Have a Tax Question? Ask a Tax Expert
Now this loss was from the sale of rental property reported on form 4797 of -162,000.
Our combined income income for 2011 is around 75,000.00 so does that full loss
get put against our 75K and the loss balance get carried forward to future years or just
only 25K of that? The sale of the property was in 2011.
Generally - yes - losses may be carried to other years - but there are some rules how to accomplish that.
If you have significant losses this year - most likely - you will have a NOL - Net Operating Loss. Please see for reference the IRS Publication 536
Generally, if you have an NOL for a tax year, you must carry back the entire amount of the NOL to the 2 tax years before the NOL year (the carry back period), and then carry forward any remaining NOL for up to 20 years after the NOL year (the carry forward period).
You can, however, choose not to carry back an NOL and only carry it forward. See Waiving the Carry back Period in the publication referenced above.
You cannot deduct any part of the NOL remaining after the 20-year carry forward period.
Claiming a NOL is relatively complex area of the tax - so most likely you would need a help from the tax professional - but considering total amount of losses - it might worth trying.
Let me know if you need any help or clarification.
Can I carry the loss forward only? If so what paperwork is involved this year and subsequent years to do so?
To make this choice, attach a statement to your original return filed by the due date (including extensions) for the NOL year. This statement must show that you are choosing to waive the carryback period under section 172(b)(3) of the Internal Revenue Code.
Thank You very much for your help. In closing, next years loss
can be deducted for the full remaining balance or is it limited?