NOL Carryforward

[alex152]

I have NOLs in 2018, 2019 and 2020. 5 year carryback was not used for those NOLs. No NOLs in 2021, 2022, 2023 and no NOL Deductions used. Can i use these NOLs for NOL deduction in 2024?

[Mike9241]

for 2018-2020, did you include in your return an affirmative election to carry forward the year's NOL?  just not carrying back the NOL is not sufficient. if you made the election the unused amounts should have been reported in the following years' returns to see if any were used. If you did, then the NOLs are available in 2024.   

[alex152]

Ok, so if election was made in any of those years, I can still amend 2021-2023 returns and claim the NOL Deduction and then claim the remaining NOLs on 2024? If election was not made, there is nothing can be done to use those NOLs?

[IsabellaG]

That's correct. The election to forgo the carryback period must have been made by attaching a statement to your return by the due date of the return, including extensions, and the election is irrevocable. If you failed to make the election then, you could have filed an amended return within 6 months of the due date of the return to make the election. Mike9241 explained how this would be handled had you made the election. 

[alex152]

Ok, but in case the election was not made for 2018-2020 years, can i still calculate carry back for 2 years (since 5 year was a temporary provision and already expired)?

Carryback won't be used since can't apply to those past years already, but it will help calculate carryforward. Then use carryforward to 2021 (amend tax return) and future years? 

For example, for 2018 calculate carryback that could have been used in 2016 and 2017, then apply carryforward to 2021.

For 2019, calculate carryback to 2017 only (2018 had NOLs) then apply carryforward to 2021, if can't use in 2021 carryforward to future years

For 2020 carryback is not even possible since 2 previous years had NOLs, therefore carryforward to 2021, if can't use in 2021, carryforward to future years.

[MarilynG1]

You could calculate your current NOL balance going into 2024 as you suggested, but you would need to have documentation for your calculations, in case the IRS questions it.  Each NOL would be calculated for carryback/forward separately.  IRS Publication 536 contains a Worksheet for Calculating NOL's that you could use to calculate each year separately. 

In 2020, the CARES Act temporarily – and retroactively – changed the NOL rules again.

The CARES Act allows firms to carry back losses in tax years beginning after December 31, 2017, and before January 1, 2021 (for calendar year firms, covering 2018, 2019, and 2020) for up to five years. NOLs carried back can also offset 100% of taxable income—an increase from the 80% offset under permanent law.

You could Amend your 2021, 2022 and 2023 return to include the NOL and get the amount 'on the books' with the IRS, going forward to 2024. 

@alex152