Allowing businesses to use losses to offset income earned in prior years (Net Operation Loss or NOL) is a longstanding anti-recession policy with solid bipartisan support. It was adopted after the 9/11 terrorist attacks, after Hurricane Katrina, and again following the financial crisis (Great Recession of 2009-10). It is simply a way to give businesses suffering losses the ability to recognize those losses more quickly. Thus, if companies are being forced to sell assets this year to raise capital to keep the businesses running, the CARES Act helps by allowing these businesses to offset any capital gains they realize against their active business losses, reducing the tax hit at the end of the year. Using active business losses taxed at high rates to offset capital gains taxed at low rates is extremely inefficient and not something that would happen in normal times. But, as the S-Corporation Association, points out these are not normal times and businesses need the liquidity.

This benefit is limited to "trade or business" losses that have already passed through the passive, at-risk and other tests. Losses from investments in passive assets, like those made by many hedge funds, do not benefit. Moreover, any losses claimed this year will not be available in the future. The NOL and loss limitation relief are primarily timing benefits. Lower taxes in 2020 will equal higher taxes in 2021 and beyond. Anybody claiming not to know the bipartisan NOL provision was part of the relief package simply wasn't paying attention, or is playing fast-and-loose with the truth for political reasons.