NOL Question

[rkhan71]

Late filer for 2013-2016. 2013 and 2014, so far are producing NOL's for self-employed business situation. So, we cannot carry forward only, but have to carryback first to apply losses, where relevant. My question though is, on the 1040 from year to year, does the cumulative NOL get listed on the 1040, line 21, so that it accumulates with the current year losses? What is the usual circumstance for accumulating NOL’s and line 21, if at all. I know that form 1045 comes into play, but wondering how line 21 comes into play for accumulation or not? Does anyone have a worksheet or technical info on this subject matter, other than what the IRS explains?

Thanks for your input.

RFK

[Burke]

The carry-forward option for NOL's is only for timely-filed returns, i.e. within 6 months of the due date which would include extensions. No 1045 is required to be filed for a carry-forward only NOL, but you must file an election and attach it to the return. It is a good idea, however, to complete 1045 for the TP's records to show how it was calculated. This form and/or worksheet should be a part of your software. It is shown on Line 21 as a minus. If the same software is used the following year, this should carryover automatically and be recomputed based on the following year's income and/or NOL if any. So yes, it is cumulative.

On a late filed return, the only option is to carryback.

[rkhan71]

Thank you, Burke

But for complete clarification, for line 21, in a following year, with an NOL, does the cumulative amount show up as calculation on line 21 (or should it)? My concern is whether the carry back, carry forward amount should be on line 21 and added to the present year loss (going forward), so that it shows as a continuous NOL going forward after applying any carry back.

So for clarity, I just want to know if there should be a number on line 21 of the new year when there is a current year loss and an NOL overall for that year (sorry for any repeated thoughts; just to be sure of understanding). I do not want to carry an amount on line 21 in the new year (current) if not appropriate; only on a worksheet or 1045 situation. There is not a lot of direction on examples of this or any pubs info. Very frustrating!

Thanks, again for you comments.

RFK

[Burke]

In my software, when the prior year's information is rolled over to the current year, the NOL carryover amount will show up on Line 21, since at that point no income or deductions have been input into the current year's return. Form 1045 will be in the forms used for the current year and will auto-calculate as information is input and the return is completed. If the TP has positive income that offsets or exceeds the original carryover NOL showing up on Line 21, then there will be no carryover to the following year. If TP has negative eligible income in the current year, it will recalculate and enter the current NOL amount allowed on the return. So, I think the answer is yes to your question if I understand what you are asking. Are you trying to calculate an NOL manually?

[rkhan71]

Thanks, I think I got it...

Based on the latter part (paragraph) of your explanation, I think I got it. (We do) enter the NOL that will be carried back or forward depending on the situation on line 21 going forward. The software was doing that, but I wanted to be absolutely sure that it was calculating properly -- with a current year loss (1040, line 12) and a "cumulative" current forward of NOL on line 21 for following year amount. I was just not sure if the cumulative amount was supposed to appear on line 21.

Thank you.

RFK