Discussion:Statute For NOL's and Loss Years
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Discussion Forum Index --> Tax Questions --> Statute For NOL's and Loss Years
| 8 May 2007 | |
| Hi, have tried to find the answer but still can't figure this out -
Scenario is this - individual taxpayer has an NOL on her 2002 1040. Assuming she elected to waive carryback on her timely filed return, she carries nol forward up to 20 years. Since the statute for the 2003 return expired 10/15/06 can the irs open up the 2002 year which generated the nol say, for example, 5 years later, under audit? I think the answer is no - but they can change the NOL carried forward on subsequest returns. Please help!!! Thank you kindly. | |
| 8 May 2007 | |
| they can always open up the calculation of the NOL to determine whether it really exists and if so, how much | |
| 8 May 2007 | |
| always means for any tax return that has a piece of the 2002 NOL on it up to the statute for that year, BUT don't forget the statute is not 3 years if there has been an understatement of at least 25% of income (like you would have if you used an NOL). | |
| 9 May 2007 | |
| Any deduction is subject to the substantiation rules. Thus, the SOL for assessment on the 2003 return will expire on 10/15/07 if the client was on a second extension, and it is conceivable that the Service could challenge the NOL deduction from 2002 any time before 10/15/07. | |
| 4 December 2007 | |
| So, the IRS can adjust it downward. But what about the flip side? Can a taxpayer revise an NOL (upward, of course) that originated on a closed return, if this revised NOL can be carried forward and claimed on an open year? | |
| 4 December 2007 | |
| The return can be audited after the statute has expired but no additional tax can be assessed. The amount of the carryforward could be reduced and increase tax in a subsequent open year. | |
| 4 December 2007 | |
| Thank you, Mscash. But I was asking if the NOL could be increased. If the IRS can reduce it, can the taxpayer increase it? | |
| 4 December 2007 | |
| It has been my experience in an audit, once they open the door, that enitre tax return is available for you to change it. Make certain that you have your papers in order to verify your new expenses. I have been 100% successful having new information added to an audited return. Having said that, I think you have a bigger issue, with the IRS wanting to look an out of statute return! Good Luck. | |
| 4 December 2007 | |
| Sorry, I am not making myself clear. This is a hypothetical question. Really.
There is no audit going on of any return. Let's assume the taxpayer discovered a missed deduction on a closed return. Had this deduction been claimed there would have been an NOL carrying forward onto an open return. Can the taxpayer increase an NOL deduction originating from a closed return and claim the NOL deduction on an open return? | |
| 4 December 2007 | |
| Nevermind, I revised my TA search and found this discussion Discussion:2001_Loss_on_Stock_not_Claimed which seems to answer my question. | |
