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With a carryback, the NOL is first carried back to the two tax years preceding the loss year (in this case, Year 1).
If Year 3 was not carried back as of yet - you would use that first and amend it, if applicable. Then, you would amend Year 2. After, Year 1. As you know, you have only 3 years from the return year to amend. You would need to either send all of the returns at once (Year 1, 2, &3). They need to process them all together or start with Year 3, then Year 2, etc.
Hope this helps.
Remember - You would need to make an adjustment to the carryback year on the 1120X. Add the amount of the NOL carryback to the total deductions line so the taxable income is refigured. Then complete the 1120X based on the difference in tax for the carryback year. You also as you mentioned need to send in a copy of the original returns for both carryback year and the NOL year, but be sure to write "Copy Only--Do Not Process" at the top of each form or schedule.
Let me know if you have any questions. Thank you.
Hi. This is the ruling for NOL Carrybacks:
You have at least three years from the date you filed the return that generated the NOL to file a claim for credit or refund to carry the NOL back to the two preceding tax years.
So, you can carry it back to Year -0-.
You can also waive the carryback and carry it forward instead.
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