NOL Carryforward

[dktax]

I am new to the board but have been reading the posts periodically throughout the season and have found it to be very informative. I have a question re: nol carryforwards. I have not dealt with one in a very long time and don't have much experience with them. I have a new client this year and it shows a fairly large NOL on line 21of his 2008 return. His AGI is showing a negative 25,000 including the NOL. Should I prepare Sch A of Form 1045 for 2008? I have and is that the number that goes on Line 21 for 2009?

I would really appreciate some help as I am getting more and more confused as I work with this. It really is late in the year and we are all getting tired. Thanks in advance.

[Gretel]

Part of your questions.

First, check if election was made on 2008 tax return to forgo carry back.

Second, AGI doesn't tell much. It all depends how much biz income he had and how much personal income.

[dktax]

Sorry, Totally blanked out that on the 2007 return there is an election to carry it forward.

[Maribeth]

Okay, then what you have on the 2008 return is the prior preparer probably just plopped the entire amount of the carryforward down on line 21. That is not what is supposed to be done.

You will need to go to the intervening years calculation on Form 1045. Is it Schedule B? That worksheet will walk you through what should have been shown on line 21 and what amount of the NOL truly was used in 2008.

You will get the amount that is now available for 2009 and you will use the same worksheets to determine how much is going to be used in 2009. That number and only that number should be shown on line 21.

If you start to do a lot of nol c/b or c/f, then you might want to get Tax Tools. They have a nice little nol calculator and intervening years calculator.

Maribeth

[dktax]

Thank you for your replies. I now feel able to complete the return. Where would I find Tax Tools?

[Maribeth]

https://www.taxtools.com

Maribeth