- quote -

I have had some time to do some research on this subject and
even discussed it with our friends in DC. There is nothing
that precludes a taxpayer from amending a prior year return
to report income, deductions, credits, losses or even a
change in filing status (other than MFJ to MFS). Any
additional carryforward must be applied to subsequent years
and used up until one reaches an open year. If the
carryforward triggers a reduction in tax liability for an
open year, the taxpayer can file a claim for refund for that
open year.

Net: I agree with Seth & Harland.

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- quote -

He may indeed file a ten year old 1040x, but not necessary.
Just begin with the earliest refund year and enclose
necessary documentation with calculations from ten years
ago.

ChEAr$,
Harlan Lunsford, EA n LA

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Harlan Lunsford <12do671gs1siq69[at]corp.supernews.com> wrote:

- quote -

Which leads to an interesting possibility (purely hypothetical):

Taxpayer discovers a 10-year-old large capital loss. He files
an amended return for that year. The next few years he had no
capital transactions, so he loses $3K/year of the loss that he
should have taken.

However, for those years that are still open, he gets to amend
and get refunds based on the carryforward from the closed year.

Seth

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- quote -

Refunds notwithstanding, one may amend a return at any time
after original is filed. Even a really old one.

ChEAr$,
Harlan Lunsford, EA n LA

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TxSrv wrote:

- quote -

Thanks for the confirmation, Fred.

ChEAr$,
Harlan

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- quote -

I believe you may amend a tax return only if the period of
limitations for assessment is open.

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Harlan Lunsford wrote:
- quote -

I'm discussing the law, not what an IRS computer may or may
not catch.

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Seth Breidbart wrote:

- quote -

If unlimited carryover (as to time), it indeed never lapses.
Take the extreme case of still dragging forward at $3,000/yr
a 1970 loss transaction. If audited currently, IRS can
place the full burden upon the t/p as to that big, 1970 loss
transaction and recompute it if warranted. So, t/p can (and
should) also upon discovery of error, recomp the loss C/F
too.

It doesn't follow that 1970 (or any intervening year if no
tax change) need be amended either. It would a question if
audited, not a consequence of return processing. Just save
the details of the recomp in case of an audit.

Fred F.

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sethb[at]panix.com (Seth Breidbart) writes:

- quote -

The year in question is 2004, so it hasn't lapsed yet. Also,
a careful recalculation showed that the increase in loss was
just $1, so no amended return will be filed. I had
originally thought that it was $826, but it wasn't.

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- quote -

Does it ever lapse? I thought only the right to receive a
refund lapsed. In any case, we don't know if that has
happened yet.

Seth

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A.G. Kalman wrote:
- quote -

Y'all are assuming that when a current year's return is
filed, the big computers automatically look backwards to
compare the unused loss and if it doesn't match, they say
"AHAH! a tax cheat!"

nope, don't work that way.

ChEAr$,
Harlan

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hnsl wrote:
- quote -

I don't agree in this instance. He reported his losses on
the return. Once the period for amending lapses, he can't
change his worksheet and increase the carryover for a loss
that was never reported.

You may be thinking of someone who has a carryover that went
unused because there were no capital transactions in a year.

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- quote -

But the D that shows the loss WAS included with the original
return. Why wouldn't the amended D be required to be filed?

--
Don EA in Upstate NY

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hnsl <hnslunsford[at]bellsouth.net> wrote:

- quote -

Because next year, when he has $500,000 in capital gains and
uses a capital loss carryforward to avoid paying taxes on
it, the IRS will look at this year's return and say "What
capital loss carryforward?"

Seth

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Larry Israel wrote:

- quote -

However, Al and Phil; there is one school of thought that
maintains that such a 1040X is not required just to increase
losses. After all, one does the worksheet and maintains it
for his records, not sending it with the original return, so
why send it with a 1040X, OR even send in a 1040X anyway?

39 cents saved. "Look to the pennies and the dollar will
take care of themselves." (Franklin?)

ChEAr$,
Harlan

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"Larry Israel" <VSLARRY[at]weizmann.weizmann.ac.il> wrote:

- quote -

That's all. Remember to amend any later years if this isn't
your 2005 return you're changing.

--
Phil Marti
Clarksburg, MD

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Larry Israel wrote:

- quote -

As long as the year is open you should amend to increase the
carryover.

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Thanks for all the help so far. One (last, I hope) question.
If I want to amend a previous year's return to increase a
capital loss, already over the limit to offset income, do I
just file a 1040X and Schedule D, with an explanation that
the purpose of the amended return is to increase the capital
loss carry-forward? Or is that something that can no longer
be changed?

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