Pennsylvania Net Operating Loss Cap After Nextel

Joseph Bright, a member of Cozen O’Connor’s Tax Practice Group, and Heidi Schwartz, an associate in the Tax Practice Group, discuss the impact of the Nextel case in Bloomberg BNA. In Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth, Joe and Heidi explain, “Nextel argued that Pennsylvania's NLC statute was unconstitutional as applied to Nextel because it classified taxpayers based on the amount of their Pennsylvania net income and taxed the classes differently.” On appeal, the court agreed with Nextel. Joe and Heidi note that if the Supreme Court upholds Nextel, a facial challenge could subsequently be raised and, “The next question is whether the NLC deduction provision is unconstitutional in its entirety, or if just the flat dollar cap or percentage deduction are unconstitutional.” Joe and Heidi add that Nextel is a “helpful precedent for taxpayers whose taxable income and NLCs exceed the cap.”

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Joseph C. Bright


(215) 665-2053

Heidi R. Schwartz


(215) 665-2799

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