The net operating loss means that all of your income for the year would become negative. You aren't allowed to do that with this carryback. Causing all of your capital gains to become negative does not necessarily result in a net operating loss. But if you only had $2000 in other income and then this loss caused a negative overall income that would be a net operating loss.
It depends on the state. You will have to do some research on your state. But probably you will have to amend the state return as well.
No. You use the maximum allowable in each year before you are able to carryback any more into another year.
Yes. You should file the current year return to generate the loss first and make the election. Then you will file any prior years' returns to use the loss. If those returns are rejected that means the election was rejected (I don't know why it would be). In that case the loss would be carried forward instead of back. You wouldn't do anything except carry the loss forward.
@lucyx513
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