From the time of enactment in 1997 of income averaging for those involved in a farming business, effective in 1998, the question has been raised about how to handle losses in the three carryback or “base” years. Although the Internal Revenue Service has resisted efforts to allow negative taxable income to figure in to the calculations, recent publications appear to allow the use of negative figures.
"Income Averaging And Losses: An IRS Change Of Position,"
Agricultural Law Digest: Vol. 11
, Article 1.
Available at: https://lib.dr.iastate.edu/aglawdigest/vol11/iss23/1