Common questions about Corporate Elections in Lacerte

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Electing to forego or waive NOL carryback for a corporate or consolidated return.

For most taxpayers, NOLs arising in tax years ending after 2020 can only be carried forward. See Net operating losses for more information.

For tax year 2020 and prior, if a corporation has an NOL, it can usually elect to waive the entire carryback period for the NOL and carry the NOL to future tax years. To do this, you need to check the box on Schedule K, line 11 and file the return by the due date, including extensions. The corporation must have a current year NOL for Schedule K, line 11 to check.

You can elect to:

• Forego the carryback for a net operating loss (NOL) for a corporate return.
• Waive the carryback for consolidated return per section 172(b)(3).

in the Corporate module of Lacerte. Both of these options use the same steps.

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Follow these steps to forego or waive an NOL carryback in the program:

1. Go to Screen 23.1, Regular Net Operating Loss Deduction.
2. Check the box labeled Elect to forego carryback.
   • This will tell the program to include the NOL carryover in General Information and proforma the NOL carryover to the next tax year.
   • Lacerte will also check the box on Form 1120, Schedule K, line 11.

If the checkbox labeled Waive net operating loss carryback period [172(b)(3)] on Screen 41, elections is checked, Lacerte will only check Form 1120, Schedule K, line 11 and won't proforma the NOL to the next tax year.

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IRC Regulation 1.266-1 Capitalize Taxes and Carrying Charges Election in Lacerte.

A taxpayer who owns unimproved and unproductive real estate can elect to capitalize annual taxes, interest on a mortgage, and other carrying charges.

• The election must be made annually.
• The election requires a statement in the taxpayer's return describing the property and the expenses to which the election applies.
• If the property produces income in a given year, the election isn't available.

To include this election in the Individual module:

1. Go to Screen 46, Elections.
2. Scroll down to Election to Capitalize Taxes & Carrying Charges section.
3. Check the box Capitalize taxes and carrying charges [266].
4. Complete the other 3 inputs in this section.
5. To create multiple elections, click Add in the left navigation panel and repeat step 2 through 4.

To include this election in the Partnership module:

1. Go to Screen 33, Elections.
2. Select Election 1 in the left-hand navigation menu.
3. Scroll down to Election to Capitalize Taxes & Carrying Charges section.
4. Check the box Capitalize taxes and Carrying charges [266].
5. Complete the other 3 inputs in this section.
6. To create multiple elections, click Add in the left navigation panel and repeat step 2 through 4.

To include this election in the S-Corp module:

1. Go to Screen 38, Elections.
2. Select Election 1 in the left-hand navigation menu.
3. Scroll down to Election to Capitalize Taxes & Carrying Charges section.
4. Check the box Capitalize taxes and Carrying charges [266].
5. Complete the other 3 inputs in this section.
6. To create multiple elections, click Add in the left navigation panel and repeat step 2 through 4.

To include this election in the Corporate module:

1. Go to Screen 41, Elections.
2. Select Election 1 in the left-hand navigation menu.
3. Scroll down to Election to Capitalize Taxes & Carrying Charges section.
4. Check the box Capitalize taxes and Carrying charges [266].
5. Complete the other 3 inputs in this section.
6. To create multiple elections, click Add in the left navigation panel and repeat step 2 through 4.

E-filing and viewing the election:

In all modules, the election is included with the e-filed return and listed in the e-file summary for verification.

To view the election:

1. Go to the Forms tab.
2. Select Elections from the Form list in the left navigation panel.

See IRC Regulation 1.266-1, Capitalize Taxes & Carrying Charges Election for more information.

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Additional Information:

• Electing to forego or waive NOL carryback for a corporate or consolidated return
• IRC Regulation 1.266-1 Capitalize Taxes & Carrying Charges Election

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