Can a Net Operating Loss Be Carried Forward?

Full Question:

For Tax Attorney:Facts:1.I am being audited for the years 2004 & 2005, which are _open_ years for me.2.The IRS is auditing me only for the years 2004 and 2005.3.I have a net operating loss (NOL) carryover (which results from _S_ corporation losses supported by loans) from the years 2003 and 2002. 4.Both of these years (2003 & 2002) are _closed_ years for me.5.The IRS agent indicates that I did not have enough basis from the years 2003 & 2002 to support my NOL to carry it forward to 2004 - which is correct. When the NOL were created, I believed that I had adequate basis, but on review now I can not support the basis of the NOL.Question:Since the years when I established the NOL are _closed_ years - Can my NOL still be carried forward and used to offset income in years 2004 & 2005, even if I did not have enough basis in the NOL in the years of 2003 & 2002 (when the NOL was created) since they (2003 & 2002) are _closed_ years? I
06/16/2011   |   Category: Taxes   |   State: California   |   #25042

Answer:

We are unable to provide a legal opinion, as this service performs information of a general legal nature. We suggest you contact a local tax attorney who can review all the facts and documents involved. Please see the information to determine applicability:

http://www.irs.gov/publications/p536/ar02.html