Loss carry forward

[Max W]

New client had NOL's from Sch C business in prior years.  The election was to carry forward.

The last loss was in 2018 and they came to me just recently to file 2019 and 2020.

Since they are late filing 2019, can they still take the loss?

[Lee B]

One would hope this would be an easy question. Unfortunately, both the TCJA and the CARES Act both changed the NOL Rules and the intersection of the two gets complicated. Excellent article in the J of A:j

journalofaccountancy.com/issues/2020/nov/deducting-losses-cares-act-coronavirus-relief.html

[jklcpa]

Agree it's more complicated than it used to be.  Here's another from JoA, starting at the 3rd paragraph, that explains the dates for electing to waive the carryback:

https://www.journalofaccountancy.com/news/2020/apr/guidance-nol-carryback-tentative-adjustments-coronavirus-cares-act.html

[Max W]

I came across this article which seems to say that the 2019 NOL waiver to carry back has to be made by the due date of the return with

2019 only has accumulated losses carried forward from 2017 and 2018, there were none in 2019, but most of the loss is being carried forward to 2020 and on.  The way I see it, those losses are treated as if they occurred in 2019, because the exemption has to be made in each year that losses are carried forward.

It seems that they can still apply the applicable losses to 2019, but that the remaining losses can not be carried forward.  However, they could be carried back.

Yes, indeed.  It is a jigsaw puzzle.

https://www.wilsonelser.com/writable/files/Attorney_Articles_PDFs/168tnf2379-hosny_9.28.2020.pdf