I have a client that had an NOL on their 2016 return. They did not elect to carry it forward so I told them i would amend 2014 to carry it back after tax season. When I look at the 2014 return, they claimed an $85,000 Unlawful Discrimination Legal Fee deduction above the line. In looking at the rules related to that, you can only claim an above the line deduction to the extent there is income related to the legal case. There was no income reported so this should have been an itemized deduction subject to 2%. They were in AMT so they would have received no benefit from it.
Question is, since the 2014 year is closed, can I amend to carry back the NOL and not make any other adjustments? I know that normally if you amend you must fix all errors and not just the ones that give the client benefit.
We are looking at a $6k refund from the NOL so if I have to fix the legal fees they would end up owing quite a bit and it would not be worthwhile.