26 CAR § 130-125. Deductions — Charitable contributions — Arkansas Code § 26-51-419

(a) Arkansas has adopted I.R.C. § 170 as referenced in Arkansas Code § 26-51-419. (b)(1) I.R.C. § 170(d)(2)(B) does not allow unused contributions to increase NOL carry forward. (2) It merely decreases net taxable income by current year contributions first, then any accumulated contribution carryforwards up to a ten percent (10%) limitation. (3) This decreases the amount of NOL used and increases the NOL available for future years. Example: 1989 1990 1991 1992 1993 1994 1995 Income $107,000 $107,000 $107,000 $108,000 $110,000 $ 80,000 $150,000 Deductions Excluding Amortization & Charitable Deductions 105,000 105,000 105,000 105,000 105,000 105,000 105,000 Taxable Income Before Amortization, Charitable Deductions and NOL 2,000 2,000 2,000 3,000 5,000 (25,000) 45,000 Amortization of Organizational Expenditures (2,000) (2,000) (2,000) (2,000) (2,000) 0 0 Charitable Deductions Allowed 0 0 0 (100) (300) 0 (4,500) Taxable Income (Loss) before NOL 0 0 0 900 2,700 (25,000) 40,500 Net Operating Loss 0 0 0 0 0 0 (25,000) Taxable Income (Loss) 0 0 0 900 2,700 (25,000) 15,500 Taxable Income Before Amortization, Contributions and NOL 2,000 2,000 2,000 3,000 5,000 (25,000) 45,000 Organizational Expenses (2,000) (2,000) (2,000) (2,000) 0 0 0 Contribution Limitation Base 0 0 0 1,000 3,000 N/A 45,000 Limitation X .10 X .10 X .10 X .10 X .10 N/A X .10 Contributions Allowed 0 0 0 100 300 N/A 4,500 LIMITS ON CHARITABLE CONTRIBUTIONS Year Contributions Utilized Current Year Limit Current Year Balance Prior Years Contribution Utilized Year End Cumulative Carryforward expired 1989 1,000 0 1,000 0 1,000 0 1990 1,000 0 1,000 0 2,000 0 1991 1,000 0 1,000 0 3,000 0 1992 1,000 100 900 0 3,900 0 1993 1,000 300 700 0 4,600 0 1994 1,000 0 1,000 0 4,600 1,000* 1995 1,000 1,000 0 3,500 1,100 0 Southern Arkansas Timber, Inc. started business on January 1, 1989. Organization expenses amounted to ten thousand dollars ($10,000). Amortization of organization expenditures is deducted before the ten percent (10%) limit is allowed. Any unused charitable contributions cannot be added to NOLs when they expire. * Contribution carryover from 1989 expired at the end of 1994, as shown in chart. For charitable contributions for consolidated filers, refer to Arkansas Code § 26-51-805(f).