Partnership NOL Carryforward

[Babak]

I have a new partnership client that reported loss last year. Since I did nor prepare their return last year, how can I add it to this year? Is it added to the Partnership return? or to the partners personal taxes?

[George4Tacks]

See if you can reconcile the partners capital accounts for last year. Any loss on the 1065 should have ended up on the K-1s. 

[Babak]

Isn't that going to only apply to their capital balances? So they are not able to use it against this year profit?

[sjrcpa]

Nope. All partnership items pass through to the partners on their K-1s. It's a flow through entity. Partnerships do not have NOLs.

[Babak]

Thank you

[CR EA]

When I enter the K-1 Partners share of income and deductions for a farm partnership, on the partners 2021 Form 1040 Individual return, if it shows a NOL from 2020 line 23, and a NOL on line 24 for 2021 is this a correct way to fill out Explanation Statement?

2020 FORM 1040 NOL CARRYFORWARD $XXX

2021 FORM 1040 NOL CARRYFORWARD $XXXX