Nol

[romajamab]

tax yr 2017 Client has a w2 income of $60,000. They also own a commercial building that is rented all yr. After deducting there expenses for the building there is a NOL for that of $12,000. On the 1040 there income is $60,000 before the nol and after all other deductions there taxable income is now $59000. there federal taxes withheld are $10,941 which gives them a refund. Question is am I able to take the NOL from there building sch E and carry forward to 2018 tax yr

[Burke]

Your figures do not make sense. Is the commercial building titled to another entity? If not and it is in their names, the loss of $12K carries to the TP's 1040. If they have positive taxable income after accounting for that, there is no NOL. You are saying gross income is $60K and taxable is $59K? That's only $1,000 difference. How did that happen even if you did not include the rental loss?

[TaxGuyBill]

For a tax return, "NOL" means that the cumulative total income on the ENTIRE tax return is negative. I think you are just saying they had a loss from renting the property, and therefore there is there is NOT a NOL.

If the building was personally owned and the rental is reported on page 1 of Schedule E, that loss in 2017 would be fully deductible in 2017 if the "Actively Participate" (almost all taxpayers who individually own rentals DO Actively Participate). So that would mean nothing is carried to 2018.


If the rental is owned by an entity (such as a Partnership) and/or the taxpayer does not "Actively Participate" (which is extremely rare for individually owed rentals) and/or there actually is a NOL somewhere (the total income on an entire tax return is negative), the answer could be different. But my answer in my prior paragraph is how I am interpreting your situation.

[TAXNJ]

Always better to have a reference for support:

Since you have more information concerning your scenario, look at The Taxbook starting at 8-19 NOL.

Also, (Pub536) source to see how it may/may not apply.

https://www.irs.gov/pub/irs-pdf/p536.pdf

also,

https://www.accountingtools.com/arti...d-carryforward