Discussion:NOL carryback or carryforward
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> NOL carryback or carryforward
| 1 February 2006 | |
| IF a C-corp has a NOL which is smaller than the prior year's income and there is no other NOL used to reduce the prior year's income, what would be the difference in carrying back the NOL and carrying it forward. If electing to carryback this year, does this block carryforward of future years' NOL's | |
| 1 February 2006 | |
| In addition to the above information, the C-corp is late filing it's prior year returns - 03 and 04. NOl is in 04 | |
| 1 February 2006 | |
| You must simply reduce the NOL c/f by the amount that would have been absorbed had the c/b claim been filed. | |
Msmith7305 (talk|edits) said: | 3 February 2006 |
| You do not elect to carryback. Carryback to (in general) the 2nd prior year with any unused NOL going then to the 1st prior year is mandatory UNLESS you elect to forego the carryback. The election will be found as a checkbox on the 1120. You just need to decide which gives you the bigger bang for the buck. | |
Actionbsns (talk|edits) said: | 25 March 2008 |
| My S corp client has a loss of $33K on her K-1 this year, she has basis, so the loss is allowed. Can we carry that back three years on her 1040? If so, can I take the loss on form 1045 which seems to be geared more to casualty losses, but I'm not positive of that, it would be the easiest method if I can do it. If I can carry it back three years, will she be able to apply more than $3,000 to the 2004 return? That's the year with the most benefit, 05 and 06 have nominal income because of real estate losses. If I can do this the way I'd like to be able to, she should get a refund of $4,000 or so. | |
| 26 March 2008 | |
| The total loss would be recognized in the current year which would reduce other "passive, non-passive" income then if any loss on 1040, then that would be carried back. You cannot just select how much you want to carry back, you carry back the amount of loss which reduces income for that year, then remaining loss is carried forward until fully used up. | |
| 26 March 2008 | |
| You need to calculate her individual NOL on Form 1045, Schedule A to determine if she has an NOL. The fact that the S corporation has a loss doesn't necessarily mean that she does; the S corp loss could be fully or partially absorbed by current income. If she has an NOL on Line 25 of that form, then it can be carried back 2 years (to 2005) and any amount not absorbed in those years can be carried forward 20 years.
The 3-year carryback is limited to casualty losses and losses of farmers and small businesses from Presidentially declared disasters. See IRC Sec. 172(b)(1)(A) and Sec. 172(b)(1)(F). | |
Actionbsns (talk|edits) said: | 26 March 2008 |
| Thanks for the feed back, that's exactly what I needed to know. Now I can finish her return and bill it out! | |
| 5 March 2009 | |
| 2009 law change now allows a "maximum" 5 year carryback. So my question is whether it is mandatory or if you still have the 2 year option. In my client's case there is no tax savings in year 4&5, so I would like a 3 year carryback best, but not sure how to interpet the explanations that I have seen thus far. Any additional insight into the new change on this is appreciated as I may wait until it is more clear. | |
| 5 March 2009 | |
| Sheldon, take a look at this recent discussion.
And a search tip - the newest discussions are at the bottom of the list. So if you know you're searching on something where current info is key, jump right to the end and read up, and/or include 2009 in your search terms. | |
| 3 June 2009 | |
| I have a new client who had a NOL in 2007, and wants to carryback to 2005. I've read thru IRS instruction pubs on NOLs and 1045, but am not clear on the process of how to file. From what I can tell, I have to amend the 2007 (1040X) and include a 1045 Schedule A. Then do I also need to file a 2005 1040x, and simply change the AGI, Taxable Income, etc on the 2005 1040x, and that's it. or is there more to it? thanks in Advance! | |
Seaside CPA (talk|edits) said: | 3 June 2009 |
| It does not sound like you need to amend 2007 return. Make sure there was not an election made to forgo the carryback period on the 2007 return though.
You can either file a 1045 or a 1040X (for 2005) to carry back the NOL. | |
Seaside CPA (talk|edits) said: | 3 June 2009 |
| Actually, for a 2007 NOL, you would now have to use the 1040X. 1045 would have had to been filed by 12-31-08. | |
| 3 June 2009 | |
| Seaside,
Thanks for the response. But I'm still not totally clear. Do you mean I need to file a 1040x for 2007? Or 2005? (Or both?). Just to clarify, there was no election to forgo the carryback on the 2007, and I do recognize the deadline 12/31/08 for the 1045 has passed. But without at least a 1045 Schedule A as part of a 1040x on the 2007 return, I don't see how the IRS knows that I'm doing a carryback ffrom the 2007 NOL year. So I reasoned that I have to file both an amended 2007 1040x as well as 2005 1040x. Thanks again. | |
Seaside CPA (talk|edits) said: | 3 June 2009 |
| I think you need to file a 1040x for 2005, but will have to attach a 1045 schedule A to show the NOL computation. You would not need to file a 1040X for 2007. Someone please correct me if I am wrong on this, I don't do many of these. | |
| 2 August 2009 | |
| I have a new client that brought in returns from 2002 and forward. I will just address 1040 here. His previous preparer was ill and eventually died, and the engagement was to complete 2007 and 2008. In reviewing his 2005 return I see a AGI for (277,525) which was triggered by a loss on a 1120S. I find no elections regarding carryback of the NOL. I find no 1045's or anything else to endicate the handling of the NOL relating to other years. The basic question I have is, if no election is made to forgo the carryback is everything gone? Is there a time limit on the election, and is there anything that I should be looking for. I have all of the transcripts back to 2002. I have been talking to him off and on over the last couple years. Good thing last guy is finally dead so I can at least try to help him. No all I need is to find someone who can help me help him. | |
| 2 August 2009 | |
| oh man, he should have come to you 4 months sooner. He's sol.
(unless he filed an extension for 05) | |
| 3 August 2009 | |
| The carryforward election was due by the due date of the 2005 return.
The carryback claim should have been filed no later than 3 years after the due date of the 2005 return. | |
| 4 August 2009 | |
| What happens if you inadvertently forgot to check the box to carry forward your net operating loss from 2008 and there was no tax in 2006 or 2007? Would it be better to amend the 2008 return and see if IRS will allow you to elect the carryforward or could you compute the 2006 and 2007 taxes after carryback (there would be no change) and carry the unused amount (all of it) forward to 2009?
Thanks for your response. Mark g. | |
| 4 August 2009 | |
| what 'box'? There is no such box on the 1040 or any of the schedules. | |
| 4 August 2009 | |
| In answer, you would have to compute the amount of the NOL that was used up in 06 and 07 before carrying forward. Just because a return shows no tax due doesn't mean that it wouln't use up some of the NOL> | |
| 4 August 2009 | |
| Whoops, I was thinking about the box on the interview forms, which generates the statement indicating that the taxpayer wishes to waive the carryback period. I appreciate your comment about using up any NOL in 2006 and 2007, which I figured would have to be done at this point.
Mark g. | |
| 4 August 2009 | |
| When all else fails read the instructions. Publication 536, page 8 allows a taxpayer to amend within 6 months of the due date and waive the carryback for an NOL.
Just thought you would like to know. Mark g. | |
| 5 August 2009 | |
| I have read the entire pub 536, and successfully did some NOL's last year FED and STATE, this year the is one paragraph that is totally confusing me, it's on page 9, SAYS:
"Exception. If you have an ESB loss arising in a tax year ending before February 17, 2009, and you are filing Form 1045 to elect a 3, 4, or 5-year carryback period, you must file Form 1045 by the later of the regular due date (discussed above) or April 17, 2009." What do they mean by that? as it applies to this scenario: The Tax Payer is on a 6 month automatic extension has not filed yet (So has not elected ESB option yet), assuming he files his 2008 NOL return on 10/15/2009, what is the last day he can file a ESB 1045? is it the 1 year rule, or does that paragraph above mean he has to file it by 10/15/2009 (is that what they mean by "regular due date" as discussed above" Discussed above where? | |
| 5 August 2009 | |
| Example – NOL for FYE 1/31/08. Form 1045 would ordinarily be due by 1/31/09 (regular due date). However, if the taxpayer is making an ESB carryback election, the due date for the Form 1045 is extended to 2/17/09. | |
| 5 August 2009 | |
| Caution: the carryback election must be made no later than the due date of the return for the year of the loss. | |
| 5 August 2009 | |
| I get now, thanks for the clarity, The regular due date of the "1045" is what the text was saying, that's what had me a bit stumped. | |
