Client has rental apartments, and it is his only source of income, he has an NOL of $3,329, and when asked how did you survive? says that he took out an Equity Loan and lived on that.
So the question is do I file the form 1045 or the 1040X or both, according to 1040X instructions it says both (rather confusing)?? and am I correct in not allowing him to deduct the interest of the Equity Loan because he used it for personal needs rather than for business?? I looked at Pub 536 and managed to do 1045 which seemed very easy since he had nothing on his 1040 except for the NOL and standard deduction. I know he can't carry forward all his NOL because this return is for 2006 and it already too late for that option, so he must carry the NOL for two years back. also he sold his aprtments in 2007? So keeping all this in mind what do I need to worry about??
Any input will be highly appreciated?? It seems being new in the business I am getting hit with the hard ones, but it is a good way to learn so didn't turn him away.
So the question is do I file the form 1045 or the 1040X or both, according to 1040X instructions it says both (rather confusing)?? and am I correct in not allowing him to deduct the interest of the Equity Loan because he used it for personal needs rather than for business?? I looked at Pub 536 and managed to do 1045 which seemed very easy since he had nothing on his 1040 except for the NOL and standard deduction. I know he can't carry forward all his NOL because this return is for 2006 and it already too late for that option, so he must carry the NOL for two years back. also he sold his aprtments in 2007? So keeping all this in mind what do I need to worry about??
Any input will be highly appreciated?? It seems being new in the business I am getting hit with the hard ones, but it is a good way to learn so didn't turn him away.
Comment