Question: How to apply the refund limitation rules for “change in marital status” under Pub 536 pages 6-7 for NOL carrybacks? Taxpayer widow (Betty) incurred a NOL in 2007 and filed as single. Husband (Bill) died in 2006. Loss was carried back to 2005 & 2006 (joint years). Using the MFS rules nothing could be applied in 2005. Entire loss applied to 2006. I have included my attempt at the refund limitation as shown below.
Per the directions in the Pub “You can claim a refund for the difference between your share of the refigured tax and your contribution toward the tax paid on the joint return. The refund cannot be more than the joint overpayment.”
The steps listed in the Pub for figuring your share of the joint liability seem to be based on the ratio of the MFS calculation based on the total tax (Form 1040 line 63) after applying the NOL carryback. Right?
The really confusing part is figuring your contribution toward the tax paid in the situation where there was an overpayment on the original return. It appears that you use the same method for applying the overpayment that you used for calculating the share of the joint tax liability except that you substitute the taxable income as reported on the original return and the overpayment as refigured after the NOL. Correct?
I have not done a NOL carryback like this before so I would really appreciate feedback from anyone who has experience with this. Thanks!
Per the directions in the Pub “You can claim a refund for the difference between your share of the refigured tax and your contribution toward the tax paid on the joint return. The refund cannot be more than the joint overpayment.”
The steps listed in the Pub for figuring your share of the joint liability seem to be based on the ratio of the MFS calculation based on the total tax (Form 1040 line 63) after applying the NOL carryback. Right?
The really confusing part is figuring your contribution toward the tax paid in the situation where there was an overpayment on the original return. It appears that you use the same method for applying the overpayment that you used for calculating the share of the joint tax liability except that you substitute the taxable income as reported on the original return and the overpayment as refigured after the NOL. Correct?
I have not done a NOL carryback like this before so I would really appreciate feedback from anyone who has experience with this. Thanks!