Electing to forgo NOL carryback period for initial year return

[Anonymous]

I have a client that started an C corp and incurred NOL, typical of initial year businesses. The IRS does not clearly define if "electing to forgo carryback of NOL for the tax year" is mandatory or implied for the initial year of filing in section.

By definition it would carryback for traditional returns of businesses in existence for N years, but for tax year of initial filing year is electing required or implied to carryforward?

[TaxGuyBill]

S-corporations don't have NOLs.  They may have a loss, but that is different than a NOL.

The losses are passed on the shareholders (which in some cases could be suspended, such as lack of Basis).  If the loss from the K-1 creates a NOL on the 1040, then the usual NOL rules apply.

[Anonymous]

I must've forgotten to drink coffee this morning, edit: it's a C not an S corp. First typo of the morning.

In which case, the NOL is typically carryback unless electing to forgo. For an initial year filing its not explicitly defined in IRC unless I overlooked the § whether election is inferred.

[George4Tacks]

Which year? https://www.irs.gov/instructions/i1139#en_US_202111_publink10005049

"What’s New

Repeal of the NOL carryback.

 

For losses incurred in tax years beginning after December 31, 2020, the NOL carryback rules apply only for farming losses and losses from insurance companies, other than life insurance companies. See Definitions and Special Rules, later.

NOL deduction limitation.

 

For tax years beginning after December 31, 2020, the deduction of NOLs arising in tax years beginning after December 31, 2017, is limited. This limitation does not apply to an insurance company, other than a life insurance company. See the instructions for Line 14."

[Anonymous]

NOL incurred in 2021, the first year of business which filing is being prepared for.

Is the election to forgo carryback for an initial year and instead carryforward into the second year implicit or must be made manually?

[sjrcpa]

Since there are no years to carry it back to, it will get carried forward. No election needed.