NOL Carryback

[Possi]

I have not done one of these before and I need to nail it...

My clients opened a restaurant and closed it 2 years later. The 2 K1s (husband and wife) have a combined loss of over 400k from the accountant.

I prepare the 1045 for the3 preceding years, and I can do a second 1045 for years 4 and 5 with the new law.

Is that right?

Must these forms be mailed in or will they e-file with the return? TaxWise lets me prepare them and it appears that they will e-file.

I hate to have to pass this back to the accountant, but if I'm not confident in my work, I will do that.

[geekgirldany]

I prepare the 1045 for the3 preceding years, and I can do a second 1045 for years 4 and 5 with the new law.

Not exactly sure what you mean. You have to choose one of the following elections to carryback. Either 3, 4, or 5 years. Start with the carryback year and move up. Post some more because I am not exactly sure.

[Possi]

2009 is the yr of the loss

The initial loss is 2009.
Carry back to 2008 and there was no tax in 2008 to benefit the carryback that yr.
Carry back to 2007 and there is about $4500 in tax to get back.
Carry back to 2006 but I don't have that tax return yet to see if it will benefit them.

If there is tax in 2006, I'll go back to 2005, then to 2004. If it is not all used up by then, I will carry forward the balance?

It's SO MUCH MONEY! I don't think it will be all used up in 04,05,06,07 and 08.

[Lion]

Carry

Carry back to the oldest year and then keep carrying forward until used up, skipping 2009 when it was created and jump to 2010 and keep going as long as it takes.

[Possi]

2004 to start

Ok, so I'll get their prior returns and start with 2004.

If they don't have those returns, I can start with any later year and carry forward, skipping 2009 and go on until it's gone.

Just parrot-ing to be sure I get it... I'm kind of "thick"... and tired... no pun intended...

thanks for all the help!

[Lion]

Tired

Hey, it's midnight and I haven't done an NOL in years, so take it with a grain of salt or a lot of caffeine!

[geekgirldany]

If you go back 5 years you start with 2004 and move forward. Also take this into consideration it is from TTB:
An NOL election to carry back fi ve years is subject to a 50% of taxable
income limitation for the carryback year. The 50% limit does not apply if
the NOL can be carried back under one of the other rules, such as a 2008
Small Business NOL or Disaster NOL.

If you can't go back the 5 years because they don't have the returns. Although you could get a transcript of them. Then you can choose 3 years back. Start with 2006 and move forward.

Lion is right that you skip 2009 and then continue on into 2010 and so on until the loss is used up.

This is going to be a big job. What I do is finish the current year and then work on the NOL returns after the tax season. Print out the Pub that is related to NOL. It helped me a great deal.

[Possi]

that's good advise

I'll complete this year and then do the NOL. That way, I can get their refund from this year into their pockets faster.

In doing that, I just let this year's return e-file without the 1045, and file that form separately, right?

Client is getting all the prior returns.

[Possi]

I have them all

If you go back 5 years you start with 2004 and move forward. Also take this into consideration it is from TTB:
An NOL election to carry back fi ve years is subject to a 50% of taxable
income limitation for the carryback year. The 50% limit does not apply if
the NOL can be carried back under one of the other rules, such as a 2008
Small Business NOL or Disaster NOL.

If you can't go back the 5 years because they don't have the returns. Although you could get a transcript of them. Then you can choose 3 years back. Start with 2006 and move forward.

Lion is right that you skip 2009 and then continue on into 2010 and so on until the loss is used up.

This is going to be a big job. What I do is finish the current year and then work on the NOL returns after the tax season. Print out the Pub that is related to NOL. It helped me a great deal.

I just received all the tax returns for 2004 forward.

Since I have the information, I'd like to wrap this up.. especially if I can e-file the 1045's (2 of them for the 5 yr carryback.)

If I get hung up, I know where to go... HERE!



THANKS for being here....

[luke]

and

you're "sure" the clients have $4ooK basis to allow the loss?.......

[Possi]

no...

you're "sure" the clients have $4ooK basis to allow the loss?.......

I was wrong about that.. I took it from memory on a very bad night...

the losses were 122,981 twice... once for hers and once for his.

Still, it's large and won't be used up in the 5 preceding years....

[luke]

Possi I just had one

POSSI - I just had one of these 5 yr NOL carrybacks and TW does NOT accurately reflect the amount of NOL for 5th year back! I had to "manually" calculate and over-ride program to get 1/2 of taxable income deducted (TW lets 100% of 5th year deduct)...

[Possi]

Me too

POSSI - I just had one of these 5 yr NOL carrybacks and TW does NOT accurately reflect the amount of NOL for 5th year back! I had to "manually" calculate and over-ride program to get 1/2 of taxable income deducted (TW lets 100% of 5th year deduct)...

Thanks for the head's up. That part stopped me cold in my tracks.

Now, can we e-file both 1045's with the tax return and it's done?

[luke]

I'm gonna mail

the Form 1045s - 1st they are supposed to be signed - 2nd the instructions say to "mail in a separate envelope" so I take that to mean NOT EF?

[Possi]

Ok

Thanks. I have never done one, and now we carryback 5 years which means I get "baptism by fire" on this form.