At a Glance:
An event management company facing significant net operating loss, turned to Councilor for help. Councilor utilized the loss and a provision from the CARES Act to lower previous year taxable income and earn the agency a large refund.
Challenge:
An event management company faced a significant financial setback with a $131,000 net operating loss on their corporate tax return. With the prospect of no future refunds or tax deductions, the company reached out to Councilor to determine how to recoup their losses and maximize financial resources.
Solutions:
Following a meticulous examination of the agency’s past tax filings, Councilor recognized that under the 2020 CARES Act, companies could carry back net operating losses for up to five years. This enabled them to claim refunds for previously paid taxes. Prior to the CARES Act, Net Operating Losses could only be carried forward. The company was able to carry the $131,000 loss back five years to offset taxable income from previous years. The result was a reduced taxable income for the five years preceding the tax filing and an opportunity to request a refund based on the revised income during those years.
Outcome:
By revising the company’s tax returns, Councilor earned the company a $49,500 refund. These additional funds provided significant financial relief. It became a source of reinvestment and operational adjustments during the COVID-19 pandemic. Councilor’s solution provided the company with relief during a time of critical financial need.
Please contact Tom Bailey via our online contact form for more information.
Councilor is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.
