Understanding losses, carryback/forward

[feedthebirds]

Thank you for your patience with me ahead of time. I am really nieve when it comes to tax things.

We opened a business this year but were put out of business by a big box store that opened across the street 2 months after we opened, I could not compete with them.

I have a great loss. I only sold roughly 11k of 35k of product (which I am having a giant sale right now or it will end up in my garage). I have over 55k in business deductions (provided my deductions are accurate). We always claim a refund from our personal taxes, so there is nothing for me to offset.

I obviously have alot of personal debt from this business that I need to pay off.

My question is do I have to take a carryback/forward? I am closing for good, I will dissolve my LLC as soon as I can. Can I just get a refund? Is there a cap on my loss/deductions that will prevent this? Can anyone help me understand what I am facing?

I just want out of this as soon as I can, I'm done. I can't eat or sleep. I am trying to learn as much as I can about what my taxes this year will entail.
My cpa is out of town for the next 2 weeks, so any advice would be greatly appreciated. I know it is advice only, I am not looking for any legal counsel.

[Deborah]

Carryback/Carryforward

You did not say what type of taxable entity your business is - but, nevertheless, a Net Operating Loss is computed based on your personal return. There are worksheets in the IRS publication that deals with Net Operating Losses. Just because your business shows a loss does not mean you have a Net Operating Loss to carry back or carry forward. First you need your business tax return done - then your personal return - then you do the worksheet and see if you have a loss to carry forward or carry back.

[veritas]

A NOL is

carried back two years and then brought forward to each suceeding year until used up (20 years) for federal purposes. Your state may have different rules. There are different rules for farmers.

You can also elect to forgo the carryback and carry it forward.

See IRS Pub. 536 for more information.

[ED SMITH]

You will have to consult with your CPA or another qualified tax preparer such as an enrolled agent. They will have to look at you previous two years tax returns to determine if you have a possible refund from carrying the loss back to these years. Any remaining loss can then be carried forward.

You will also want to be sure the return is timely filed, including extensions, or you will lose the right to waive the carryback, which depending on the circumstances may or may not be favorable.

[dsi]

Feedthebirds, given the info your offered above one would think you should be seeing another refund, unless you were operating as a C-corp. Get some rest, meet with your tax advisor as quickly as you can.