$300 NOL from 2020 donation deduction?

[Greta]

Client had zero taxable income in 2020 but gave $300 in donation. Now it seems I'm getting a $300 NOL in 2021. She is a retiree with no business. Is that NOL right?

[jeffmcpa2010]

You know that you are spending time researching an item that affects way less than $100 of tax.

Just taking time to ask the question probably cost that much in you time.

I don't have any idea of the answer, but I try to focus on the questions I have that make a measurable difference.

Big Picture - Probably never affects anyone.

[Greta]

Now that this client is in a far higher bracket in 2021, out pops a $300 NOL deduction. My thinking is that this is a glitch in the software, so I plan to delete the deduction manually, so as not to gum up the processing of 2021.

[PATAX]

Greta the same exact thing has happened to me. I posted this question earlier and I believe the answer was that it may be correct.... the software is Computing it, but not a definitive answer. I would hope the pro series is doing it correctly and that the carry forward is accurate, and I would think that if it is not correct and ProSeries would have corrected this error by now. Maybe on the n o l explanation line just type in "nol carryforward from last year" since that is what Pro Series is doing... . Or you can just ignore and delete the carry-forward if you believe that it is inaccurate . I tried to research this online but I could not find much so I am in the same boat as you. but this is just my opinion Greta and you do what you want to do. Hope this helps.

[Greta]

Thanks. Actually it's happening to several of my retired clients whose income comes purely from a portfolio and who were in a zero bracket in 2020. But 2021 being such a hot stock market year, they are way up in income. To me NOL implies some kind of business loss, not a charitable donation. Just feels weird to have elderly folks with portfolios claiming an NOL.

[PATAX]

You're welcome Greta. Same exact thing here. I will keep researching it and if I find something definitive then I will let you know.

[sjrcpa]

Off the top of my head I do not think it is correct.

But, even it were, NOLs have to be carried back 5 years unless you elected to forego the carryback period on a timely filed 2020 return. So no carryforward to 2021.

[PATAX]

Thanks sjr. I had one a few days ago with a very small amount as a carryover and I just deleted it. It did not affect anything one way or the other anyways. I hope Pro Series provides Clarity in regards to this matter and makes a correction if necessary. I searched again and research this and can't find anything definitive. Might be a glitch like you said.

[IRonMaN]

I thought I read that Drake already has a 2022 form NOL-F ready to use those contribution NOLs next year 😜

[PATAX]

@IRonMaN A friend and colleague uses Drake, and he probably prepares more returns in this area than any other tax preparer. He has been very busy now for weeks, and I can't recall him saying anything recently to me about forms missing or forms Not Ready or Not final, etc...... but the Drake software is a little clumsy in my opinion, and not as user-friendly as Pro Series. And I don't want to learn new software.....

[IRonMaN]

In a word association test, the words Drake and clunky often are matched together.  It's cheaper and forms seem to be released earlier than ProSeries.  But then again, I can't vouch as to how accurate it is when they are trying to be first to cross the finish line.  As long as I can cross that finish line before the race is shut down, I'm good ------------ I don't need to be first.