General NOL Question

[JG EA]

If a client only gets minimum relief (5%) and all the NOL is used up in a carry back do you push for a carryforward?

I don't know if it will ever be any better because SE tax is involved and that's where a lot of their tax comes from.

They also have AMT though and so they may get a better percentage in the future for some tax relief. I have a feeling they'll want the bird in the hand and I don't know if I should push for possible future benefits.

[JAinNC]

Ask the client

his/her views. Tell them approximately how much you will charge to amend prior years and estimate of benefit. Tell them how it might benefit them to carry it forward.
Let them decide whether or not to make the election to forego carryback.

Jeannie

[Luis Mopeo]

If a client only gets minimum relief (5%) and all the NOL is used up in a carry back do you push for a carryforward?

I don't know if it will ever be any better because SE tax is involved and that's where a lot of their tax comes from.

They also have AMT though and so they may get a better percentage in the future for some tax relief. I have a feeling they'll want the bird in the hand and I don't know if I should push for possible future benefits.

I'm curious how the client has an NOL and also significant SE income, and AMT.

[JAinNC]

I think JG meant that an NOL never wipes out SE tax.

[Luis Mopeo]

I think JG meant that an NOL never wipes out SE tax.

True, that's why I'm curious. Are guaranteed payments being taken out of the partnership when there's a loss flowing through? If that's the case, why take the guaranteed payments? It all nets out the same, except you don't pay SE tax.

I'm also curious about going from NOL to AMT, that's a big swing. I'm not trying to infer that anything's wrong, I'm just curious what the situation is.

[JAinNC]

Who said

anything about a partnership? Did I miss somthing?

JG can you clear this up? Now I'm curious.

[DaveO]

NOL carryback depends on returns.

If I have done the prior year returns I'm more willing to look at a carryback. If I have not done the prior years then I will pretty much insist on a carryforward.

[JG EA]

Solely SE

No, no partnership. Just a sole proprietor. This year of course there is no SE tax and no AMT because there is the NOL. But in 04 and 05 there was a gain, SE tax and AMT. That is because of their high exemptions, and because of regular depreciation.

Yes, I did mean that the NOL didn't wipe out the SE tax in the prior years and that's the part of the reason not much benefit. But I have a little hope here from the other thread that maybe I did something wrong on the 6251 when carrying back to 04.

Thanks for the thoughts - I will present the actual figures (when I am sure of them that is) and let the client decide.