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Section 172(a) allows a deduction for an NOL, which may be
carried back to each of the 2 years preceding the taxable year of
the loss and carried over to each of the 20 taxable years
following the year of the loss. Sec. 172(b)(1)(A). Generally,
the entire amount of the NOL must first be carried to the
earliest eligible carryback year. Id. Thereafter, the excess
(if any) of the NOL over the taxable income for each of the prior
taxable years to which such loss was carried must be carried to
each of the succeeding years. Id. A taxpayer may, however,
elect to relinquish the carryback period. Sec. 172(b)(3). The
election must be made, in a prescribed manner, by the due date
(including extensions) for filing the taxpayer’s return for the
NOL year in which the election is to be in effect. Id. A
taxpayer claiming an NOL deduction for any taxable year must file
with his return for such year a statement which computed the
amount of the NOL deduction claimed and sets forth certain
pertinent information.
Petitioner testified that the “losses brought forward”
deduction in the amount of $13,532 claimed on his Schedule C was
the result of “business expenses that exceeded the income” from
prior years. Petitioner presented no authority in support of his
position that the NOL carried forward to 1998 should be included
in the computation of his 1998 net earnings from self-employment
and we reject that contention.
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Last modified: May 25, 2011