I’m wondering if before we all get up in arms about this, if someone could explain to me, how exactly this bailout worked. Ya know… the logistics.
If I understand things correctly, this is what has happened:
1) Home builders had profits in past years, and they paid income tax on those profits.
2) Because of market changes the homebuilders are now taking losses.
3) Prior to the change in the law if this happened you could revise your previous taxes going back up to two years and move some of your current losses back to the profitable years, thus reducing your previous taxes. The difference in taxes will then be refunded to you.
4) The law was changed to allow home builders (maybe others as well?) to move their losses back up to five years which allows them to recoup more previously paid taxes.
Is this more or less correct? I’m no accountant, so all this could be completely wrong. If so, can someone straighten me out? (My wife would really appreciate it, she’s been trying for years and can’t quite seem to get me straightened out. Though she swears I’m getting better!)
