Although California generally follows federal law in computing net operating losses (NOLs), there are many modifications of the federal law for both corporation franchise (income), and personal income taxpayers. In addition, California has special NOL rules for businesses that operate in specified areas and for specific types of businesses and taxpayers.

California Tax: Net Operating Losses and Net Operating Loss Carryovers provides an explanation of the California NOL rules, the many differences between the California and federal NOLs, California’s special rules for specified types of businesses, as well as an overview of the impact the 2003 suspension will have on tax return preparation and tax planning.