How can I maximize the tax benefit of my current year's large business loss ?

If, in the current year, your taxable income is a negative amount due to a large business loss, then it appears you have a net operating loss. Simply stated, a net operating loss is the excess of allowable deductions over your gross income computed under the law in effect for that loss year with the required adjustments. On Nov. 6, 2009, President Obama signed The Worker, Homeownership and Business Assistance Act of 2009, which included provisions that extend the net operating loss (NOL) carryback period to five years for taxpayers incurring losses in tax years ending after Dec. 31, 2007 and beginning before Jan. 1, 2010. Typically, taxpayers are allowed to carryback an NOL to the previous two years, or may elect to forgo the carryback of an NOL and just carry forward an NOL. You can choose not to carry back your NOL. If you make this choice, then you can use your NOL only in the 20-year carryforward period. (This choice means you also choose not to carry back any alternative tax NOL.) Speak to your local CPA about filing IRS Form 1045 or about filing an amended return 1040X to use the carryback NOL.