Can NOL year be amended due to next prior year NOL carryover and also the prior NOL year

[Al-K]

2015 is an NOL Year with large loss due RE Rental, and so is the next prior year 2014. Using two separate IRS form 1045 Sch A (to compute NOL amount) and Sch B for carryover amount (unused loss amount) for year 2015 and 2014, there are unused losses from both NOL years to be carried over, that is to carryover unused loss into 2014 (for 2015 carryover loss) and unused carryover loss into 2015 (for 2014 carryover loss). Since carryover must not skip any year, AS I UNDERSTAND. Is it correct to amend the NOL years themselves even though they should be skipped per IRS Pub. 536 example (shows one NOL year).

Thank you so much for your answer 4/6/17.

[LudwigVan_fan]

Is the following correct?
Also, are the RE rental losses allowed in full and not limited by passive activity rules?

2014 had an NOL originate in that year.  Did you carry it back to 2012 and then to 2013; or, make a timely election to forego the carryback?

2015 had an NOL originate in that year.  Did you carry it back to 2013, or, make a timely election to forego the carryback?

[Al-K]

Thank you for your answer.

Until now I had not been aware of NOL carryback or carryover or election to forgo carryback, so no election was ever made for any prior years ever, including the 2014 and 2015 per 172(b)(3).

I Just learned within 2 weeks what NOL is. All prior years tax returns were filed on time by April 15 of each year. Sales of rentals produced capital gains for last 3 years and sizeable activity losses from all rentals prior 10 years, which made AGI negative for last 5 years resulting in 0 Taxable Incomes  and 0 taxes, and with Schedule A of 1040 further caused line 41 of 1040 to go further negative.

Yes I was an active participant and limited by $25000 in RE activities ( I was not a RE Professional)

2014 is an NOL originating year, no election to forgo carryback was ever made. I am working now to amend carrybacks/carryovers at this writing and afterwards I will use those unused NOLs in 2016. A planning stage.

2015 is an originating NOL Year as well, no election was ever made. I am working now to amend carrybacks/carryovers at this writing and afterwards I will use those unused NOLs in 2016. A planning stage.

Thus all amendments either for 2012 & 2013 (skipping 2014 2015 being NOL Years) OR 2012, 2013, 2014 (carryforward 2015 unused NOL portion), 2015 (carryforward unused NOL portion)

My dilemma is should I skip amendments of 2014 and 2015 due to carryforwards mentioned above.

Thank you very sincerely,

[LudwigVan_fan · Accepted solution]

Yes, skip the actual amendments.

Compute the NOL carryover to 2016 and subsequent years (2017, et. seq.) as if prior years had been amended.

Keep copies of your NOL computations until the NOL is used up, and then add 3 years.  Thus, if the NOL from 2014 is used up completely in 2017, keep the computations until April 2021.  (statute of limitations is normally 3 years from the due date of a return, or date actually filed, whichever is later)

[Al-K]

Thank you sir graciously for a good answer. I request to clarify the following:

(1) Should I leave the NOL generating years of 2014 and 2015 alone. Meaning I will add up the prior two years (2012 and 2013 unused carryovers)  and hop over to apply into 2016 tax year.

(2) Am I out of luck to carryback to 2012 due to statute of limitations of 3 years for 1040x, instead only carryback to preceding single year of 2013. Thus 2013 carryback will add 2014 with 2015 carryback to be used into 2016 tax return.

However, from pub 536, I  interpreted NOL generating year (within 3 years from original filing date - 2014 filed on April 15, 2015 allowing April 15, 2017 to fall within 3 years) and further giving me  two prior years to carryback 2014 NOL to 2012.

These two extra prior years in addition to 3 years are also illustrated by (<a rel="nofollow" target="_blank" href="http://www.thetaxadviser.com/issues/2011/aug/clinic-story-06.html">http://www.thetaxadviser.com/issu... follow:

...... X files his 2011 Form 1040 on April 15, 2012. Since his claim for credit or refund is attributable to an NOL, X has until April 15, 2015, to file an amended return for 2009 under Sec. 6511(d)(2)(A).

I wonder if these two extra years are allowed. essentially resulting into 6 years rather than 3 years for 1040X amendment instructions as illustrated above.

Sincere Regards!

[LudwigVan_fan]

2)  You have until April 15, 2018, to file the NOL carryback from 2014 to 2012.  (2014 due in 2015 + 3 years=2018) and if you did not forego the carryback when you filed your 2014, you MUST carry it back.  Also, 2013 is open for NOL carryback both for  2014 (April 15, 2017) and 2015 (April 15 2018)

Please note that claims for refund (which an NOL is) MUST be filed within 3 years from the due date of the return.  NOT when the return is actually filed.  Thus, if 2014 was filed say in May of 2015, the claim for refund must still be filed by April 15, 2018.

I'm not sure if your 2013 had an NOL???  If it did, you would have until April 15, 2017 to carry it back to 2011.

1)  Yes, don't actually amend 2014 & 2015 as they are the originating years.  When computing the 2014 NOL, compute the carryback to 2012, then to 2013, then to 2015 (which really doesn't change 2015, but since there are two NOLs, you must keep track of the amount being carried forward from each year, as the 2014 NOL will be used up first and would expire first).

Compute the 2015 NOL, it should be carried back to 2013 (unless the 2014 NOL is not completely used up in 2012/2013) You would only amend 2013 once.  However, the worksheet computations should show what would happen if both 2014 & 2015 NOLs were carried back (basically 2015 probably won't change).  Don't amend 2014 or 2015, unless something else needs to changed in those years that would affect the amount of NOL to be carried back or forward.

Then for 2016, your worksheet schedules should show the amount of 2014 and the amount of 2015 NOLs carried into 2016.

However, the amount actually shown on the return is only one number of the NOL carryforward.

If you able, it is sometimes easier to create a spreadsheet in the form of the F1045, but then you can enter more years and do more things with the spreadsheet.  But, if you don't feel comfortable with that, stick with the F1045s.

[Al-K]

Thanks again for the answers. Your answers are  valuable to solve this complex issue and gave me good working insight, and I am sure this would help many more like me, so I once more thank you from the bottom of my heart.

No, there will be no refund from any prior years by carrying back the two NOLs so I can go as far as 2012 -- in addition, these allow me to carryforward the unused losses every year to eventually help my 2016 taxable burden since I, in ignorance, had  rolled over large IRA amount in 2016 against seeing a large negative number on 1040  line 41 of 2015 tax return, hoping that TT S/W would offset.

Also, great advise to create a spreadsheet to save lots of time and minimize manual mistakes this year and in the future years.

Sincere Regards!

[LudwigVan_fan]

Actually, if 2013 is an origination year of an NOL, that can be carried back to 2011....if done by April 15, 2017!

[Al-K]

I am now working on 2013 to carryback to 2011. It has been a costly mistake for me all these years due to my ignorance about NOLs. Very few professionals are aware to tackle this complex issue, as I looked for help for the last 2-3 weeks, but got conflicting wrong answers until you saw my question which rescued me to help minimize my 2016 tax burden in-spite AMT kicking in.

[LudwigVan_fan]

Thank you for your gracious comments!

If you are or have been subject to AMT in any of these years, you'll need to consider what the NOL is for AMT purposes.

It is NOT the same as the regular NOL

Click on the link for line 10, NOL for AMT

<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i6251/ch02.html">https://www.irs.gov/instructions/i6251/ch02.html</...>


<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i6251/ch02.html#d0e409">https://www.irs.gov/instructions/i6251/ch02...>

[Al-K]

Thanks, I will study from the links you provided for AMTNOL etc.     So far, after carryback or carryforwards amended dry runs, NO AMT has shown up on line 45 Form 1040 for any prior years. I only see AMT kicking in for 2016 dry run, I believe,  because of cashing IRA (mistake due to ignorance), pension, SS and capital gains (though lost money)  on RE sales. Best Wishes!

[Al-K]

I wonder if it is OK to ask you if you know of anyone or yourself who as a consultant for compensation could go over my numbers condensed on a single spreadsheet from 2012 through 2016 listed there. I have computed the amounts separately for each NOL year using 1045. And to point where  2014 NOL is used up from the spreadsheet.  And the prior years held amounts to use in 2016. I should clean the spreadsheet by tomorrow PST for review. I hope I am not doing this against any policy for this request.   Thanks.

[LudwigVan_fan]

Personally, I'm unable to review them.  I really don't know anyone that I could recommend.
As far as asking on this forum...I don't know....I'll ask.

[Al-K]

I understand, thanks!

[LudwigVan_fan]

I received a few replies.

First, they don't think it would be a good thing.  This is a public internet forum...and by revealing email address, and other things, you could compromise your identity and open up yourself for theft, fraud, etc.

I'm not sure about how this forum works in its entirety.  But most of the questions are answered by volunteers.  There is no way of knowing the qualifications and/or the accuracy of the answers some people might give.

For someone reviewing your NOL comps for compensation; that would put them into a paid preparer situation, and they would have to sign your claims and/or returns as a paid preparer.  For your safety, logistics, and the people volunteering on the forum, I don't think anyone would like to get into that situation.

Thus, for your own identity safety, I wouldn't release to this public forum any personal information about your identity.