Late NOL carryback waiver could not be made after automatic extension

Plain-English summary

Section 172(b)(3) permits a taxpayer to make an irrevocable election to forgo the net operating loss carryback period by the return’s due date, including extensions. Treasury Regulation section 1.9100-2 supplies an automatic six-month extension when its conditions are satisfied. Chief Counsel advised that because the election deadline is statutory, the IRS cannot grant additional late-election relief after that period. The taxpayer, assumed to be well beyond the automatic extension, therefore had to carry back the redacted-year NOL.

Ruling snapshot

• Question: Could a taxpayer make a section 172(b)(3) election after the six-month automatic extension period had expired?
• Outcome: no; the taxpayer was required to carry back the NOL
• Key authorities: IRC § 172(b)(3); Treas. Reg. § 1.9100-2

Full text (IRS public release)

ID:        CCA_2019040807022939
UILC:      172.01-00

Number: 201919012
Release Date: 5/10/2019
From:
Sent: Monday, April 08, 2019 7:02:29 AM
To:
Cc:
Bcc:
Subject: RE: Section 172(b)(3) Election to Forego Carryback


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An election to forgo an NOL carryback period is available under section
172(b)(3). Under that provision, the election must be made by the due date (including
extensions) for filing the taxpayer’s return for the taxable year of the NOL. Once made,
the election is irrevocable.

Under § 1.9100-2, a taxpayer is allowed an automatic 6-month extension from the due
date of the return (excluding extensions) to make a statutory election whose due date
is the due date of the return including extensions, provided the taxpayer timely filed its
return for the taxable year the election should have been made and the taxpayer takes
corrective action within the 6-month extension period.

Because the deadline for making the election under section 172(b)(3) is prescribed by
the statute, the IRS cannot provide any relief for late elections beyond that provided in §
1.9100-2. In your case, I assume the taxpayer is well beyond the 6-month automatic
extension period. As a result, he cannot make this election and is required to carryback
the ------- NOL.

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