NOL Carry backs for years 2020 back to 2016

[Mike37]

I have a client who has an S-Corp who has lost money 3 of the past 5 years. I would like to apply these losing tax years to her profitable tax years 2017& 2018. This would wipe out most of her tax debt. I have just done her returns from 2013-2020. I know I'll have to amend her K-1's and 1040's.

What procedure should I go through to complete this task. Any advice would be appriciated.

Michael Rhodes, EA

[email address removed]

[TaxGuyBill]

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@Mike37 wrote:

I have a client who has an S-Corp who has lost money 3 of the past 5 years.

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S-corporations don't have NOLs, they have pass-through losses.  After applying the usable loss from the S-corporation for each year to the 1040, does that year's 1040 have a NOL (AGI would be negative)?

[Mike37]

I think I understand what you are saying. I'll give an example to clarify.

Client has a 1040 AGI of $189,620 and a K-1 from S-corp with $-100,744 Ordinary Business Income (Loss)

If I can net that out, it would give my client $ 88,876 of AGI.

Am I understanding this correctly..???

[jeffmcpa2010]

Try preparing the tax return and see how it comes out. Of course you need to understand and be aware of the Basis rules when it comes to S-Corp loss in order to determine whether the Loss is allowed.

[Accountant-Man]

Then there is no NOL on the 1040.

[sjrcpa]

And after getting through the basis hurdle the loss is only allowed if it is not a passive loss.