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I filed a timely 2014 tax return. The 2014 tax return had a…

I filed a timely...

I filed a timely 2014 tax return. The 2014 tax return had a Net Operating Loss in which the election was timely made to carry it forward.In early 2017 I amended my 2014 tax return due to a property foreclosure loss which increased my original 2014 NOL.I recently received an IRS letter saying the 2014 NOL carryforward election was filed late and cannot be carried forward (so it needs to be carried back 2 years).I have proof that the 2014 NOL carryforward election was filed on time but my question is: Does amending my 2014 return require a separate carryforward election for the increase in the original NOL? I would not think so as the original election states to carry forward the entire 2014 NOL? Can you please give me guidance as to what publication/IRS rules answer this question?

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Answered in 1 day by:
3/12/2018
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,137
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Internal Revenue Code §172(b)(3) is the section that allows you to waive the NOL carryback period. It clearly states that the election must be made on a timely filed return (with extensions) and once made, cannot be revoked.

So if you have proof that your return was timely filed, send a letter to the IRS, citing the IRC above, and provide them proof of the timely filing. They should change their position when they get proof of filing.

This is NOT an uncommon occurrence. I had a client that just received a letter from them that said they could not process his return because the did not have a form that showed a certain amount. They had the amount. If they did not get the form, how did they get the amount? Additionally, it was electronically filed. Without the form, their computers would have rejected the return. But they did not. Idiots! Simply computers spitting out notices without human intervention.

I hope this answers your question. If you have any more, please feel free to ask, and I will be happy to answer.

Thanks! Have a great week!

Roger

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Customer reply replied 4 months ago
Thanks Roger. So just to be clear, by filing an amended return which only increased the original NOL (Net Operating Loss), the IRS should NOT treat this as a separate NOL which would be subject to a separate carry forward election?

That is correct. It is the same tax year, the same NOL

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,137
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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