Calculation of ELA income

[TaxGuyBill]

Do you have a question?  If so, please ask it.  Also, you could clarify what "ELA income" means.

[George4Tacks · Accepted solution]

IRS form 461

Part III—Limitation on Losses Use Part III to apply the threshold limitation and figure the excess business loss. See Definitions. 

Line 14 Add lines 9 and 13. The resulting figure can be a positive or negative number. 

Line 16 If the resulting figure on this line is a negative amount, then it is your excess business loss. See Definitions. 

Although it is a loss, you will report the excess business loss adjustment as a positive number on the “Other Income” line on your tax return and enter “ELA” on the dotted line. The “Other Income” lines are located on the following lines based on the type of tax return. 

• Schedule 1 (Form 1040), line 21. 

• Form 1040NR, line 21. 

• Form 1041, line 8. • Form 1041-QFT, Part II, line 4. 

• Form 1041-N, Part II, line 4. 

• Form 990-T, Part I, line 12 (applicable to trusts only). 

[sjrcpa]

Great find. I had no idea what ELA meant.  I'll probably see it for real in a large after April 15 return I have.

[abctax55]

@George4Tacks  -  I owe you for this....I'm working up the extension for my biggest client and this came up.  You saved me from researching the presentation.

[George4Tacks]

You buy lunch!

[abctax55]

It's a date !

[CPA Chris]

I thought the 2019 limit on business losses was suspended due to COVID legislation but lacerte still calculates it on form 461?

[Terry53029]

From IRS: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), amended section 461(l) to restrict the limitation on excess business losses of noncorporate taxpayers to tax years beginning after 2020 and before 2026. The Act repealed the limitation for tax years 2018, 2019, and 2020. If you filed a 2018 and/or 2019 return(s) with the limitation, you can file an amended return.