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William Ellis, CPA
William Ellis, CPA, CPA
Category: Tax
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Experience:  Over 15 years of experience in public accounting
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How do I carry forward an Ordinary Loss from a failed business

Resolved Question:

How do I carry forward an Ordinary Loss from a failed business against personal income?
Submitted: 4 years ago.
Category: Tax
Expert:  William Ellis, CPA replied 4 years ago.

William Ellis, CPA :

Good afternoon and thanks for letting us assist you. Is this a C-corporation that paid taxes the past few years?

Customer :

No. Sole proprietorship.

William Ellis, CPA :

Since you said this is a "failed" business, I am assuming you have closed it down. If the corporation had taxable income, the net operating loss can be carried back for three years and set against the income.

Customer :

Since it was not incorporated, can I simply carry the loss forward against personal income?

William Ellis, CPA :

A sole proprietorship makes this easy. You can set the loss against your other income. If you end up with a net operating loss, you can elect to forgo carrying the loss back and carry it forward until it is extinguished or 15 years has passed.

William Ellis, CPA :

If you don't elect to forgo the carryback period, you'll need to carry the NOL back first.

Customer :

OK, great. Now how do I carry it forward? That is, which form(s)?

William Ellis, CPA :

Use tax software such as Turbo Tax. During the interview, you'll be asked if you have an NOL. Make sure you enter an amount for your AMT NOL as well. If you don't, the NOL won't flow to the return. If you're not sure what the AMT NOL amount is, enter the same amount as the regular NOL. The amount of the NOL will be listed on line 21 of page 1 of the Form 1040. Make sure you enter it in the interview area--look for carryforwards. Different amounts such as tax refunds and municipal bond interest can lower the available NOL. I hope this helps, Bill Ellis.

Customer :

Excellent, and well worth the money. Thanks very much.

William Ellis, CPA :

Thank you!

William Ellis, CPA :

I'd appreciate it if you could post some positive Expert feedback for me. Thanks again, Bill Ellis.

Customer :

Absolutely, although I must ask that you allow me to finish this conference call that I'm on, first.

William Ellis, CPA, CPA
Category: Tax
Satisfied Customers: 296
Experience: Over 15 years of experience in public accounting
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William Ellis, CPA
William Ellis, CPA
240 Satisfied Customers
Over 15 years of experience in public accounting