Corp NOL

Technical topics regarding tax preparation.
#1
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A corporation had both an NOL and a net capital loss for 4/30/16. We were planning on filing an 1139 to carryback both, so the box to forgo carryback was not checked, but unfortunately the 1139 was never filed. So is the 2016 NOL lost forever? What if we notice another error on the return and amend it? Would the clock reset on the new amended NOL amount?

The net capital loss still carries forward though, correct? And would still be eligible to carryback 3 years?

Thanks, just want to make sure we get it right this time!
 

#2
Nilodop  
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You may have noticed the word "tentative" in the 1139 title. The purpose of the form (we used to call it a quickie carryback) is just to get the carryback refund faster. If the form is not filed, you can still get the carryback by filing an 1120X, but be prepared to wait a long time, maybe a year.

The 1139 is due within 12 months of the corporation's year-end, so an amended return is irrelevant.

Not filing an 1139 does not change the availability of losses.

I don't understand your goal about trying to forgo the NOL carryback. Or the capital loss carryback, for that matter.
 

#3
LW25  
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Regarding the Form 1120X corporate income tax refund claim versus the use of Form 1139: I am curious as to anyone and everyone's experience.

Many of us have used the one form at some times and the other form at other times.

Obviously the advantage to using Form 1120X for the tax refund claim is that if the claim is denied, the taxpayer can maintain a suit for refund after the date of disallowance or 180 days from the date of the refund claim whichever is sooner (120 days in a bankruptcy case).

By contrast, if a Form 1139 is used, the money might come sooner. But, if the IRS does not pay, the taxpayer generally still has to file Form 1120X before being able to litigate.

Can we make any generalizations as to which method is more reliable? After all these years, I should have a personal view, but I do not. On balance, which avenue is better: 1120X or 1139?
 

#4
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LW25 wrote:Regarding the Form 1120X corporate income tax refund claim versus the use of Form 1139: I am curious as to anyone and everyone's experience.

Many of us have used the one form at some times and the other form at other times.

Obviously the advantage to using Form 1120X for the tax refund claim is that if the claim is denied, the taxpayer can maintain a suit for refund after the date of disallowance or 180 days from the date of the refund claim whichever is sooner (120 days in a bankruptcy case).

By contrast, if a Form 1139 is used, the money might come sooner. But, if the IRS does not pay, the taxpayer generally still has to file Form 1120X before being able to litigate.

Can we make any generalizations as to which method is more reliable? After all these years, I should have a personal view, but I do not. On balance, which avenue is better: 1120X or 1139?


Bringing this back up because I have some questions on the 1139 vs 1120X.

Background: I have prepared the 2017 1120 and it produced a loss. The entity will never use this loss going forward so my only option is to carry this back. The 2015 return has enough income to absorb the entire NOL, but that year was a very complex return that I did not prepare. Rental property that sold, an installment agreement on another piece of property, underpayment penalties... there was also a NOL carryforward that was used up on that return as well.

I have never done an NOL carryback but have done some reading. I am hoping for a few hints from those that have as to what they would do in this situation. It looks like the 1120X just needs the original amounts and if NO other schedules changed (which they don't) then it needs the first page of the original 2015 and the first page of the 2017 along with the tax computation pages for both years. Is that correct?? I would just adjust line 29a to add the NOL carryback to what was there already from 2014. If that is ineed it, then I can just force in the numbers to generate the 1120X and send it in. Seems easy.
In reading up on the 1139, it seems much more complex. Which way would you go??
 

#5
lckent  
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When you do the carryback, don't forget to also calculate the AMT NOL and carry it back, too. Since the AMT NOL is limited, you may find that an AMT liability is created.
CPA, Retired
 

#6
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Thanks LC....small corp so exempt from AMT.
 

#7
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Oakland CA
if the nol originating loss year was efiled and the carryback year(s) did not have any interactions/collateral effects on credits or limitations, will the IRS still insist on attaching to mailed 1139 the first two pages of the origination nol year tax return? Or is it one of those wierd things like when IRS field auditors don't have easy access to a full copy of the returns they're suppose to audit?
 


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