Summertime work

[JG EA]

This time of year is mostly about returns that have been put off. I am trying to clear out some of these. Thanks for all the help.

I have a question. A client has an NOL this year. Because of the NOL, and therefore no AGI, his rather large charitable contributions have to be carried to next year. But because none of the contributions are allowed - the itemized deductions are lower than the standard deduction.

My 1stquestion: Do you elect the Schedule A anyway to show the contribution? I assume you do and can't carryover to next year without showing the contributions this year, but I can't find it written anywhere.

2nd question: I'm working on the 1045 to carryback the NOL. On the 2004 carryback year the election to itemize was made to save on AMT. I assume I have to leave that election and continue to itemize - is that right?

[Kram BergGold]

my ideas

first go to your computer and set up a dummy 2005 return with a similar scenario to 2006 and see what happens to the charitable carryforward when you transfer it forward to 2006, if you take standard deduction in 2005.
As for the NOL carryback I see no reason why you can't change from itemized to standard if standard now results in a better outcome due to the NOL carryback.

[JG EA]

Thanks for you response. I'll try your first suggestion tomarrow.

In thinking about it more and reading the 1045 instructions better, it seems to indicate that if you itemized in the carryback year then you need to refigure your itemized deductions. It doesn't say that you can't use the standard deduction, but it makes sense that if making a switch like that then maybe do a 1040X instead of the 1045.

Here's another question about this return and NOL's in general. If you carryback and nothing gets absorbed and so it's a carryover - is it standard practice to then just do the election to carryforward or do you file the 1045 for some obscure tax reason?