When To Use an NOL Generally, you must carry back the entire amount of the NOL to the2 tax years before the NOL year (the carryback period), and then carryforward any remaining NOL for up to 20 years after the NOL year (thecarryforward period). You can, however, choose not to carry back anNOL and carry it forward only. See Waiving the carryback period,later. The "NOL year" is the year in which the NOLoccurred. You cannot deduct any part of the NOL remaining after the20-year carryforward period. Exceptions to 2-year carryback rule.Eligible losses and farming losses qualify for longer carrybackperiods. Eligible loss.The carryback period for an eligible loss is 3 years. An eligibleloss is any part of an NOL that: Is from a casualty or theft, or Is attributable to a Presidentially declared disaster for aqualified small business or a farming business (defined later). Techirghiol unterkunft last minuteAn eligible loss does not include a farming loss (explainednext), unless you choose to treat the farming loss as if it were not afarming loss. Farming loss.The carryback period for a farming loss is 5 years. A farming lossis the smaller of: The amount which would be the NOL for the tax year if onlyincome and deductions attributable to farming businesses were takeninto account, or The NOL for the tax year. You can choose to treat a farming loss as if it were not a farmingloss. If you make this choice, the carryback period will be 2 years (3years if the loss is an eligible loss). To make this choice, attach astatement to your 1999 income tax return filed on or before the duedate (including extensions) that you are choosing to treat any 1999farming losses as if they were not farming losses. Also, if you filedyour return timely without making that choice, you may still make thechoice by filing an amended return within 6 months of the due date ofthe return (excluding extensions). Attach a statement to your amendedreturn and write "Filed pursuant to section 301.9100-2" onthe statement. File your amended return at the same address that youfiled your original return. Once you make this choice, it isirrevocable. Farming business.A farming business is a trade or business involving the cultivationof land, the raising or harvesting of any agricultural orhorticultural commodity, operating a nursery or sod farm, the raisingor harvesting of trees bearing fruit, nuts, or other crops, orornamental trees. The raising, shearing, feeding, caring for,training, and management of animals is also considered a farmingbusiness. A farming business does not include contract harvesting of anagricultural or horticultural commodity grown or raised by someoneelse. It also does not include a business in which you merely buy orsell plants or animals grown or raised by someone else. Qualified small business.A qualified small business is a sole proprietorship or apartnership that has average annual gross receipts (reduced by returnsand allowances) of $5 million or less during the 3-year period endingwith the tax year of the NOL. If the business did not exist for thisentire 3-year period, use the period the business was in existence. Waiving the carryback period.You can choose not to carry back your NOL. If you make this choice,then you can use your NOL only in the 20-year carryforward period.(This choice means you also choose not to carry back any alternativetax NOL.) To make this choice, attach a statement to your tax return filed bythe due date (including extensions) for the NOL year or to an amendedreturn for the NOL year filed within 6 months of the due date of youroriginal return (excluding extensions). This statement mustshow that you are choosing to waive the carryback period under section172(b)(3) of the Internal Revenue Code. Caution: If you do not file this statement on time, you cannot waive thecarryback period. If you filed your return timely but did not file thestatement with it, you must file the statement with an amended returnfor the NOL year within 6 months of the due date of your originalreturn (excluding extensions). Write "Filed pursuant to section301.9100-2" on the statement. Once you make this choice, you cannot change it (it isirrevocable). If you choose to waive the carryback period for morethan one NOL, you must make a separate choice and attach a separatestatement for each NOL year. cheap hotels in BournemouthHow to use the NOL.If you choose to carry back the NOL, you must first carry theentire NOL to the earliest carryback year. If your NOL is not used up,you can carry the rest to the next earliest carryback year, and so on. If you do not use up the NOL in the 2 carryback years, carryforward what remains of it to the 20 tax years following the NOL year.Start by carrying it to the first tax year after the NOL year. If youdo not use it up, carry the unused part to the next year. Continue tocarry any unused part of the NOL until you complete the 20-yearcarryforward period. Example 1.You started your business as a sole proprietor in 1999 and had a$42,000 NOL for the year. No part of the NOL qualifies for the 3-yearor 5-year carryback period. You begin using your NOL in 1997, thesecond year before the NOL year, as shown in the following chart. Year Carryback/Carryover UnusedLoss 1997 $42,000 $40,000 1998 40,000 37,000 1999 (NOL year) 2000 37,000 31,500 2001 31,500 22,500 2002 22,500 12,700 2003 12,700 4,000 2004 4,000 -0- If your loss were larger, you could carry it forward until the year2019. If you still had an unused 1999 carryforward after the year2019, you could not deduct it. Example 2.Assume the same facts as in Example 1, except that $4,000 of theNOL is attributable to a casualty loss and this loss qualifies for a3-year carryback period. You begin using the $4,000 in 1996. As shownin the following chart, $3,000 of this NOL is used in 1996. Theremaining $1,000 is carried to 1997 along with the $38,000 NOL thatyou must begin using in 1997. Year Carryback/Carryover UnusedLoss 1996 $3,000 $1,000 1997 39,000 37,000 1998 37,000 34,000 1999 (NOL year) 2000 34,000 28,500 2001 28,500 19,500 2002 19,500 9,700 2003 9,700 1,000 2004 1,000 -0-