@Mike9241 wrote:
the way I read that code section is because 2017 is filed more than 3 years after its due date including any valid extensions (if the taxpayer took out a valid extension for 2017, they have until 10/15/2021 to file it and would be able to file NOL c/b claims) the NOL can't be carried back. since it would seem no valid carryforward election was made there is no carryforward either. There is nothing that prevents the taxpayer from filing 2017 and then carrying back the NOL. the worse that can happen is the IRS rejects the c/b claims. However, say the IRS honors the C/B claims but then realizes that the law doesn't allow it. the taxpayer will get a bill.
Going from the 2017 version of publication 536, https://www.irs.gov/pub/irs-prior/p536--2017.pdf
it appears the taxpayer has lost the ability to waive the carry back provision. Therefore, the taxpayer must carry the loss back to 2015, then 2016, and can then carry any remaining loss forward to 2018 and so on.
In this case, the taxpayer has not filed 2015 or 2016 returns either. That means that no refund will be paid if the loss results in a refund, but the NOL can be used to offset tax due.
What I would do in this case is the following.
1. Prepare the 2015, 2016 and 2017 tax returns in chronological order, but don't file them.
2. Take the NOL for 2017 and carry it back to 2015 and adjust the 2015 return accordingly. If the NOL results in a refund, it won't be paid, but it is necessary to get the NOL on the IRS' books. If the taxpayer owes for 2015, the NOL will reduce the tax owed.
3. Then take the remaining NOL and adjust the 2016 return. Same rationale.
4. File the 2015, 2016 and 2017 returns by mail in separate envelopes.
5. If a 2018 return needs to be prepared, do this next, and you can continue to carry forward any remaining amount of the NOL, if anything is left.
