Due to an unusual event,a taxpayer has a large loss in the current year,resulting in an NOL.The taxpayer expects next year's taxable income to return to the same approximate amount he reported in last few years,however he expects his income tax rate to increase after this year's election.The taxpayer should elect to forego the carryback period.

Question

Quizplus · Accepted Answer

By electing to forego the carryback period, the taxpayer can carry the NOL forward to offset future taxable income at a potentially higher tax rate. It makes sense in the given scenario where the taxpayer expects an increase in tax rate.

Due to an Unusual Event,a Taxpayer Has a Large Loss