Different tax returns for state/Fed

Discussion in 'Taxes and Accounting' started by SideShowBob, Dec 7, 2012.

  1. First, I realize tax advice on a public forum is often worth less than what you pay for it.

    That said, we had a large gain in 2010 in futures (section 1256) and then a large loss in 2011 (large but a lot less than the gain in 2010). Since section 1256 allows amending prior returns and carrying back the losses, I will be amending my 2010 return using a carryback loss and getting a refund on my 2010 federal return.

    However my state return does not allow carryback. So there's no point in amending my 2010 state return. For 2012 on my federal return there will be no carried over loss (because it was applied to my 2010 return). Can I still carry it over on my state return? Usually the numbers are carried to the state return directly from the federal but in this case the state will rape me twice (on the lack of carry back and also on the fact I can't carry it forward). Is there a *legal* way to carry it forward only on my state return?

    I imagine I can't be the only one getting raped by my state.

  2. Yes, you can do a carry back on your federal return and if your state decoupled to block the carry back and allow a carry forward instead, then do just that.

    California doesn't allow NOL carry backs, but they do allow carry forwards in a limited way. So do your best to get that carry forward. Meanwhile, you get your federal NOL carry back refund.

    NJ doesn't allow any losses. States do decouple on some issues.

    Our CPA tax preparers deal with decoupling issues in states all the time, much more than me as I focus on consulting and content.