Question

In which of the following situations would Bob elect to waive the NOL carryback?

	Bob has a 2017 NOL of $100,000. In 2015 and 2016, he was in the 25% tax bracket. He believes he will be in the 28% tax bracket in 2018. Bob needs cash to pay his business debt obligations to avoid default.
	Bob has a 2017 NOL of $100,000. In 2015 and 2016, he was in the 25% tax bracket and received a substantial refund of $10,000. He believes he will be in the 10% tax bracket in 2018. Bob wants to receive the best advantage possible when deducting his NOL.
	Bob has a 2017 NOL of $100,000. In 2015 and 2016, he was in the 15% tax bracket. He believes he will be in the 28% tax bracket in 2018. Bob wants to receive the best advantage possible when deducting his NOL.
	Bob has a 2017 NOL of $100,000. In 2015 and 2016, he was in the 15% tax bracket. He believes he will be in the 25% tax bracket in 2018. Bob needs cash to pay his business debt obligations to avoid default. Regardless of the tax savings, he needs cash in hand to either purchase business inventory, pay fixed costs, or business expenses to keep the doors open.

Answer 1

Solution:

Bob elect to waive the NOL carryback where, "Bob has a 2017 NOL of $100,000. In 2015 and 2016, he was in the 15% tax bracket. He believes he will be in the 28% tax bracket in 2018. Bob wants to receive the best advantage possible when deducting his NOL."

Explanation:

In this situation, if Bob elect to carryback the loss, he will get benefit of 15% on carryback amount, however if he elect to waiver carryback and carried forward the loss to next period then he will get benefit of 28% on carried forward amount.

Hence 3rd option is correct.