Waive Carryback period under section 172(b)(3)

[j-caruso]

Couldn't find how to prepare the statement in TurboTax to waive the Carryback period under section 172(b)(3) of the Internal Revenue Code.

[j-caruso]

"Let's check your NOL" did not happen, but I have an NOL

I did file an extension.

[rjs · Accepted solution]

To prepare the statement to waive the carryback period for a net operating loss, using TurboTax Home & Business, do the following after you have entered your business income and expenses to produce the net operating loss.

• Click the Personal tab.
• Click Deductions & Credits.
• Click "I'll choose what I work on" or "Jump to a full list."
• On the screen "Your 2015 Deductions & Credits," scroll all the way down to the bottom and click the button that says "Done with Deductions."
• The next screen says "Let's Check Your Deductions and Credits." Click Continue.
• You may get some other screens at this point. Proceed through the interview until you get to the screen described in the next step.
  
• The next screen says "Let's Check Your NOL." It says that you may have a net operating loss, and asks "Do you have an NOL for 2015?" Select Yes and click Continue.
• The next screen asks "What would you like to do with your NOL?" and gives you three choices. Select "Carry the NOL forward to next year." Click Continue.
• The next screen tells you that the NOL election form will be included in your return. Click Continue. TurboTax prepares the necessary statement and includes it in your return. You do not have to enter any information for the statement.

Note that the statement to waive the carryback period must be included with a return that is filed on time. If you have an extension, you have until October 17, 2016 to make the choice for 2015. Since it's already after April 18, if you have not yet filed your return and did not file an extension, you are now filing late and can no longer waive the carryback period.

[j-caruso]

"Let's check your NOL" did not happen, but I have an NOL

PS I did file an extension.

[rjs]

I edited my answer above to point out that you might get various other screens before "Let's Check Your NOL." Did you continue through the interview until you got to the screen that says "Here Are Your 2015 Deductions & Credits"?

You didn't say anything about the nature of your NOL. If you didn't get the NOL screen in TurboTax, maybe you don't really have an NOL. A negative AGI by itself does not necessarily mean that you have an NOL. Only certain specific types of losses can create an NOL. The most common is a business loss on Schedule C. The other, less common causes of an NOL are a casualty or theft loss, very large employee business expenses, moving expenses, or a loss from rental property. If you don't have any of those, you don't have an NOL. Investment losses cannot produce an NOL.

If you have not already done so, download Publication 536, Form 1045, and the instructions for Form 1045 from the IRS web site. Read "How To Figure an NOL" in Pub. 536 and fill out Schedule A of Form 1045. Does Form 1045 Schedule A show that you have an NOL?

You had originally included an incident number in your question, though you have now deleted it. I assume that means that you have already been in contact with TurboTax support about this. If Form 1045 Schedule A indicates that you have an NOL, I am going to have to refer you back to TurboTax support to find out why TurboTax is not recognizing the NOL, and what you can do about it.

[j-caruso]

Thank you!

[marshoffice]

There is a point in the program where you are asked "Need any more forms?" Answer "yes"

You will be instructed to Press "Open Forms List"

Pick the general forms list for the federal return.

You will see a Summary of all the forms available. Click the magnifying glass icon in the box to the right of the IRS 172(b)(3) election and it will show you the form that will be printed as part of the federal return.

[aufderha3]

It looks like this changed for 2020.  The year many more of us need this.  After saying "yes, I had an NOL" you get an informational screen saying we can carry our loss forward to 2021 and mentioning the TCJA.  No option to include a form or elect to carryback.  No update for the CARES act rules.  Dissapointing.

[ErnieS0]

You can complete the NOL carryforward election in TurboTax CD\Desktop. When you reach the screen Carry NOL Forward, switch to Forms and you will see the election statement. Check the box.

[aufderha3]

That is correct.  But how can you choose to carryback?  It's allowed.

[Irene2805]

If you do not want to waive the carryback, just don't mark the box to waive it. You can carryback the NOL one of two ways:

• File an amended return for the previous year(s), and including the loss carried back; OR
• File Form 1045 - Application for Tentative Refund

For more information please see the following:

TurboTax Help Articles

• How to file a NOL carry back - TurboTax
• How to amend (change or correct) a return you already filed

IRS Reources

• Publication 536 (2019) - Net Operating Losses (NOLs) for Individuals, Estates, and Trusts  [The actual publication is currently being edited for TY2020.]
• Form 1045
• Instructions for Form 1045

@aufderha3

[aufderha3]

In Turbo Tax, how do you elect to carryback?  Isn't that step 1 of the process?

[gloriah5200]

Please see the following tax changes:

Most taxpayers no longer have the option to carryback a net operating loss (NOL) due to changes made in the Tax Cuts and Jobs Act.  Please refer to the links below.

For most taxpayers, NOLs arising in tax years ending after 2017 can only be carried forward.

The 2-year carryback rule in effect before 2018, generally, does not apply to NOLs arising in tax years ending after December 31, 2017.

Exceptions apply to certain farming losses and NOLs of insurance companies other than a life insurance company.

Also, for losses arising in taxable years beginning after Dec. 31, 2017, the net operating loss deduction is limited to 80% of taxable income (determined without regard to the deduction).

Nol Carrybacks disallowed for most & only go forward

The Tax Cuts and Jobs Act made changes to the tax law, including Net Operating Loss (NOL) rules.

Here’s what changed:

• For most taxpayers, NOLs arising after 2017 can only be carried forward.
• Certain farming businesses and insurance companies (other than life insurance) can still use a two-year carryback for certain losses.
• After December 31, 2017, the net operating loss deduction is limited to 80 percent of taxable income.

Rules for existing or pre-2018 NOLs remain the same.

Tax Cuts & Jobs Act changes to NOL rules

[aufderha3]

The rules changed last year with the CARES act.

https://www.taxpolicycenter.org/taxvox/who-benefits-cares-act-tax-cuts

Besides, all I'm looking for is the option to carryback.  It was there in 2019.  Currently Turbo Tax doesn't even tell you that it generates a forward foregoing your right to carryback if you select 'yes, I an NOL' for 2020.  They need to add back in the next screen to ask if you'd like to carry it back or forward and generate the appropriate election form to include with our tax return so we can e-file.