Form 1045 - NOL

[vegasbillea]

Client's 2015 Tax Return was prepared and filed in 2019. The 2015 Tax Return had an NOL (Sch C Business) and the preparer carried the nol back 3yrs (2012,2013,2014) and the balance carried to 2016 TY.
In doing the 2016, the business has another NOL. Question, since the 2015 return utilized the 1045 form to carry back 3 years do I still once again use the 2014 and 2015 years on form 1045 for 2016 (2016 TY only required 2 year carry back) I think maybe yes, but not sure. I have searched the TTB forum information and could not fine how to utilize form 1045 when consecutive NOL years are present.
Thanks for any help you might give me.

[spanel]

I'm not an expert on NOLs... but why on earth would you do a carry back into years which you cannot claim any additional money. (12,13,14 are all closed years). Why would you not elect to forgo the carryback periods and carryforward same as I would do for 2016 as well.

Chris

[vegasbillea]

Chris, thanks for your response,
I believe the reason the carry back in 2015 was in order to avoid the carry back you must declare it on a timely filed return. Since the 2015 timely filing has come and gone then you must, I believe,
carry back and any remaining is carried forward, is this not correct?
With the 2016 return, are you suggesting I only carry it forward and not the 2 yrs back?
When I looked at the 2015 tax documents that was brought in, I asked the same question, and felt the preparer interpreted the regulation to carry back, even to the close years and make the adjustments
to the NOL before carrying it into the 2016.
Again Chris, thanks for your response.

[TaxGuyBill]

I'm not very experienced with NOLs either, but here are a few thoughts:

1) The election to waive the carryback needs to be on a timely filed return. If that is not done, it must be carried back..
2) Those carry back years are NOT closed for refund. For an NOL, the determination is if the NOL year is 'open' for refund or not. If the NOL year is still 'open' for a refund, so are the carryback years.
3) They actually filed a Form 1045, so that isn't exactly a carryback. It is a refund based on the prior years without actually carrying it back. However, the due date for a 1045 is December 31st of the year it was due, so I suspect that #4 (next) is probably what was done.
4) If they just used Schedule A of Form 1045 to calculate the NOL for the carrybacks, then they would have amended those prior years.
5) It sounds like 2012-2015 all ended up with $0 of income due to the NOL. I think that means that there effectively would not be a carryback for the 2016 NOL (technically it is carried back, but with $0 of change, so it effectively is not carried back). So that effectively rolls the 2016 NOL and the leftover 2015 NOL into 2017.

[vegasbillea]

TaxGuyBill
Thank You for your reply, I really appreciate the time you took to respond and to share you knowledge, have a very prosperous tax season.