NOL carryforward

Taxpayer did not file in 2019 since his income was negative in that year due to loss in his rental activity. However, he should have filed to carry forward the NOL that may be important to him down the road.

I know it is too late for him to file a 2019 tax return in order to carry forward the NOL now though as the due date has long passed already.

Now what about the NOL that he had accumulated before 2019? Let's say he had an NOL from 2018 of which the tax return was timely filed and the election to carry forward was timely made, has he lost that already too since he did not file the 2019 tax return?

2018 NOL carryforward is not lost. 2019 NOL gets carried back 5 years.

Let's say he had an NOL from 2018 of which the tax return was timely filed and the election to carry forward was timely made, has he lost that already too since he did not file the 2019 tax return?

If he hasn't yet filed 2019 or 2020 how would he have made an election to carryforward the 2018 NOL? Starting in 2018 the NOL could only be carried forward, no election available for anything else. But with the tax law changes last year the 2018 and 2019 NOL's must be carried back unless an election is made on a timely filed 2020 tax return to carry forward any of the 2018, 2019, or 2020 NOL's.

So if an extension has been made for 2020, it should not be too late to prepare and file 2019, and prepare and file 2020 by the extended due date with the elections to forgo the carryback for 2018 and/or 2019 and/or 2020.

Let's say he had an NOL from 2018 of which the tax return was timely filed and the election to carry forward was timely made, has he lost that already too since he did not file the 2019 tax return?

If he hasn't yet filed 2019 or 2020 how would he have made an election to carryforward the 2018 NOL? Starting in 2018 the NOL could only be carried forward, no election available for anything else. But with the tax law changes last year the 2018 and 2019 NOL's must be carried back unless an election is made on a timely filed 2020 tax return to carry forward any of the 2018, 2019, or 2020 NOL's.

So if an extension has been made for 2020, it should not be too late to prepare and file 2019, and prepare and file 2020 by the extended due date with the elections to forgo the carryback for 2018 and/or 2019 and/or 2020.

He timely filed his 2018 tax return and also timely made the election to carry forward the 2018 NOL. But he did not filed in 2019. His 2020 tax return is also late by now since he did not file an extension.

My question is if he files his 2019 and 2020 tax return now, can he still continue to carry the 2018 NOL forward or he has lost the 2018 NOL already since he did not file his 2019 and 2020 tax return on time to continue to carry it forward?

As long as the carryforward election was timely there is no problem carrying to 2019, 2020, and forward if not fully absorbed.

Thank you Tenletters.

Let me ask my question in another way. Hope someone can help.

Let's say taxpayer incurred a loss in 2017 and he timely made the election to carry the loss forward.

He did not file a 2018 tax return because he was not required to file.

He filed the 2019 tax return late after the due date. He did not use any of the NOL in his 2019 tax return.

Now when he files his 2020 tax return, is the NOL incurred from 2017 still available?

Yes, assuming you mean he was unable to use the NOL in 2019.

He timely filed his 2018 tax return and also timely made the election to carry forward the 2018 NOL.

This statement does not make any sense. Starting with the 2018 tax year NOL's could only be carried forward. There was no carryback available, hence no election to be made. Then the CARES act came along in 2020 and changed the law to require 2018, 2019, and 2020 NOL's to be carried back unless an election is made on the taxpayer's 2020 tax return (all of this is assuming a fiscal year taxpayer). So in your situation, the 2018 NOL must be carried back since your taxpayer cannot make an election to carryforward on a timely filed 2020 tax return solely because no extension was filed. Had he filed an extension he could still file 202 by 10/15 with the election to carryforward 2018, 2019, and/or 2020 NOL's.

There may be an exception here if the 2020 tax return is filed by 10/15 even without an extension. Something about regulatory vs. statutory elections and §301.9100...but this is above my pay grade.

For your next example of a taxpayer with a 2017 NOL, if he elected to carryforward the NOL then it will carryforward to 2018 first. Even though a return was not filed you must determine how much of the NOL was used, if any. Then carry to 2019, 2020, and so on. But this is far from your first example as the rules for 2017 NOL's are not the same as for 2018 - 2020.

He timely filed his 2018 tax return and also timely made the election to carry forward the 2018 NOL.

This statement does not make any sense. Starting with the 2018 tax year NOL's could only be carried forward. There was no carryback available, hence no election to be made. Then the CARES act came along in 2020 and changed the law to require 2018, 2019, and 2020 NOL's to be carried back unless an election is made on the taxpayer's 2020 tax return (all of this is assuming a fiscal year taxpayer). So in your situation, the 2018 NOL must be carried back since your taxpayer cannot make an election to carryforward on a timely filed 2020 tax return solely because no extension was filed. Had he filed an extension he could still file 202 by 10/15 with the election to carryforward 2018, 2019, and/or 2020 NOL's.

There may be an exception here if the 2020 tax return is filed by 10/15 even without an extension. Something about regulatory vs. statutory elections and §301.9100...but this is above my pay grade.

For your next example of a taxpayer with a 2017 NOL, if he elected to carryforward the NOL then it will carryforward to 2018 first. Even though a return was not filed you must determine how much of the NOL was used, if any. Then carry to 2019, 2020, and so on. But this is far from your first example as the rules for 2017 NOL's are not the same as for 2018 - 2020.

Thank you for pointing that out. I have just hastily made up the scenario for simplicity's sake in order to ask a question that I am looking for the answer. Actually, for the particular situation of this taxpayer, his NOL was incurred way before, like 2009. He did timely file that year's tax return and timely made the election to carry the loss forward. But then for the period between 2010 to 2019, there were years that he did not file because he was not required to file and there were also years that he had filed late after the due date. So I am wondering if the 2009 NOL is still available in the 2020 tax return that he is filing now.

You have to run that NOL thru all the subsequent years, whether tax returns were due or not and whether they were timely filed or not to see how much NOL remains. If there is any left it is usable in 2020.

I have just hastily made up the scenario for simplicity's sake in order to ask a question that I am looking for the answer. Actually, for the particular situation of this taxpayer, his NOL was incurred way before, like 2009.

How unfortunate that you chose 2018 as the year to replace the actual NOL year in your example, any year prior to 2018 and most of this conversation would not have taken place

I have just hastily made up the scenario for simplicity's sake in order to ask a question that I am looking for the answer. Actually, for the particular situation of this taxpayer, his NOL was incurred way before, like 2009.

How unfortunate that you chose 2018 as the year to replace the actual NOL year in your example, any year prior to 2018 and most of this conversation would not have taken place

You are right. Picking another year would have saved you the time to write the long response. I apologize.

You have to run that NOL thru all the subsequent years, whether tax returns were due or not and whether they were timely filed or not to see how much NOL remains. If there is any left it is usable in 2020.

Yes I will run the NOL through the years in which no tax return was filed.

My main purpose is to make sure that the late filing tax returns in subsequent years would not have invalidated the NOL from before.

No need to apologize...the information posted here may now be very valuable to a reader in the future. I was just pointing out that you happened to choose a unique year with different rules from the year or years you were actually dealing with.

So I have a situation where the TP elected to waive the carry back for NOL in both 2016 and 2017. 2018 also has a NOL, in addition to the carryforwards of 2016 & 2017, which were included on the 2018 return. The election to waive the carry back for 2018, 2019 & 2020 was not made on the 2020 return, on purpose. So what is the carryback to 2013? Just the 2018 NOL, and the 2016 & 2017 continue to carryforward only? Same situation for 2019 carryback to 2014.

The TP had unusually high income in 2013 and could easily absorb the NOL from all 3 years (2016, 2017, & 2018) if it is proper to do so. I think I can only carryback the 2018 NOL to 2013, and the 2016 & 2017 continue to carryforward only. (Each year stands alone, not as a package deal.) However, it is a lot of money and I want to make sure I am doing it correctly. Gotta get it done before 4/15, so don't wanna mess this up.

Thanks for the responses.

Election to waive the carryback is Irrevokeable. Only the 2018 NOL carries back.