CaptCook wrote:An election to forego an NOL carryback must be made on a timely filed return.
Normally, I would agree, because that’s what 172(b)(3) says. But the CARES Act added section 172(b)(1)(D) to provide a special rule for NOLs arising in 2018, 2019 or 2020. And 172(b)(1)(D)(v)(II) says:
(II) TIME OF ELECTIONS.---An election under paragraph (3) (including an election described in subclause (I)) with respect to a net operating loss arising in a taxable year beginning in 2018 or 2019 shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the first taxable year ending after the date of the enactment of this subparagraph.
“paragraph (3)” refers to 172(b)(3).
So, the election to waive the carryback period for an NOL arising in 2018 doesn’t have to be made on a timely-filed 2018 return. The election to waive the carryback period for an NOL arising in 2018 can be made on a timely-filed 2020 return under this special rule. This is exactly what Rev. Proc. 2020-24 says:
(1) Elections to waive carryback under §172(b)(3) for NOLs arising in taxable years beginning in 2018 or 2019. A taxpayer within the scope of this revenue procedure may elect under § 172(b)(3) to waive the carryback period for an NOL arising in a taxable year beginning in 2018 or 2019. Such an election must be made no later than the due date, including extensions, for filing the taxpayer’s Federal income tax return for the first taxable year ending after March 27, 2020. A taxpayer must make an election described in this section 4.01(1) by attaching to its Federal income tax return filed for the first taxable year ending after March 27, 2020, a separate statement for each of taxable years 2018 or 2019 for which the taxpayer intends to make the election. The election statement must state that the taxpayer is electing to apply § 172(b)(3) under Rev. Proc. 2020-24 and the taxable year for which the statement applies. Once made, the election is irrevocable.