If you can clarify the situation for me with an example, I'll be able to answer you. Thanks, Bill
there was a NOL of $1 Million for the 9/30/09 year end and took back the NOL 2 years, initially, thinking that the 5 year carryback was too late. then re-discovered that the 5 year carryback was not too late. so we've decided to amend the original carryback. but the question is, do we take the original NOL of $1 million to the 5th preceding year or do we take the balance of $800K left over after the original carryback?
i dont think you understand my question. i had $1million of nol that i took back 2 years and now i want to amend the original carryback. after the initial carryback, i was left with about $800K of nol left over to carryforward. but again, i want to amend the carryback and take the nol to the 5th preceding year, 4th, 3rd, etc. now, do i take the $800k to the
5th year or the $1million to the 5th year?
I apologize that my original answer wasn't very clear. You will need to take the original NOL amount of $1 million back to the earliest year for two reasons. The first is, if you qualify for the 5-year carryback, you are required to apply the NOL to this year first. After this is done, you need to apply the remaining NOL to the very next year, then the year after this, then the year after this. If you do not apply the NOLs properly in this manner, you will not know how much NOL is available when you amend the carryback for 2 years ago.
For example, let's say that 5 years ago you had income of $120K, 4 years ago $60K and 3 years ago $80K. The NOL application should look like:
NOL available is $1 million
5th year back $880K
4th year back $820K
3rd year back $740K
2nd year back $540K
Now the NOL is being properly applied and you have the accurate amount to amend the prior filing. Thanks, Bill