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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 9. TAXATION AND ASSESSMENTS |
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Chapter 9-1. INCOME AND FRANCHISE TAXES |
Section 9-165. COMBINED REPORTING: NET OPERATING LOSSES
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165.1Post-apportioned net operating loss carryforwards. A combined group member may carry forward its District apportioned net operating loss to the extent the carryforward and offset is consistent with the requirements and limitations of D.C. Official Code § 47-1803.03(a)(14). A District apportioned net operating loss carryforward is an attribute of the separate entity rather than of the combined group. A combined group member may not share all or a portion of its net operating loss carryforward with other members of the combined group or as an offset against the total income of the combined group. A District apportioned net operating loss carryforwards shall be allowed to offset only the District taxable income of the combined group member that created the net operating loss.
165.2Pre-combination net operating loss carryforwards. Each member of a combined group shall have its own net operating loss carryforward deduction (before apportionment) for loss years prior to 2000 and District apportioned net operating loss deduction (after apportionment) for loss years 2000 and thereafter where:
(a)Such member filed a separate District franchise tax return for tax years beginning before January 1, 2011; or
(b)Such member was included in a District consolidated return for tax years beginning before January 1, 2011, in which case, the net operating loss shall be determined on a separate entity basis by using the prorated amount of the consolidated net operating loss assigned to the District consolidated member if that member had a loss.
165.3Example: Applying an NOL in a Combined Report.
YEAR 1:
Corp. X
Corp. Y
Corp. Z
Combined
Unitary business income (loss) subject to apportionment
(400,000)
(10,000)
60,000
(350,000)
Apportionment percentages
5%
1%
3%
9%
Loss apportioned to D.C. (combined loss x apportionment %)
(17,500)
(3,500)
(10,500)
(31,500)
Nonbusiness items wholly attributable to D.C.
50,000
(2,500)
0
D.C. net income (loss)
32,500
(6,000)
(10,500)
NOL available to be carried forward (100% of loss)
0
(6,000)
(10,500)
YEAR 2:
Corp. X
Corp. Y
Corp. Z
Combined
Unitary business income (loss) subject to apportionment
50,000
80,000
(5,000)
125,000
Apportionment percentages
6%
4%
4%
14%
Income apportioned to D.C. (Combined income x apportionment %)
7,500
5,000
5,000
17,500
Non-business items wholly attributable to D.C.
2,500
(10,000)
0
D.C. net income (loss)
10,000
(5,000)
5,000
Application of NOL carryforward from Year 1
0
0
(5,000)
D.C. net income (loss)
10,000
(5,000)
0
NOL available to be carried forward (100% of loss)
0
(5,000)
0
Corp. X
Corp. Y
Corp. Z
Remaining NOL from Year 1
0
(6,000)
(5,500)
Loss in Year 2
0
(5,000)
0
NOL available to be carried forward
0
(11,000)
(5,500)