My client has $75,000 of suspended losses. In 2006 or 2007 their incomes will drop triggering $25,000 of suspended losses. There is a good chance the $25,000 loss will exceed their income. Can this loss, NOL, be carried back to a year in which their incomes are too high to deduct passive losses?
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hope I understand the question,
but here goes anyway:
The NOL is figured on numbers flowing from the 1040, so if a passive loss is suspended, it will not enter the NOL calculation until it is released.
If it is released, then it can be carried back along with the rest of any NOL available to the qualified years.
Once released, I don't believe they would be subject again to the passive activity limits in the carryback years. The NOL is not broken down into component parts, but entered in the prior years as one entry, usually on the Misc Income line.Last edited by abby; 01-23-2006, 08:22 PM. -
ABBY you are correct
Abby, my gut feeling was the answer to my queswtion was going to be hard to find. You inspired me to try looking it up. In Lassers page 237 I found the answer and it is identical to yours. Thanks.Comment
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