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Guidance on the proper treatment of net operating losses (NOLs) incurred prior to 2015
Unused NOLs from tax years beginning prior to January 1, 2015, are not reported on the 2015 Form NYC-2 or NYC-2A, Schedule B, line 35, NOL deduction. These losses must be converted into a prior net operating loss conversion (PNOLC) subtraction pool to be applied against apportioned business income over a period of years. Taxpayers compute the pool and the amount to annually deduct on Form NYC-2.3, Prior Net Operating Loss Conversion (PNOLC) Subtraction, and report the deduction on Schedule B, line 33 on Form NYC-2 or NYC-2A.
If you have already filed your 2015 Form NYC-2 or NYC-2A and have incorrectly reported the deduction for your prior year NOLs, you must file an amended 2015 tax return and include Form NYC-2.3 to avoid a denial of your incorrectly reported deduction and the possible issuance of a notice of deficiency.
For more information, please see the 2015 Form NYC-2.3 and its instructions.