§ 311-21. Net Operating Loss (NOL).

(a)

Except as limited by subsections (b), (h) and (i) of this Section 311-21, any net operating loss incurred by a taxpayer in a taxable year beginning on or after January 1, 2017 shall be deducted from net profit that is reduced by exempt income to the extent necessary to reduce municipal taxable income to zero, with any remaining unused portion of the net operating loss carried forward to not more than five (5) consecutive taxable years following the taxable year in which the loss was incurred, but in no case for more years than necessary for the deduction to be fully utilized.

(b)

No portion of a net operating loss shall be carried back against net profits of any prior year, and no portion of a net operating loss may offset qualifying wages.

(c)

A pre-2017 net operating loss sustained shall be apportioned to the Municipality in the same manner as provided in Section 311-17 of this chapter for apportioning net profits to the Municipality. A net operating loss sustained in any taxable year beginning prior to January 1, 2017 that is apportioned to the Municipality may be applied against the net profit of succeeding tax years that is apportioned to the Municipality, until exhausted, but in no event for more than five (5) taxable years immediately following the year in which the loss occurred.

(d)

The distributive share of the net profit of each pass-through entity owned directly or indirectly by the taxpayer shall be calculated without regard to any net operating loss that is carried forward by that entity from a prior taxable year and applied to reduce the entity's net profit for the current year.

(e)

The tax commissioner shall provide by rules and regulations the manner in which such net operating loss carry forward shall be determined.

(f)

The net operating loss of a taxpayer that loses its legal identity, by any means such as merger or consolidation, shall not be allowed as a carry forward loss deduction to the surviving or new taxpayer.

(g)

If a taxpayer who is an individual is engaged in two (2) or more taxable business activities to be included in the same return, the net loss apportioned to the Municipality of one unincorporated business activity may offset the profits apportioned to the Municipality of another unincorporated taxable business for purposes of arriving at the overall net profits of the taxpayer that are subject to municipal income tax.

(h)

For taxable years beginning in 2018, 2019, 2020, 2021, or 2022, a taxpayer may not deduct more than fifty percent (50%) of the amount of the post-2017 deduction otherwise allowed by subsection (a) of this section.

(i)

Any pre-2017 net operating loss carry forward deduction must be utilized before a taxpayer may deduct any amount pursuant to subsection (a) of this Section 311-21.

(j)

Nothing in subsection (h) of this Section 311-21 precludes a taxpayer from carrying forward, for the period otherwise permitted under subsection (a) or subsection (c) of this Section 311-21, any amount of net operating loss that was not fully utilized.

(Ordained by Emer. Ord. No. 363-2015, § 2, eff. Jan. 1, 2016; a. Ord. No. 019-2018, § 1, eff. March 22, 2018)