Can a Net Operating Loss Be Carried Forward?

Q: What is the 3 year rule for IRS audit?

The 3 year rule for IRS audits states that the IRS typically has three years from the date you filed your tax return to audit it. This period can be extended to six years if you underreport your income by more than 25%. If you fail to file a return or file a fraudulent return, the IRS can audit you indefinitely.

Q: Can the IRS audit me after 3 years?

Yes, the IRS can audit you after three years if certain conditions apply. For instance, if you underreported your income by more than 25%, the audit period extends to six years. Additionally, if you did not file a return or filed a fraudulent return, the IRS can audit you indefinitely.

Q: How many years back can they audit your taxes?

The IRS can generally audit your taxes for up to three years after the return is filed. This period can extend to six years if there is substantial underreporting of income. In cases of fraud or failure to file, there is no time limit on audits.

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

Category: Taxes
Date: 04/07/2025
State: California

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

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the IRS 7 year rule?

The IRS 7 year rule refers to the period during which the IRS can audit tax returns that contain substantial underreporting of income. If you fail to report more than 25% of your gross income, the IRS can audit those returns up to seven years after the filing date. However, if you filed a fraudulent return or did not file at all, there is no time limit for the IRS to pursue an audit.

What is the 3 year rule for IRS audit?

Can IRS come after you after 10 years?

Generally, the IRS has ten years to collect unpaid taxes after the assessment date. This is known as the Collection Statute Expiration Date (CSED). After this period, the IRS can no longer legally collect the debt. However, certain actions can extend this time frame, such as filing for bankruptcy or entering into an installment agreement.

Can the IRS audit me after 3 years?

How many years back can they audit your taxes?

What are the exceptions to the 3 year refund rule?

The three-year refund rule allows taxpayers to claim a refund within three years of filing their return. Exceptions include cases where the taxpayer was unable to manage their financial affairs due to disability, or if the return was filed under the wrong status. Additionally, if the IRS determines that the return was filed fraudulently, this rule may not apply.