Sch C Losses

[Terry D EA]

I have a client who is a used car dealer with an LLC taxed as a disregarded entity on Sch C. This was setup by another CPA which I have no problem with. This year they are showing a significant loss of 150K. This loss completely depletes any income on 1040. Is the total amount allowable? I have calculated a NOL but am stuck with my thinking that the loss should be limited to income. Should the entire amount of the loss show on the 1040? Tired and can't think straight. Looked at the instructions for Sch C and couldn't find anything. Yes, all investment is at risk to no at risk loss limitation and this is not farming losses so no rules there either.

[jklcpa]

Yes, the whole loss shows on the 1040 and then you calc the NOL and can carry that back 2 years or elect to only carry it forward.

[Terry D EA]

Thanks Judy, I guess in the grand scheme of things, the loss reduces the income to zero and it is the remaining loss that carries either back or forward. Last year we carried a loss back to 2011 and used it all up because it was small. This year it is different and now with some rest, it is easier to understand the logic behind it.