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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I had an NOL situation with my personal finance due to a bad

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I had an NOL situation with my personal finance due to a bad investment in rental house. My CPA prepared that return for 2011 tax year and I filed in 2012. I wanted to carry forward the losses as that reduces my AGI and allows me to get financial aid for my kids who are in college. My CPA forgot to request NOL carry back waiver which should have been done before Dec 31 2012. My question - is there any way I can still carry forward NOL? The rental house I had was not on a farm land. Farm lands have an exception and can file till April 15 2012. My stand to lose a lot of money financially as my kids will be ineligible for financial aid in college. If I file NOL carry forward - what are chances of being audited? Any advise will be appreciated.


Hi and welcome to Just Answer!
If you miss the deadline for a waiver - you are required to carry back - and only the unused part of the NOL may be carried forward. If you do not file this statement on time, you cannot waive the carry back period.
If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the Other income line of Form 1040. You must attach a statement that shows all the important facts about the NOL. Your statement should include a computation showing how you figured the NOL deduction.
If you simply do not carry NOL back and will carry forward without waiver - chances that the IRS will disallow such treatment are very high. That doesn't mean - you will be audited - but most likely you will receive a letter with proposed correction to your tax return - and will be given 30 day to reply if you disagree.
Sorry if you expected differently.

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Customer: replied 3 years ago.

Hi Lev: I checked with my CPA and he advised me that "most probably" he had included the NOL carry forward letter in the 1040 package he gave me to mail. Due to some paper confusions - he may have forgotten to provide that in copy created for me. He has the letter in his electronic copy. I filed paper return last year. His advise is to go ahead and file with NOL carry forward and if IRS questions - insist that it was in the package mailed and that IRS lost it. Should I go ahead and file with NOL carry forward? The difference for me is of course a lot. I can of course ask for a copy of my 1040 from 2011 from IRS. If indeed IRS does not have the NOL forward election letter - does the fact that my CPA insisted that it was mailed and it is in his electronic copy and IRS lost the paper - hold any ground?

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