Brief ⁽¹⁾

HB 2588 would permit net operating losses to be carried back five years under state income tax law. The bill would place a cap of $1,500 on any refund resulting from net operating loss carryback in a given year. Under current law net operating losses, including farm losses, may be carried forward ten years but not carried back.

Background

HB 2588 was introduced by the Special Committee on Assessment and Taxation following a study of the topic of farm net operating loss carryback and farm income averaging during the 1999 Interim. As introduced, the bill would have made Kansas income tax law conform to the federal law regarding farm net income loss carryback. As such, the original bill provided a five- year farm net operating loss carryback, but did not contain a cap on the refund amount per year.

The House Committee held hearings on the bill and later amended it to include the yearly refund cap of $1,500.

The House Committee of the Whole amended the bill to allow net operating loss carryback for all businesses.

According to the Department of Revenue, the fiscal impact of the bill as amended would be a revenue reduction of $5,900,000, of which $400,000 is attributable to the farm net operating loss carryback and $5,500,000 is attributable to other business net operating loss carryback.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html