Governor Corzine and the New Jersey Legislature have recently enacted several laws aimed at easing corporate tax burdens. One of the most widely heralded of such laws extends the net operating loss carryforward (“NOL”).
NOL allows taxpayers to offset the profits that they may earn in future years with the losses that they are likely incurring now. The new law extends the NOL deduction from its current seven tax periods to twenty tax periods. Accordingly, New Jersey corporations may benefit from their current economic woes by spreading out their NOL deductions over twenty tax periods to offset their anticipated profits during that time.
The change not only provides welcome relief for existing New Jersey corporations, but it should also serve to attract more corporations to the state now that its NOL regulations are on par with those of Pennsylvania, New York and Delaware.