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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2324
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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I have a significant nonpassive loss from Schedule K-1 for ...

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I have a significant nonpassive loss from Schedule K-1 for 2007 that after it is applied on line 17 of F1040 results in a negative AGI and zero tax for 2007. I am only able to carry forward a small amount of the negative AGI into 2008. Also, I will losing all my itemized deductions and exemptions for 2007. BotXXXXX XXXXXne is that I am only able to really recover a small amount of the loss in taxes. Is this right? Is there something that I am missing? Can the loss be broken down over multiple years?
Submitted: 6 years ago.
Category: Tax
Expert:  MequonCPA replied 6 years ago.

DearCustomer-

If your loss is allowed in 2007, it must be included in 2007. You must now determine if you have a Net Operating Loss (NOL) and if so, the amount.

To begin you need to complete Schedule A of Form 1045 to determine if you have a net operating loss. Link to form and instructions below.

http://www.irs.gov/pub/irspdf/f1045.pdf

http://www.irs.gov/pub/irs-pdf/i1045.pdf

Once you have determined if you have an NOL and the amount, you may have 2 options. If you have not yet filed the the return, you can choose whether you want to carry the loss back 2 years. First to 2005 and if any amount is left, then to 2006. If there is still some loss remaining, you can carry it forward to 2008. Your other option is to include an election with your 2007 return stating that you want to forego the carryback period and elect to carry the loss forward. If you have already filed the return, you will be required to first carry the loss back, because you did not include the election on your originally filed return.

 

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2324
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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