NOL

[mdmcfarland]

I have a client whose only income is from a schedule C. She as 2 depedants, both in college. I have entered her info into ATX. After the standard deduction is subtracted from the AGI, it shows a negative figure. The program is showing a NOL to be carried forward. Is this correct? Her schedule C shows a profit?

[BulldogTom]

Off the top of my head, I would say on the NOL worksheet, in the area where business expenses are calculated, there is a problem. I don't have the form or program in front of me, but I remember going through all the business versus non-business deductions for an NOL a couple of times before. If you don't do it correctly, you end up with a funny number.

Sorry I can't be of more help.

Tom

Lodi, CA

[DonnaA]

I have a client whose only income is from a schedule C. She as 2 depedants, both in college. I have entered her info into ATX. After the standard deduction is subtracted from the AGI, it shows a negative figure. The program is showing a NOL to be carried forward. Is this correct? Her schedule C shows a profit?

I don't believe your client has a NOL carryover. Personal exemptions are not allowed in the computation, nor is the standard deduction (or itemized deductions) in excess of nonbusiness income. See IRS Publication 536.

[rfassett]

The NOL worksheet, at least in prior years, had you add back the standard deduction. Worksheet or not, your client does not have an NOL carryforward. A net operating loss can not be created with the exemptions or below the line deductions.

[Julie]

rfassett has the right idea.

Read the instructions for the NOL worksheet. Carefully, line by line. I misunderstood it myself at first. There are some entries that, at least last year, we needed to fill in by hand.