Farm Net Operating Loss

[Christian]

I have a farm return with an existing operating loss carried over from a prior year (new client). In deducting this loss for 2014 (farm had a profit in 2014) is the loss deducted as an expense item on his farm Schedule F or shown as a separate line item deduction on Form 1040 ?

[DougO]

A properly computed Net Operating Loss should be shown on line 21 of Form 1040.   There are other items besides just a Sch F loss from a prior year that would go into the amount of any NOL carryover.   And did the taxpayer elect to carryover the loss rather than first carry it back on the prior year return.  

[rfassett]

I have a farm return with an existing operating loss carried over from a prior year (new client). In deducting this loss for 2014 (farm had a profit in 2014) is the loss deducted as an expense item on his farm Schedule F or shown as a separate line item deduction on Form 1040 ?

You are asking about one of the greatest inequities in federal tax laws. You would think that you should be able to use a loss carry forward to offset income where the loss originated. And in the case of C or F, you would also be offsetting self-employment income. Doesn't work that way. Capital loss carry forwards offset current capital gains. But it does not work that way for C and F. You put your NOL carry forward on line 21 of form 1040.

[Christian]

I thank both of you for your timely response. He elected some time back to carry forward the loss so no problem there. I do a few farm returns but most of them turn a profit. I find it ridiculous that the loss cannot be deducted on Schedule F. I was reasonably sure it was deducted on the 1040 but it's great to have folks who can help.