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Ponzi scheme NOL - is 2-year carry back permitted?

I know that a "normal" theft loss has a 3-year carry back provision IRC §172(b)(1)(F). And a business net operating loss normally has a 2- year carry back IRC §172(b)(1)(H). But a Ponzi theft loss is treated as a "sole proprietorship" that can elect up to a 5-year carry back if it meets income limits. So my question is: can the Ponzi loss be carried back 2 years because it's treated as a business instead of 3 as for a theft loss? It would make a big difference to my client.

Reply to
Tom Healy CPA
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I noticed your post in LinkedIn on this issue. I have to agree with Christopher A's answer. I.e., the theft loss carries a minimum carryback of 3 years. When Congress changed the law from

2 back to 3 back, it kept 3 years for theft losses. (Christopher's reference to Sec. 172(b)(1)(F).) In other words, if a there is a business loss that creates an NOL, the normal carryback would be 2 years or forward 20 years. A theft loss still uses 3 back. In addition, if the NOL consists of both a business loss and theft loss, I believe the taxpayer has to make an allocation.

I don't have any IRS Guidance on this issue (must I go back 3 or may I use 2 when there is a theft) in my files.

Reply to
Alan

I should have said "When Congress changed the law from 3 back to

2 back.. "
Reply to
Alan

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