Sorry as I know we're in the thick of it all. I have a Schedule C client who had net income of 206k (AGI of 180k) in 2019 and net income of -$71k (AGI of -$61k). Huge swing and huge loss in 2020. Can I carry this loss back directly to the 2019 return? Or do I have to spread amongst the last five years? I've never done a carryback, only a carryforward and I know all these rules changed with the CARES act. So I'm a tad lost and could use some direction. Much appreciated
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See TheTaxBook 1-10 for detailed information
Net Operating Loss (NOL) Carrybacks
See page 8-20, for detailed information & page 5-28 (farms NOL)
NEW LAW
For an NOL occurring in any tax year beginning after December31, 2017, and before January 1, 2021, an NOL must be carried back to each of the five tax years preceding the tax year of the NOL.
The taxpayer can make an irrevocable election to relinquish the carry back period for an NOL for any tax year and thus only carry the NOL forward. An NOL deduction for the tax year equals the aggregate of the NOL carryovers and carrybacks to the tax year (no 80% limit).
Farmers may retain the 2-year carryback.
PRIOR LAW
Prior to the Tax Cuts and Jobs Act (TCJA), in general, an NOL could be carried back two years and carried forward up to 20 years.
Effective for NOLs occurring after December 31, 2017, TCJA repealed the 2-year carryback provision, with certain exceptions for farming and casualty insurance companies. NOL carryovers were limited to 80% of taxable income for the year in which it was carried to, and could be carried forward indefinitely until used up.Last edited by TAXNJ; 04-11-2021, 11:41 AM.Always cite your source for support to defend your opinionComment
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Very much appreciation to you both. Thank you for all the help!Comment
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