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- NOL Carryforward denied, question about 1231 losses
NOL Carryforward denied, question about 1231 losses
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jw-rogers
Level 3
09-23-2020
02:44 PM
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New 1040 client with a carryforward request from 2016 into 2017 that was denied by the IRS. IRS has asked to carry the NOL back to 2014. The denied 2017 return also added1231 losses not included on the 2017 return initially.
Am I correct in taking the NOL only back to 2014 and letting the 1231 carryforward from the 2016 return to the amended 2017?
Given 2014 is closed - any friendly advice on what happens from here?
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TaxGuyBill
Level 15
09-24-2020
11:27 AM
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@jw-rogers wrote:New 1040 client with a carryforward request from 2016 into 2017 that was denied by the IRS. IRS has asked to carry the NOL back to 2014. The denied 2017 return also added1231 losses not included on the 2017 return initially.
Am I correct in taking the NOL only back to 2014 and letting the 1231 carryforward from the 2016 return to the amended 2017?
Given 2014 is closed - any friendly advice on what happens from here?
Yes, if the additional 1231 losses were for 2017, that stays on the 2017 return and would not be part of the 2016 NOL.
The NOL was in 2016, so the determination whether or not a refund can be received is based on if 2016 is still an open year (not 2014).
Unfortunately, unless the taxpayer made payments for 2016 in the last couple of years, 2016 is now closed and no refund is allowed. In the event the taxpayer still owes money for 2014, it might be possible to amend 2014 to reduce that amount owed. Otherwise, sorry, it is too late.
