E: lpanichelli@morrecpa.com / T: (415) 382-5600
Client Portal Login    Subscribe
Novato, CA CPA / Morre & Company, LLP
  • Home
  • About
    • Firm Profile
    • The Morre Team
  • Services
    • Services For Individuals
      • Personal Financial Planning
      • Estate Planning
    • Business Services
      • Small Business Accounting
      • QuickBooks & Xero Services
        • Why QuickBooks & Xero
        • QuickBooks & Xero Setup
        • QuickBooks & Xero Training
        • Xero & QuickAnswers
        • Xero & QuickTuneup
        • QuickBooks & Xero Tips
      • Cash Flow Management
      • Bank Financing
      • Strategic Business Planning
      • Succession Planning
      • New Business Formation
      • Internal Controls
    • Tax Services
      • Tax Preparation
      • Tax Planning
      • Tax Problems
        • IRS Audit Representation
        • Non-Filed Tax Returns
        • Payroll Tax Problems
        • IRS Liens
        • IRS Levies
        • IRS Payment Plan
        • Get Your IRS File
    • Quality Control
    • Make A Payment
  • Tax Center
    • Estimated Tax and Election Information
      • Average Cost Method Election
      • Cancellation of Debt Election
      • Capitalize Investment Expenses Election
      • Alternatives for Estimated Tax Computations
      • Foreign Tax Credit
      • Installment Sale Reporting Election
      • Investment Interest Expense Election
      • Method of Accounting Election
      • Sale of Residence Election
      • Start Up Costs Election
      • Net Operating Loss (NOL) Election
      • Depreciation and Expensing Rules
    • Track Your Refund
    • Tax Due Dates
    • Tax Due Date Reminders
    • Tax Rates
    • IRS Tax Forms and Publications
    • Record Retention Guide
    • State Tax Forms
    • 1040 Tax Calculator
    • Marginal and Effective Tax Rates Calculator
  • Financial Guides
    • Life Events
    • Business Strategies
    • Tax Strategies for Business Owners
    • Tax Strategies for Individuals
    • Investment Strategies
    • Frequently Asked Questions
  • Resources
    • Financial Calculators
    • Client Portal
    • Internet Links
    • On-line Education
    • News and Weather
      • Today's News and Weather
    • Marin Bookkeepers Referral Network
    • Our Newsletter
      • July 2017
      • July 2016
    • Newsletter
      • Previous Newsletters
  • Contact Us
    • Let Us Know!
  • Calculators
  • QuickBooks Tips

Net Operating Loss (NOL) Election

Call Us: (415) 382-5600
  • broad range of Accounting services
    We help you take charge of your finances to ensure a sound and secure future. Read more
  • Morre & Company, LLP
    Count on us to take the worry, leaving you to do what you do best. Read more
  • Secure client portal
    Providing the support you deserve.
  • Small enough
    As a valued client, you get a secure, password-protected portal. Read more

Newsletter

Our monthly newsletter, financial guides, and interactive calculators help you stay informed about your finances.

Newsletter

Send Us a File

Use our convenient SecureSend page to securely deliver a file directly to a member of our firm.

Send Us a File

Our Services

We offer a broad range of services for business owners, executives and independent professionals. Please call us for a free initial consultation.

Reports

Financial Guides

Click on any of the report categories listed below to find practical, unbiased information to help you reach your financial goals.

Guides

Featured Articles

Net Operating Loss (NOL) Election

Net Operating Loss (NOL) Election


General Rules of the Election

Generally, a net operating loss is either a business loss or a casualty loss. A carry over is created when the loss is so large that it cannot be fully used in the year of the loss.

                                           

For NOLs arising in 2008, the general carry back period is two years, although carry back periods of three and five years apply to losses attributable to certain eligible losses, farm losses, and disaster losses. Depending on the causes of a taxpayer?s NOL, it is possible that more than one carry back period applies. A taxpayer can elect to forgo the NOL carry back period or periods if more than one applies.
  
A taxpayer entitled to either carry back period can elect to waive the carry back period and only carry the loss forward. By carrying the loss back, an immediate refund of prior year taxes is possible.  By forgoing the carry back period, no refund of prior year taxes is possible.
  
The taxpayer must attach a separate election statement to the return for the year of the NOL in order to make a valid election. The election must be made by the due date (including extensions) for filing the return for the loss year; if the return is timely filed, an automatic six-month extension period (from the original due date of the return, excluding extensions) for making the election is allowed.
  
Once the election is made, it is generally irrevocable.
  
Warning: An election to forgo the carry back period applies to both the regular tax NOL and the Alternative Minimum Tax NOL. If the taxpayer attempts to make a split election (e.g., forgo the AMT NOL, but not the regular NOL), the entire election could be held invalid because it is ambiguous and equivocal on its face.  

When Should the Election Be Made?

Taxpayers should consider making the election if:
  
  • They will be in a higher tax bracket in the carryover years than in the carry back years (after considering the time value of money).
  • The carry back of the NOL would cause the taxpayer to lose significant tax benefits (e.g., IRA deductions, personal exemptions, itemized deductions, etc.) in the carry back year.
  • The carry back of the NOL generates alternative minimum tax (AMT) in the year to which it is carried.
  • The NOL is small and it is not practical or cost-effective to carry it back.
  

Please call us if you have any questions about this election.
  

 

Morre & Company, LLP

Certified Public Accountants
1682 Novato Blvd, Suite 300
Novato, CA 94947
Phone: (415) 382-5600

Toll Free: (888) 414-7104
Your Partners in Financial Success!
Morre & Company, LLP 1682 Novato Blvd, Suite 300 Novato, CA  94947
Phone: (415) 382-5600 | Fax: (415) 382-5605
lpanichelli@morrecpa.com
Login   Search   Site Map   Privacy Policy   Disclaimer