NOL Carryback-Refund

[Bird Legs]

Am preparing a 2003 tax return. Hughe NOL. Cannot forego the NOL carryback provision
because of the late filing of the 2003.
Question: This NOL will have to be carried back to the 2000 return. Will create a refund.
However, this is outside the 3 year limitation for refunds to be issued. Does this mean
that the client will not only lose the refund but also the NOL? Or am I not reading the rules properly?
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P.S. Excuse this post. Just realized that a NOL in 2003 is carried back only 2 years,
not 3. However, even carrying back the loss 2 yrs., 2001 return, the refund would still be outside the 3yrs. limitation. So the question still stands about losing the refund and the NOL carried back.

[Lion]

NOL Carryback

Hi, Legs,

No. You don't lose a refund by carrying back an NOL two or five or three or any other number of years. What determines whether or not a carryback year is closed for NOL purposes only, is the year in which the NOL was GENERATED. So, if your NOL started in 2003, then you can carry it back per the rules in effect in 2003 for NOLs and have those years "open" for NOL carryback purposes only, as long as 2003 is still open. You cannot, however, change something else you discovered in an otherwise closed year -- forgot to include second mortgage interest -- if that year would otherwise be closed for refunds, just because you can carryback an NOL to that year. Is that as clear as mud? Most states have similar NOL rules to federal. CT, for instance, will accept CT-1040Xs for all federal NOL carryback years, even after the years are closed for refunds from other circumstances. So, carryback and get those refunds.

[Bird Legs]

Lion, you are all heart.

Appreciate your response. I finally figured it out just as you outlined in your response.
My old brain is not working properly at times.
Again, thank you very much.
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[Lion]

Carrybacks

Don't worry. My old brain has been there, done that. That's how I learned your answer! I had a 2002 NOL to carryback for a timely filed return, so filled out the 1045 for Federal. Then, I panicked when starting to prepare CT-1040Xs since it went back five years. I called CT, and they explained it to me. Just cautioned me not to make any changes other than the NOL for the years that would otherwise be closed.

[Bird Legs]

lion hearted

Both you and I will be promoted to regular member from junior member fairly soon.
Keep up the good work.
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[S T]

Member Status

Yes Bird, you and Lion are on your way, 30 is the number for Member status!

Both of your posts on the NOL were great. Sometimes we can not decipher what it is that we are trying to accomplish. It is just all of those "darned complicated" rules.

Sandy

[Lion]

Member

So, it's 30, huh? If you can decipher IRS regs, you can decipher message board regs! I'll keep reading and posting every day....

[Bird Legs]

Hey, Lion Hearted

So will I. Just keep plugging away and eventually we will arrive at the finish line.
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