thanks so much for still following this. I was at a library computer yesterday and my session timed out. The K1 is from a retail business S Corp I closed at the end of the year. It shows a big loss. In working through my 1040, I've entered that negative amount on the income portion of the form. So a negative number carries over to the top of the second page. Then comes the single exemption, and my itemized deductions. Not sure what a negative income does to those. And then I have a 10% penalty of a bit more than $4,000 for early withdrawal of IRA. I'd like to think the excess negative income would wipe that out.
The K1 income, being from no passive source, meets the criteria I read in the instructions for form 85_ _ in that I owned and was the sole full time employee of the S corp business that was the source of the negative income figure. Hope this helps. I have not been able to find any print resources that address this!
Thank you for using justanswer. It sounds like you might be dealing with a Net Operating Loss. (NOL) In general, a Net Operating Loss occurs when the cost of doing business exceeds the business income. Net Operating losses may be carried back 2 years, or carried forward for 20 years, until the loss is used up. You may choose to forego the carryback period and only carry the NOL forward to future years by attaching a statement to your 2007 tax return to that affect. This choice must be made before the due date of the tax return including extensions and is irrevocable
Since an S Corp is a "pass thru" entity, your Net Operating Loss will be calculated on your personal return by using 2007 Form 1045.
Please see below for more in depth information:
I hope this give you a place to start.
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