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Statute of Limitation for Tax Carryovers

by David J. Holets, CPA | Oct 06, 2015   ()

It is not unusual for a taxpayer to make an error on a return that results in a misstatement of a net operating loss (NOL) or a credit that is then carried forward. In some cases, these mistakes might not be noticed until after the statute of limitation for the tax year generating the NOL or credit carryover is closed.

Example: W, a C corporation, generated a $10 million NOL and a $1 million Sec. 41 research credit carryover in 2010. W could not carry back either amount. Each year from 2011 through 2014, W had taxable income. In 2015, W expects to use the allowable portions of its 2010 NOL and research credit carryovers. When preparing its 2015 tax return, W discovers the 2010 NOL carryover had been understated by $1 million and the research credit carryover had been understated by $500,000. The statute of limitation for 2010 is closed. Does W have any options to adjust the carryover amounts from 2010?

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Source: The Tax Adviser
Source: The Tax Adviser

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