Treatment of 2008 Federal Net Operating Losses Carried Back Based on the American Recovery and Reinvestment Act of 2009 [issued September 17, 2009] - READ FULL ARTICLE
Has Arizona conformed to the provisions of the American Recovery and Reinvestment Act of 2009 which allows eligible small businesses to carry back 2008 net operating losses up to five years?
No. The computation of an individual’s Arizona taxable income starts with the individual’s federal adjusted gross income computed under the internal revenue code. However, Arizona Revised Statutes (A.R.S.) § 43-105 provides the definition of “internal revenue code” that is to be used for any given taxable year.
Each year the Arizona legislature considers whether to amend A.R.S. § 43-105 to conform to changes made to the internal revenue code during the prior year. On April 6, 2009 the Governor signed Senate Bill 1185 which incorporated the federal changes made in 2008 into Arizona’s definition of “internal revenue code.” However, the adoption of federal changes made in 2009, including the American Recovery and Reinvestment Act of 2009, are not likely to be considered by the Arizona legislature until the spring of 2010. Therefore, Arizona does not currently have any authority to allow a carry back of net operating losses beyond the period that was allowed under the internal revenue code prior to the American Recovery and Reinvestment Act of 2009.