Form 1045 Sch B

[jlew1229]

I have a client with an NOL carryback. I had filed a 1040X for the years affected. The IRS sent my client a letter stating that form 1045 Schedule B is the only form approved by the Internal Revenue Service to compute an NOL carryover. I thought you could do either, (1040X or Form 1045) but guess not.

The IRS is stating a different NOL carryforward than Lacerte computed on Federal Statements worksheet. The IRS is not taking into account that Social Security is no longer taxable and Itemized deductions have changed. So, their calculations use up much more NOL than what the Lacerte worksheet calculated in Federal Statements.

Is the worksheet that Lacerte has to calculate the NOL carryforward incorrect? I was going to populate box 2 of form 1045 Sch B with the amounts from the Lacerte worksheet. Then I just need to figure out how to get Itemized Deductions adjustment to populate.

The Lacerte worksheet has itemized Deductions adjustments when calculating the NOL carryforward, but I cannot get form 1045 box 7 to populate. The form 1045 instructions for Line 7 states it only use it if you put something in line 3-5, which I did not, so I am wondering why Lacerte worksheet has itemized deductions adjustments

For reference. The NOL carryback is $41,937. The original form 1040 had taxable income of $ 12,630.00 -. The Lacerte NOL worksheet has taxable income of -2950.00. Which is the new taxable income with the NOL added back in. Lacerte then added back $ 2421.00 in itemized deductions. IRS wants to use up $ 16,630 of NOL. Lacerte worksheet only used up $3,471.00. I would really like to have the IRS agree with the $3,471.00.

Is the Lacerte worksheet correct, and the IRS should have taken into account that Social Security is no longer taxable, and itemized deductions have changed?

Thank you in advance for the help.

[Terry53029]

You can use 1040X, but have to include a copy of 1045 schedule A. here are the instructions:

Form 1040-X or Other Amended Return

Individuals can get a refund by filing Form 1040-X, Amended U.S. Individual Income Tax Return, instead of Form 1045. An estate or trust can file an amended Form 1041, U.S. Income Tax Return for Estates and Trusts. In most cases, you must file an amended return no later than 3 years after the due date of the return for the applicable tax year.

If you use Form 1040-X or other amended return, follow the instructions for that return. Attach to the amended return a copy of Schedule A of Form 1045 showing the computation of the NOL and, if applicable, a copy of Schedule B of Form 1045 showing the computation of the NOL carryover. Complete a separate Form 1040-X or other amended return for each year for which you request an adjustment.

You must file Form 1040-X (or other amended return) instead of Form 1045 to carry back:

• Any items to a section 965 year,

• A prior year foreign tax credit released due to an NOL or net capital loss carryback, or

• A prior year general business credit released because of the release of the foreign tax credit.

The procedures for Form 1040-X and Form 1045 are different. The IRS isn't required to process your Form 1040-X within 90 days. However, if we don't process it within 6 months from the date you file it, you can file suit in court. If the IRS disallows your claim on Form 1040-X and you disagree with that determination, you must file suit no later than 2 years after the date we disallow it.

[jlew1229]

Thank you for the reply. I was able to create the 1045 Schedule A

Would you be able to help with the form 1045 Sch B part of the question as well? The IRS is adjusting the NOL carry over that was submitted. The IRS is not taking into consideration that once the NOL gets carried back, Social Security is no longer taxable. Shouldn't the taxable income on line 2 of Schedule B reflect this? The IRS Schedule B is using taxable income from original return. I want to add back the NOL to the taxable income from the amended return.

Thanks

[Terry53029]

Sorry I use Pro Series, and not familiar with Lacerte. maybe @BobKamman can help out.

[BobKamman]

I use ProSeries, not Lacerte. I looked at the Form 1045, Schedule B instructions, and they do say that SS should be recomputed:

Line 6—Adjustments to
Adjusted Gross Income
If you entered an amount on line 3 or
line 4, you must refigure certain income
and deductions based on AGI. These
include:
• The special allowance for passive
activity losses from rental real estate
activities,
• Taxable social security benefits,

Tell your client that as long as half of Congress wants to prevent IRS from hiring enough qualified people to do the job, you just have to put up with incompetence.

[jlew1229]

Thank you so much everyone for helping me.

There is not a Capital loss deduction or Section 1202 exclusion, so nothing entered in box 3 or 4.

I guess my question is on box 2. Do you use the original return taxable income number, or can I use the amended return taxable income and just add back the NOL?

Thank you again for your help. I really appreciate it.