farm NOL

[taxdude71]

have a client that never filed his 2008 return. It has a farm that was auctioned off at a huge loss. Under the NOL rules, he has to take the 2 year carryback. Is he then able to take the carryforward even though the return was filed late? Are there any special farm rules that apply here?

[ATSMAN]

Might this shed some light:

Farming loss. The carryback period for a farming loss is 5 years. Only the farming loss portion of the NOL can be carried back 5 years. A farming loss is the smaller of:

The amount that would be the NOL for the tax year if only income and deductions attributable to farming businesses were taken into account, or

The NOL for the tax year.

Farming business. A farming business is a trade or business involving cultivation of land or the raising or harvesting of any agricultural or horticultural commodity. A farming business can include operating a nursery or sod farm or raising or harvesting most ornamental trees or trees bearing fruit, nuts, or other crops. The raising, shearing, feeding, caring for, training, and management of animals is also considered a farming business.

A farming business does not include contract harvesting of an agricultural or horticultural commodity grown or raised by someone else. It also does not include a business in which you merely buy or sell plants or animals grown or raised entirely by someone else.

Waiving the 5-year carryback. You can choose to figure the carryback period for a farming loss without regard to the special 5-year carryback rule. To make this choice for 2012, attach to your 2012 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2012 farming losses without regard to the special 5-year carryback rule. If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months after the due date of the return (excluding extensions). Attach an election statement to your amended return, and write “Filed pursuant to section 301.9100-2” at the top of the statement. Once made, this choice is irrevocable.