined loss amount as a tax attribute which remains with that business organization;

(3) Total the apportioned loss carry forward amounts of each business organization in the combined group possessing such tax attributes; and

(4) Apply the result in (3) above as a deduction from the gross business profits of the combined group after apportionment under RSA 77-A:3 in the taxable period in which the deduction is to be used.

(e) The net operating loss carry forward calculated in either (a), (c), or (d) above, shall be limited as provided in RSA 77-A:4II, (a), (b), (c), (d), and (e), XI for each business organization.

(f) The resulting net operating loss shall be applied to the gross business profits after apportionment under RSA 77-A:3.

(g) Business organizations availing themselves of the net operating loss deduction shall:

(1) Maintain detailed records that confirm each step in the calculation of the:

a. Net operating loss;

b. Net operating loss carry forward; and

c. Net operating loss deduction amounts; and

(2) Retain the federal and state tax returns and the detailed records relating to a net operating loss for all taxable periods to which the net operating loss relates.

(h) During a department audit of a taxable period where a New Hampshire net operating loss deduction is taken on a return, within the statute of limitations, the business organization shall:

(1) Provide the department with all state and federal tax returns and detailed records with an impact on the proper calculation of the deduction taken by the business organization;

(2) Not receive a refund for a prior year overpayment nor be assessed additional tax liability for prior year deficiencies resulting from an inquiry that reveals adjustments to prior taxable period net operating loss calculations would be appropriate in the liability of the business organization in any of the prior taxable periods outside the statute of limitations;

(3) Deduct the appropriate New Hampshire net operating loss deduction in the audit years as if the extra-statutory year adjustments had been made; and

(4) Adjust the carry forward amount in the years subsequent to the audit year.

N.H. Code Admin. R. Rev 303.03

#2012, eff 5-5-82; amd by #2403, eff 6-27-83; ss by #2722, eff 5-23-84; ss by #4192, eff 12-23-86; ss by 5355, eff 3-16-92; ss by #5490, eff 10-19-92; ss and moved by #6853, eff 9-23-98 (from Rev 303.04 ); rpld and ss by #8709, eff <br> 8-25-06; amd by #10233, eff 11-21-12

Amended byVolume XXXV Number 06, Filed February 12, 2015 , Proposed by #10758, Effective 1/16/2015, Expires1/16/2025.

Amended by Volume XXXIX Number 46, November 14, 2019, Proposed by #12906, Effective 10/23/2019, Expires 10/23/2029.

Amended by Volume XLII Number 41, Filed October 13, 2022, Proposed by #13450, Effective 9/23/2022, Expires 9/24/2032.

Amended by Number 10, Filed March 9, 2023, Proposed by #13552, Effective 2/7/2023, Expires 2/7/2033.