Can I skip or take a portion allowed NOL forward for this year and forward the remaining to future years?

[Mybesttaxservice]

My new client had NOL carry forward from 2020 (NOL ) to 2022 $18k (Only one NOL item)

This year 2022 taxpayer has large income. We are able to deduct NOL carry forward from 2020 $18k . But she prefers to not deduct NOL carry forward from 2020 to have a look good net income for mortgage loan and buy house purpose

Can we skip NOL carry forward for this year and forward to next /future years instead?

Public 536 has not addressed this "SKIP " OR "USED IT OR FORFEIT". Only address after 12/31/2017 NOL carry forward indefinitely and 80% limit rules 

Please any expert or any one give me an advise 

Thanks in advanced 

[Just-Lisa-Now- · Accepted solution]

No, you cant pick and choose when to use it.  But I think the underwriter "may" look past an NOL for income purposes on a loan since it doesnt really give an actual representation of the income for the year.  

[TaxGuyBill]

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@Mybesttaxservice wrote:

My new client had NOL carry forward from 2020 (NOL )

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As a side note ... You probably already checked this, but just in case you didn't think about it ... Are you SURE there is a NOL carry forward?

Originally, 2020 automatically carried forward.  Then Congress retroactively changed the law that made it carry back.  So have you checked if your client filed the election to "waive the carryback", so that it carried forward?  If I remember correctly, due to the retroactive nature of it, the election to "waive the carryback" could be on either the 2020 or 2021 return (although I would need to look that up to be sure).

Again, you may have already checked that, but I thought I would mention it in case you forgot about it.

[sjrcpa]

Ans if it was a carryforward from 2020, what happened in 2021?

[BobKamman]

@Just-Lisa-Now-  As my mother would say, underwriters don't have the common sense that God gave a goose.  If they were trusted to exercise any judgment, they could make more money doing quality control at the pickle factory.  

[Mybesttaxservice]

Hello Lisa

Thank you for your advice

That meant: we can pick the year to use it. Correct? Just not care about loan officer, who are not tax expert. 

I am trained about mortgage loan a lot in the past which they suppose to add back depreciation and amortize $$$, NOL in past, but some they dont know 

Because I search , there is other Turbo tax expert said "Use it or lose it" . Then some one else argued that "Pub 536 did not mention at any where "

I rechecked with pub 536 and did not find one either. 

Thank you again 

[Mybesttaxservice]

Thank you for your advise 

I have just known your mention (after 2020). I thought after 2018

"After the law Acts (Tax Cut) 2018, NOL after 12/31/2017 must carry forward indefinitely and no longer carry backward. The rule of limit 80% AGI "

Thank you again 

[Mybesttaxservice]

Thank you sjrcpa

Yes 2021 was used up some of 2020 NOL . This is remaining NOL of 2020 only carry forward . Thank you your time and help

[qbteachmt]

https://www.irs.gov/newsroom/net-operating-losses

"Most taxpayers no longer have the option to carryback a net operating loss (NOL). For most taxpayers, NOLs arising in tax years ending after 2020 can only be carried forward. The 2-year carryback rule in effect before 2018, generally, does not apply to NOLs arising in tax years ending after December 31, 2017. The CARES Act provided for a special 5-year carryback for taxable years beginning in 2018, 2019 and 2020. Exceptions apply to certain farming losses and NOLs of insurance companies other than a life insurance company. Also, for losses arising in taxable years beginning after December 31, 2017, the net operating loss deduction for taxable years beginning after December 31, 2020, is limited to 80% of the excess (if any) of taxable income (determined without regard to the deduction, QBID, and Section 250 deduction) over the total NOLD from NOLs arising in taxable years beginning before January 1, 2018."

[Mybesttaxservice]

Thank you for your advice QBteachmt 

I learned another rule NOL carry back 5 years for 18/19/20

I appreciate this