Ponzi scheme NOL - is 2-year carry back permitted?

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Subject Author Date Ponzi scheme NOL - is 2-year carry back permitted? Tom Healy CPA 09-24-2009  Re: Ponzi scheme NOL - is 2-year carry back permit... Alan 09-26-2009  Re: Ponzi scheme NOL - is 2-year carry back permit... Alan 09-26-2009
Posted by Tom Healy CPA on September 24, 2009, 2:35 am Please log in for more thread options I know that a "normal" theft loss has a 3-year carry back provision IRC §172(b)(1)(F). And a business net operating loss normally has a 2- year carry back IRC §172(b)(1)(H). But a Ponzi theft loss is treated as a "sole proprietorship" that can elect up to a 5-year carry back if it meets income limits. So my question is: can the Ponzi loss be carried back 2 years because it's treated as a business instead of 3 as for a theft loss? It would make a big difference to my client. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on September 26, 2009, 1:42 pm Please log in for more thread options Tom Healy CPA wrote: > I know that a "normal" theft loss has a 3-year carry back provision > IRC §172(b)(1)(F). And a business net operating loss normally has a 2- > year carry back IRC §172(b)(1)(H). But a Ponzi theft loss is treated > as a "sole proprietorship" that can elect up to a 5-year carry back if > it meets income limits. So my question is: can the Ponzi loss be > carried back 2 years because it's treated as a business instead of 3 > as for a theft loss? It would make a big difference to my client. > I noticed your post in LinkedIn on this issue. I have to agree with Christopher A's answer. I.e., the theft loss carries a minimum carryback of 3 years. When Congress changed the law from 2 back to 3 back, it kept 3 years for theft losses. (Christopher's reference to Sec. 172(b)(1)(F).) In other words, if a there is a business loss that creates an NOL, the normal carryback would be 2 years or forward 20 years. A theft loss still uses 3 back. In addition, if the NOL consists of both a business loss and theft loss, I believe the taxpayer has to make an allocation. I don't have any IRS Guidance on this issue (must I go back 3 or may I use 2 when there is a theft) in my files. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on September 26, 2009, 3:35 pm Please log in for more thread options Alan wrote: > Tom Healy CPA wrote: >> I know that a "normal" theft loss has a 3-year carry back provision >> IRC §172(b)(1)(F). And a business net operating loss normally has a 2- >> year carry back IRC §172(b)(1)(H). But a Ponzi theft loss is treated >> as a "sole proprietorship" that can elect up to a 5-year carry back if >> it meets income limits. So my question is: can the Ponzi loss be >> carried back 2 years because it's treated as a business instead of 3 >> as for a theft loss? It would make a big difference to my client. >> > I noticed your post in LinkedIn on this issue. I have to agree with > Christopher A's answer. I.e., the theft loss carries a minimum carryback > of 3 years. When Congress changed the law from 2 back to 3 back, it kept > 3 years for theft losses. (Christopher's reference to Sec. > 172(b)(1)(F).) In other words, if a there is a business loss that > creates an NOL, the normal carryback would be 2 years or forward 20 > years. A theft loss still uses 3 back. In addition, if the NOL consists > of both a business loss and theft loss, I believe the taxpayer has to > make an allocation. > > I don't have any IRS Guidance on this issue (must I go back 3 or may I > use 2 when there is a theft) in my files. > I should have said "When Congress changed the law from 3 back to 2 back.. " -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Personal Holding Corp/NOL/carry forward-carry back? 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