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M sustained a net operating loss (NOL) and an alternative minimum tax (AMT) NOL in 1985. On his 1985 return, M elected "to forego the net operating loss carryback period and will carry forward the net operating loss." M later sought to carry back only his 1985 AMT NOL by filing an amended 1984 return, contending that the two types of NOLs from a single year may be carried into separate tax years, and that his election did not waive the carryback period for his AMT NOL. The IRS disallowed this treatment, and the Tax Court (opinion Gerber, J.) affirms.
Individuals are permitted to carry NOLs from one tax year to another. An individual's NOL, with certain adjustments, is generally composed of the excess of deductions allowed over gross income.
An NOL deduction computed for a particular year can include NOL carryovers and carrybacks from other tax years. Sec. 172(b) provides for the manner in which NOLs are to be carried back and carried forward. Generally, the entire amount of an NOL is carried back to the earliest year of the carryback period (i.e., three years prior), the excess being carried to succeeding years. Any excess NOL is then carried forward (for up to 15 years) until the NOL is depleted.
Taxpayers may elect to waive the carryback of an NOL from a particular tax year. If such an election is made, a taxpayer may only carry the NOL forward, starting with the earliest year in the carryforward period. A Sec. 172(b)(3)(C) election is irrevocable; it waives the opportunity to carry back the NOL.
The AMT requirements for taxpayers, other than...