NOL Carryback

[origun]

Taxpayer has a $7000 NOL from 2008 tax year to carry back. Instructions for form 1045 say "You generally must carry back the entire NOL to the 2nd tax year before the loss year." I don't have easy access to the 2006 tax return (not done at my office). The entire am't of NOL could be used up in 2007 tax year as they had a big one-time capital gain that year with significant tax liability and the '07 return was done on our software. Is there any chance I could just do a 1045 (or a 1040X) for 2007 and ignore 2006 return. I would think the results (i.e., amount of refund) would be the same. (2007 and 2008 are pretty straightforward returns: no credits, AMT, K-1s, self-employment, etc. to complicate the calculations)

And there is no reaso to opt out of the carryback and carry forward as they have no tax liability in '08 and don't expect to have in the future--unless they win the lottery!

Thanks for any help you can give!

[DTS]

origun

It's my understanding that if you elect to go back, you have to go back 2 years.

D

[S T]

Copy of Return

Have the client go to the party that prepared the 2006 tax return and request a copy.or have the client file the 4506 form and obtain a copy of the 2006 tax return. All will take time, but you need to carry NOL back the 2 years and show calculations for 1040X You will still be able to complete the 2008 return and seems like you have made the decision it is in the best interests to carry NOL back.

Sandy

[origun]

Thanks

I was hoping, although deep down I knew better, that I could just do the 2007...but expected I'd hear what you told me! I should be able to get a 2006 return to work with but was hoping to be able to take an easier way out. This is only the second carry back I have ever done so they are time consuming for me as the regs and procedures aren't at my fingertips. My state (Oregon) has no special forms for NOLs that I am aware of and goes along with federal rules re NOLs...so I'm assuming I can just do amended returns for the relevant years once I do the 1045. If anyone has any special insight on Oregon and NOLs, I'd also appreciate any input.

[taxea]

How to do 1040X when you didn't do 1040

You do the 1045 or amend the returns, not both. If you are going to do a 1045 you use the form in the 08 program. If you have a copy of the 06 return you can put all the numbers in from it.

You could also have the client sign a Power of Attorney, then use E-Services to get the info you need. You will have to contact the state for their info also.

If you are going to do amended returns then you need a copy of the 06 again.

When you put the 06 into the program select done by other preparer or self-prepared. You can then just plug the amounts into the lines...you don't need to actually input details. i.e. W-2, 1099 etc. Override the box if it won't let you just put the amount in.

Once you have entered the 06...save it, then save it again by adding 1040X. Go back to the homebase. Open the 1040X return you just saved. Open the state return and then open the amended form, put the year in. Go back to the federal, open the 1040X and put in the year. Close this form and open the client information form...change the preparer info to yours, make sure the efiling boxes are not checked.

From here you can make the entries needed for the NOL. Once done with this, make necessary corrections in the client billing State form by putting a 0 for the amount of any form that you did not prepare as part of the amended return. Enter your fee for the 1040X and any form you did make changes on. Go back to the federal and make the necessary changes on the fed billing form. Be sure to bill the client if you had to get the returns.

Hit the save button and it should change to your fees.

Review the 1040X form to be sure it is correct and to add any information necessary as well as the reason for amending the return. (Same with state amended)

Now you are ready to review for errors.

By doing this, the original 06 you entered will be as prepared and filed and the 1040X will have your changes.taxea