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NOL

November 01, 2016 • Larry Gurewitz • Log In to Post Comments

I have a 1040 with an NOL in 2015 that is carried back to 2013.  The 2013 has a negative adjusted gross income creating a NOL that wasn't carried back. .  Do I amend 2013, 2012 and 2011 returns.  If so, should the 2013 1040X explanation be, "2013 NOL carried back to 2011.   2015 NOL carried back to  2013"?  Also do I make an adjustment on the return to eliminate the Current Year NOL?  


Comments

Larry,

You first need to address the 2013 NOL that was not carried back.  Assuming the 2013 return that generated the loss did not elect to forego carrying back the NOL, then you need to amend 2011 and 2012, providing those years have positive income to utilize at least some of the 2013 loss.  Once you have done that and determined if any of the 2013 loss is remaining to be carried forward to 2014, then you can address the 2015 NOL.

You should not have to amend 2013 becuase that was a loss year, so you should not be able to carryback your 2015 loss for utilization in 2013.

At this point, as long as there is positive taxable income in 2014, then 2014 must be amended to either utilize some of the 2013 NOL that was not utilized in 2011 and 2012 and then to carryback the 2015 NOL if there is still positive taxable income.

You should not have to amend 2015 unless there are NOLs still available from 2013 that have not been properly tracked through 2015.

 

 

Michael, checking further there was no positive taxable  income for the client in 2011 and 2012.  How do you suggest I proceed given this situation?

Larry,

In that situation, you would simply amend 2014 to claim the entire 2013 NOL that carries forward.  If there is still positive taxable income in 2014 after the entire 2013 NOL is carried forward, then you would carry back as much of the 2015 NOL as you need to eliminate 2014's taxable income.  

On the other than, if there is enough 2013 NOL to eliminate the 2014 taxable income and still carry forward, then you would amend 2015 to reflect the additional 2013 NOL that carries forward. 

MIke last question.  So your saying, that I don't need to amend 2013 and this will still satisfy the requirement that I have carried back the 2015 NOL two years?

Larry,

That's correct.  If there is no taxable income in 2013, then 2015's NOL can't be used in 2013, so you simply move on to the next year that you have positive taxalbe income to use the 2015 NOL.  In your case, that's 2014.

 

 

Larry,

That's correct.  If there is no taxable income in 2013, then 2015's NOL can't be used in 2013, so you simply move on to the next year that you have positive taxalbe income to use the 2015 NOL.  In your case, that's 2014.

 

 

Mike, I want to thank you for all your help!

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