helow Posted January 24, 2009 Report Share Posted January 24, 2009 TP wants to file 2007. He filed extenstion but still did not file. I did his return and then he brought a sch K1 from an S corp that is now dissolved. He owned 33.33%. The sch K1 shows a loss of $116,655, creating what appears to be an NOL of $46,777. I added NOL worksheet which also showed $46,777 as NOL. I deducted it on form 1040 Sch-E since TP borrowed the money from the bank and must repay it. I would like to know if this is the correct way. On the back of my mind I am asking, could this be shedule D. Also, If I have to carryback, should I carryback to 2004 (3-years) or 2005 (2-years) and what amount? When I add 1040x to 2005 tax I prepared, where does this amount go. I have done his 2005 tax return and when I added 1040x I was not sure how to go about adding the NOL. This is the first time I prepare NOL or even 1040X. I appreciate your quick tutorial and affirmation that the NOL piece. Helow Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted January 24, 2009 Report Share Posted January 24, 2009 You need to go to www.irs.gov and search for net operating loss which would give you the link to the pub. If you have questions after that then please post them. taxbilly Quote Link to comment Share on other sites More sharing options...
helow Posted January 25, 2009 Author Report Share Posted January 25, 2009 Does the NOL carryback go into line 21 of 1040? Thanks Helow Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted January 25, 2009 Report Share Posted January 25, 2009 Need some more facts: 1) Did the corporation dissolve in 2007 or 2008? 2) What is his basis? 3) Is his K-1 loss on line 1 or line 2? 4) Which carryback period does he have (2,3, or 5)? taxbilly Quote Link to comment Share on other sites More sharing options...
helow Posted February 4, 2009 Author Report Share Posted February 4, 2009 Need some more facts: 1) Did the corporation dissolve in 2007 or 2008? 2) What is his basis? 3) Is his K-1 loss on line 1 or line 2? 4) Which carryback period does he have (2,3, or 5)? taxbilly Sorry, I had an emergency and temporarily stopped doing taxes for a while. But fortunately, I am back now and stronger than before. Below are answers to your questions: 1) The corporation dissolved in 2007 2) His basis is 116,655, he co-owned with 2 others. He borrowed the money and has to pay it back with interest. 3) His K-1 loss is on line 1. 4) The loss occured in 2007 and want to carryback to 2005. How do I carryback the NOL to 2005? Do I need to amend the 2005 return (1040x) and claim the NOL? When I added NOL worksheet to 2007 return, I am showing in tab 1, $12, 912 (I reported initially $46,777 but when I entered nonbusiness deduction the loss changed to 12,912)and in AMT Calcualtion tab, I am showing $-1560. My question is where do I need to show these figures? Also, do I need to do anything tabs Ln 24 NOL and AMT Ln 24 NOL? How do I tell the software that I am carrying back the NOL? It is showing me warning, not in red fonts though. I appreciate your help. This is the first time I am working on a return with NOL, so I appreciate any help. Helow Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 5, 2009 Report Share Posted February 5, 2009 TP wants to file 2007. He filed extenstion but still did not file. I did his return and then he brought a sch K1 from an S corp that is now dissolved. He owned 33.33%. The sch K1 shows a loss of $116,655, creating what appears to be an NOL of $46,777. I added NOL worksheet which also showed $46,777 as NOL. I deducted it on form 1040 Sch-E since TP borrowed the money from the bank and must repay it. I would like to know if this is the correct way. On the back of my mind I am asking, could this be shedule D. Also, If I have to carryback, should I carryback to 2004 (3-years) or 2005 (2-years) and what amount? When I add 1040x to 2005 tax I prepared, where does this amount go. I have done his 2005 tax return and when I added 1040x I was not sure how to go about adding the NOL. This is the first time I prepare NOL or even 1040X. I appreciate your quick tutorial and affirmation that the NOL piece. Helow NOLs do not go on either Sch E or Sch D. They go to Line 21 of the next year if you elect to forego the carryback, or on the carryback year. The easiest way, and the fastest way for him to get a refund from this loss, is to add a form 1045 to this year's return, and use it for the carryback. Read the instructions carefully, and then you will be ready to ask questions. Although the 1045 is a separate return, that must be mailed in separately from this year's return, adding it to the return makes it easy to get the NOL worksheet into the proper places. Quote Link to comment Share on other sites More sharing options...
helow Posted February 5, 2009 Author Report Share Posted February 5, 2009 NOLs do not go on either Sch E or Sch D. They go to Line 21 of the next year if you elect to forego the carryback, or on the carryback year. The easiest way, and the fastest way for him to get a refund from this loss, is to add a form 1045 to this year's return, and use it for the carryback. Read the instructions carefully, and then you will be ready to ask questions. Although the 1045 is a separate return, that must be mailed in separately from this year's return, adding it to the return makes it easy to get the NOL worksheet into the proper places. I do not think I can file the 1045 as TP did not file 2007 timely. This is what I am working on now. The only option is to carryback to 2005 and file 1040x. What about the other questions that Taxability raised in his previous message. Thanks much Helow Quote Link to comment Share on other sites More sharing options...
helow Posted February 5, 2009 Author Report Share Posted February 5, 2009 I do not think I can file the 1045 as TP did not file 2007 timely. This is what I am working on now. The only option is to carryback to 2005 and file 1040x. What about the other questions that Taxability raised in his previous message. Thanks much Helow Please respond. Thanks Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 6, 2009 Report Share Posted February 6, 2009 H: 1) Complete the NOL worksheet in the 2007 return. 2) The NOL you get will now go to the 2005 return on lin 21 as a negative amount and you can generate the 1040X. Be sure to attach the 2007 NOL worksheet. 3) Complete the NOL worksheet in the 2005 return to see of you have a carryforward to 2006. 4) If you do, repeat step 2 for 2006. 5) Repeat step 3 in the 2006 return to see if you have a carryforward to 2008. Hope this helps. taxbilly Quote Link to comment Share on other sites More sharing options...
helow Posted February 7, 2009 Author Report Share Posted February 7, 2009 Thanks much. I really appreciate your help. Helow Quote Link to comment Share on other sites More sharing options...
Catherine Posted February 7, 2009 Report Share Posted February 7, 2009 Thanks much. I really appreciate your help. Helow I do, too, as I am looking at one of those myself this year. And it's been long enough since I've done one that I've been dreading it. Catherine Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 7, 2009 Report Share Posted February 7, 2009 The key to the NOL is to take your time and go over the worksheet line by line. I always pull up the instructions to guide me because, as you say, we don't do these every day. Most NOLs are not as involved as Helow's which was due to the client procrastinating and losing the option of going forward rather than carrying back. I don't like carrybacks because it usually opens up a can of worms for the IRS to question. taxbilly Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.