2019 NOL

[roniswindell]

Will Pro Series Basic automatically carry forward an NOL from 2019 due to Sch C business?  How is that going to work for 2020?

[Just-Lisa-Now-]

A Sch C loss wont necessarily create an NOL...but if you do have an NOL, yes it should carryover to 2020.

[Accountant-Man]

The GOP will be auto carried forward, and will only have to be adjusted if you carried it back.

[TaxGuyBill]

Basic does not have Form 1045, so I assume that means it does NOT calculate the NOL.

If that is the case, you would need to manually calculate and enter it for it to carry forward (or use Professional on a Pay-Per-Return basis).

The 'default' is that a NOL is carried back 5 years.  So if you want it to carry forward, you need to make the election to "Waive the Carryback".

[roniswindell]

Yes, it is an NOL whose source is Sch C.  Yes, you have to do the 1045 manually in Basic, but since all NOLs except some businesses that have special rules, have to be carried forward 2019 on, where do I input it on the 2019 return so that it will pick it up for 2020? 

[sjrcpa]

" since all NOLs except some businesses that have special rules, have to be carried forward 2019 on, " 

This is no longer true. As Bill said, they now go back 5 years unless you elect out. And you can elect out on the 2020 tax return.

[TaxGuyBill]

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@roniswindell wrote:

since all NOLs except some businesses that have special rules, have to be carried forward 2019

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No, the CARES Act changed that.  NOLs are carried back 5 years unless you file the election to Waive the Carryback.  [EDIT]  Susan beat me to it again.   🙂

As for your actual question, I don't remember.  The last time I had to deal with it I used a Post-It note in the client file.   🙂

[TaxGuyBill]

I just checked, and I think that is on the "NOL Worksheet", which is NOT in Basic.  So unless you use Professional for this return, you may need to use the Post-It method.

[roniswindell]

Why does it say this in 2019 Basic when I pull up that election?

                           Filing Election 172(b)(3) In 2019 Smart Worksheet

Note:  Beginning in 2018 this election only applies to certain farm losses and insurance companies

Check this box to make the election to forego the carryback period.     I___I

[sjrcpa]

'cause they didn't update it for the new law,

and where've you been that you don't know about the change?

[Terry53029 · Accepted solution]

Here is a link for you to check the new rules:

https://www.irs.gov/newsroom/frequently-asked-questions-about-carrybacks-of-nols-for-taxpayers-who-h...

[roniswindell]

Thank you. Looks like I can wait to forego until the 2020 return, but I think I will add the election to the 2019 return today just to see what Pro Series will do with that loss.

[rbynaker]

The bigger question in my mind is why don't you want to carry it back and get refunds?

There are lots of valid reasons, I'm not saying these should always be carried back, just curious.

[roniswindell]

After I looked at the carryback years, there was minimal amount of tax savings to be had. The client is on an upswing for 2020, so best use it in a year when it can be most profitable tax-wise.

[rbynaker]

Absolutely, good for you and your client.  It helps to have 9.5 months of 2020 in the bag already to help with tax planning!