2555 and NOL

[mvp2885]

Is there a way to suppress/remove the NOL when the NOL is being caused by form 2555. The client does not have any other income and they qualify on the basis of the Bona Fide Residence Test. 

Any help on how I can suppres/remove the NOL in proseries would be helpful. 

Thank you! 

[sjrcpa]

A 2555 Earned Income Exclusion would not create an NOL.

Possible negative AGI, yes,  depending on what else is on the return, but that does not equal NOL.

[mvp2885]

You are correct, 2555 should not create an NOL. Line 8 shows as - $16,022, so this pushes the AGI to -$16,022. But this is not correct? Again, the $16,022 (the 2555 income being excluded) is the only income. 

[Just-Lisa-Now-]

Im not sure what youre trying to do is correct or not, but the NOL should show up on the Federal Carryover Worksheet, Line 14.   Can you find a way through there to adjust it?

[sjrcpa]

You first have to include the 16,022 as income - either wages or Sch C income. Then you exclude it on the 2555. Net would be -0-.

[mvp2885]

Thank you! 

[sjrcpa]

You're welcome

[Taxes-by-Rocky]

If Schedule C.....1/2 S/E tax deduction may give rise to NOL....despite 2555 netting to zero.  See NOL classification worksheet.

P.S.  That was a new one for me too this year!

[sjrcpa]

"If Schedule C.....1/2 S/E tax deduction may give rise to NOL."

Probably not. The exclusion would be Sch C net income less deductions related to that income (1/2 SE tax, SE health ins, SEP)

[Taxes-by-Rocky]

I thought the same thing until I discovered that the 2555 exclusion only excludes Schedule C net income from income tax....but not from S/E tax.  Hence, the S/E tax that is still owed despite the FEIE.  Then comes the question, is it a business or nonbusiness deduction for NOL purposes.  PS dumps it into business.  It was small so I went with it for the lack of any other logical answer.