Election to waive NOL carryback 2009 tax year

[GTS1101]

A new client that had their taxes done at H&R Block for the last six years came to me to review 2009. I realized that H&R Block made some huge errors. One of the errors was the NOL was calculated incorrectly and overstated. When going through the return I noticed that H&R Block filed an Election to Forego the NOL Carryback for 2009 tax year. As far I read and understand the tax law in rev proc 2009-52 and sec 172 is that once this election is made it cannot be revoked. The only exception I saw was that if you made the election for a tax year before 11/06/09 which would be tax year 2008 than you could revoke the election and carryback.

I know the client is supposed to review what they are signing before mailing their tax return in but as you all know most clients do not review their returns or understand them if we try to explain it to them. My question is do you think if I write a letter explaining that the election was filed without their knowledge and the fact the return is full of errors that they would consider revoking the waiver or would I just be wasting my time.

Thanks!

GTS1101

[Maribeth]

§172(b)(3) says that an election can be made to NOT carryback an NOL. It also says that the election, once made, is irrevocable.

§301.9100-1 says that an amended return can be filed before the dute date of the return, including extensions, (10/15/10), in order to make elections that should have been made on the original return.

Does it work the othe way? Can you elect not to elect on a 1040X before 10/15/10??

Maribeth

[GTS1101]

Thanks Maribeth! That provides a little bit of hope. I think this regulation might work to help because they did not file an election they were allowed to make before the due date including extensions of 10/15/10. I am wondering though whether I should apply 301.9100-3 because they relied on a tax professional who made the error. I am going to have to think about this one because I don't want the taxpayer to miss out on a very nice refund from carryback if I don't apply the correct terminology.

GTS1101