NOL Carryforward to 2022

[cpaJA8]

Can anyone explain the post-2017 NOL limited to 80% of taxable income before any NOL deduction?  Taxable income is negative before.  If I show it all carry forward to 2022, then taxable income is positive.  Do I limit it to 80% of that number?  Do I limit it to 80% of the negative taxable income to carry forward?  I have called Lacerte and the IRS.  Can someone please help?

[cpaJA8]

Anyone?

[Strongsilence-CPA]

Is 2021 an NOL?

It would be helpful if you listed the  NOL amount and the year it originated.

It sounds to me that you are considering whether to carry a 2021 NOL forward or back. Is that right?

[Strongsilence-CPA]

A side issue:

  I had 2 of these situations prior to 4/15 and I expected to see the diagnostic still in my list when I opened the tax return.  But the diagnostic is not there. So I wonder if Lacerte has solved the issue.

[cpaJA8]

NOL Worksheet 1: Comp of 2021 NOL line 24=<873>

Comp of Nonbusiness income 14,190. Nonbusiness Deducts 14,250.

Comp of 2021 Taxable income for NOL utilization: Taxable income <4043>+NOL from 2019 and later=3,110. 2021 taxable income before NOL deduct=<933>.

Schedule 1 line 8A 2019 NOL utilization: Initial loss and NOL carryover avail in 2021=1507. Taxable income before NOL deduct <933>.  NOL absorbed=0. Taxable income after NOL deduct=0. NOL carryover to 2022=1507.

Schedule 1 line 8A 2019 NOL utilization: Initial loss and NOL carryover avail in 2021=1603. Taxable income before NOL deduct 0.  NOL absorbed=0. Taxable income after NOL deduct=0. NOL carryover to 2022=1603.

NOL worksheet 3: Worksheet 1 line 25=873. Excess loss=0. NOL carryover to next year=873.

I do not want to carry any NOL back, only forward.  I keep getting the 80% limitation diagnostic.  I don't absorb any NOL do I since taxable loss?

[Strongsilence-CPA]

You must override the amount of post-2017 NOL carryforward absorbed in 2021 so it does not exceed the 80% of taxable income limit.

The NOL absorbed must be 0 (because 80% of negative TI is 0.)

In Screen 15, for the NOLSs at issue, input a -1 in the "NOL absorbed in 2021" box.  (You listed 2019 twice but I think you have a 2018 and 2019 NOL.)

Finally, review your NOL carryforward to 2022 as a self-check.

The diagnostic will go away.

[cpaJA8]

It was 2019 and 2020 for the NOLs  - my fault.  Thanks for catching it.

Here is another issue with only one prior year NOL.

NOL Worksheet 1: Comp of 2021 NOL line 24=<2700>

Comp of Nonbusiness income 21,176. Nonbusiness Deducts 28,400.

Comp of 2021 Taxable income for NOL utilization: Taxable income <12,555>+NOL from 2020 and later=9,222. 2021 taxable income before NOL deduct=<3,333>.

Schedule 1 line 8A 2020 NOL utilization: Initial loss and NOL carryover avail in 2021=9222. Taxable income before NOL deduct <3,333>.  NOL absorbed=0. Taxable income after NOL deduct=0. NOL carryover to 2022=9222.

NOL worksheet 3: NOL carryover to 2022. Worksheet 1 line 25=2,700. Excess loss=0. NOL carryover to next year=2,700.

If I enter -1 for NOL absorbed, taxable income of 1,278 is created.  Do I then go back and take out the -1 and show NOL absorbed to be 1278*80% = 1022?  And if there were multiple years, would I enter -1 for NOL absorbed until that created taxable income (not a loss) and show 80% absorbed  from there?  I'm probably overthinking but appreciate the help you have already given and any additional you can provide.

[cpaJA8]

Bump

[Strongsilence-CPA]

hey 

I am going to hop off this thread now because I'm not able to answer your questions. But one last question and a thought for you before I go back to my work:

Question: Wouldn't it benefit the taxpayer to use the NOL carryforward in 2021 to avoid tax?

Comment: The NOL absorbed should be the amount that is not allowed.