If a taxpayer has a net operating loss (NOL) in 2017 of $20,000, of which $8,000 is attributable to a theft of rental use property, the taxpayer may:
A)Carry all of the NOL of $20,000 back 5 years.
B)Carry all of the NOL of $20,000 back 3 years.
C)Carry $8,000 of the NOL back 3 years and the remainder of the NOL of $12,000 back 2 years.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

The theft loss of rental use property is subject to specific rules and must be carried back two years before it can be carried forward. Therefore, the taxpayer may carry back $8,000 to the earliest of the prior three years and carry forward the remaining NOL of $12,000. The remaining NOL of $12,000 can be carried back two years and carried forward 20 years. Therefore, the correct answer is C.

If a Taxpayer Has a Net Operating Loss (NOL) in 2017