Tax Prep by Deb Posted November 23, 2008 Report Posted November 23, 2008 I have only had one other NOL situation which came up the first year that I did taxes back in 1992. It happened to be my parents, and when I called IRS for assistance I was informed that unless there was other income besides the loss such as wages, investment income ect... I propably did not have a NOL. In their case there was a big schedulc C loss but there was also Interest Income of about 3,400.00. So I did have a NOL and it was a nice suprise for them when we got the check for the refunds of the carried back years. Now I have a client who is showing on line 12 a loss of $6,555.00 as well as line 17 (rental property) loss of $20,731.00. He has no other source of positive income. This was a verrrrrrry bad year for him. The program is telling me that there is a possible NOL and when I do the worksheet it appears that there is, however going back to 1992 where there had to be a positive figure in the mix, I do not have anything on the return that is a positive. Also his itemized deductions, non business related on the schedule A is $20,298.00. He does have a deduction for self employed health insurance deduction for $1,836.00. The reason this comes into play is because he had two businesses last year, one made a profit of $10,424.00 whereas the new business ended up with a loss of $16,979.00 thus the line 12 loss $6,555.00 Therefore line 41 is showing a negative $49,420.00. Do I have a NOL? Has the rules changed? Any help will be appreciated. He is coming in tomarrow to pick up his return and I would love to explain to him that he will probably be getting a refund for some of his 2005 tax return as well as 2006 and carried forward until it is exhausted or 20 years. I am figuring the NOL to be $29,122.00 Can sombody please check me to make sure this is correct? Your help will be greatly appreciated! Deb! Quote
TAXBILLY Posted November 23, 2008 Report Posted November 23, 2008 You don't have a self employed health insurance adjustment since your net earned income is negative. The N.O.L. would be $ 6555 + $ 20731. taxbilly Quote
Tax Prep by Deb Posted November 24, 2008 Author Report Posted November 24, 2008 Thanks Taxbilly for the health insurance deduction. I had a feeling that the program was figuring that wrong. Does any body else have any thought as to my NOL. Do I in fact have one? Deb! Quote
RoyDaleOne Posted November 24, 2008 Report Posted November 24, 2008 Load Form 1045 and Schedule A 1045 Quote
Tax Prep by Deb Posted November 24, 2008 Author Report Posted November 24, 2008 Load Form 1045 and Schedule A 1045 I did that and it appears that I have a NOL. I'm just asking for confirmation, as like I said in the one I did in the early 1990's the words, and example indicated a need for some positive income, for example wages, investment income, ect. I do not have that on this return. The only figures are negatives, so do I have a NOL? Deb! Quote
RoyDaleOne Posted November 24, 2008 Report Posted November 24, 2008 Based on the facts you posted, I am 99% sure you have an NOL. I have done a fair number of NOLs. Quote
Tax Prep by Deb Posted November 24, 2008 Author Report Posted November 24, 2008 Based on the facts you posted, I am 99% sure you have an NOL. I have done a fair number of NOLs. Thanks, I appreciate your response. Everything I have read indicates that I do, but it helps to have someone more experienced in these to re-inforce my thinking! Deb! Quote
TAXBILLY Posted November 25, 2008 Report Posted November 25, 2008 Deb: You are making this more difficult than it is. If you download the NOL worksheet and follow the directions you will see that your NOL is $ 27286 which you would know automatically since you only have two business income/loss entries. taxbilly Quote
Daune/CA Posted December 1, 2008 Report Posted December 1, 2008 Deb, Just an FYI. You do not have to carryback the NOL, there is an election to carryforward any NOL should the future income prove more favorable than using the carryback. If there are income years with less than the NOL in carryback years, you may desire to carryforward so as not to lose any of the NOL without any tax benefit. Daune/CA Quote
Tax Prep by Deb Posted December 2, 2008 Author Report Posted December 2, 2008 Deb, Just an FYI. You do not have to carryback the NOL, there is an election to carryforward any NOL should the future income prove more favorable than using the carryback. If there are income years with less than the NOL in carryback years, you may desire to carryforward so as not to lose any of the NOL without any tax benefit. Daune/CA I believe though, that to make that election the return had to be filed on time. This one was way past the due date. Am I right? Deb! Quote
kcjenkins Posted December 2, 2008 Report Posted December 2, 2008 Yes, you are correct. If it's a late return, you must carry back the NOL. Quote
Tax Prep by Deb Posted December 2, 2008 Author Report Posted December 2, 2008 Yes, you are correct. If it's a late return, you must carry back the NOL. Thanks, that's what I thought I had read, but I always respect others input! Deb! Quote
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