"It's taken a while because he had not been involved in first-team football before he came to us.
"He has done very well but it's only four games.
"If Alan carries on the way he has been, I'd hope we could sort something out for next year.
"It will be a lot clearer by the end of the season - after he has played a dozen matches."
The former Leicester City man has a year left on his current deal at the City Ground, where he fell dramatically out of favour with previous boss Gary Megson.
Taylor added: "It is not a case of agreeing a fee, it would just be a matter of him getting out of his deal.
"I'm sure we will offer him a deal but it's down to Nottingham Forest.
"If he can get out of it, we'll be very interested in taking him on.
"He's a funny lad and he's well liked around the place.
"He's also still hungry to get back to the level he used to be at."