Charity & NOLs

[Snaggletooth]

Bleedingheart, Inc. is a (usually) profitable C-corp whose owner is an erstwhile philanthropist. For several years running, charity contributions have exceeded the 10% ceiling.

In most recent year, Bleedingheart has a loss and an NOL back to 2006. I believe we can elect to carryback 4-5 years for years beginning before Jan 1, 2010.

Does the "excess" charity carryforward have to be recalculated for 2006 and all years which might be affected, or can the NOL be applied without regard to the threshold??

[Bees Knees]

The form 1120 instructions for charitable contributions say the following:

Limitation on deduction. The total
amount claimed cannot be more than
10% of taxable income (line 30)
computed without regard to the following.
• Any deduction for contributions.
• The special deductions on line 29b.
• The deduction allowed under section
249.
• The domestic production activities
deduction under section 199.
• Any net operating loss (NOL) carryback
to the tax year under section 172.
• Any capital loss carryback to the tax
year under section 1212(a)(1).

The instructions for carry forwards say:

Carryover. Charitable contributions over
the 10% limitation cannot be deducted for
the tax year but can be carried over to the
next 5 tax years.
Special rules apply if the corporation
has an NOL carryover to the tax year. In
figuring the charitable contributions
deduction for the current tax year, the
10% limit is applied using the taxable
income after taking into account any
deduction for the NOL.
To figure the amount of any remaining
NOL carryover to later years, taxable
income must be modified (see section
172(b)). To the extent that contributions
are used to reduce taxable income for this
purpose and increase an NOL carryover,
a contributions carryover is not allowed.
See section 170(d)(2)(B).