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Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4379
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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# For the tax years: 2008,2009,2010,2011 I realized NOL for

### Customer Question

For the tax years:
2008,2009,2010,2011
I realized NOL for each year due to losses in real estate.

I am amending each year, because I did not carry the NOL forward correctly.

Here is what I am doing for example:

2008 NOL indicated on line 21 I reported: -743,260 and I calculated NOL for 2008 of -1,471,053 (using form 1045 and Pro Series tax software)

2009, I continued to report the -743,260 (2008) + -1,471,053 = -2214313 NOL carry forwared, then using form 1045 I compute NOL for 2009 etc

My specific question is: Am I carrying the loss forward correctly. It seems that as long as I have no income to offset this loss against, it will keep moving forward on line 21 from year to year until I finally realize some income and can capture this credit. Ami I doing the carry forward "reporting" correctly by accumulating it on line 21?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor : yes, you are. And you are correct that until you have income the losses can be carried forward. ...... You should apply the oldest losses first as income arises. .... You need to retain the amount of each years loss. Fir this purpose AND because once a given years loss is more than 20 years old, you can no longer use the loss
Customer :

ok, so just a little more advice

Customer :

to make sure I understand you

NPVAdvisor : Of course
Customer :

each of these years 2008 through 2011, I had fantastic losses

Customer :

so using pro series software by intuit, and advice from my cpa

Customer :

I have a math background by the way

Customer :

I compute the NOL on form 1045 schedule A

Customer :

this is then reflected on line 21 of the following year 1040

Customer :

and I keep adding it up, with correct supplement statement

Customer :

until I finall hit this year

Customer :

when I realized a big gain

Customer :

so I want to apply all of that towards my gain,

Customer :

I was just looking for one final oppinion before I sent in my ammended 2009-2011 returns

Customer :

so I am correct?

Customer :

hello?

NPVAdvisor : Absolutely, you've done it well. It's not "rocket science"
NPVAdvisor : just so ...
Customer :

ok then one last question same topic

NPVAdvisor : 1. You can substantiate the losses
Customer :

yes

NPVAdvisor : 2. A large transaction will raise the flag
Customer :

ok on line 21 other income statement, I see

NPVAdvisor : butflag but it sounds like you've documented well
Customer :

yeah I know, and I have documented it very well

Customer :

on the supplemental statement line 7

Customer :

Net operating loss caryover from prior year

Customer :

If you put anything here, then it seems to reduce NOL for current year...Is this the place I put it when I want to finally use it?

NPVAdvisor : Exactly ... Turbo tax?
Customer :

no this is protax

Customer :

just need to know that I also understand this line

Customer :

sorry not pro tax

Customer :

pro series

Customer :

it is sort of like lacert

NPVAdvisor : ok, intuit's product ... Yes used it
Customer :

strange thing is that if you use this product in the future, you may want to know

NPVAdvisor : yes intuit's products seem to expect you to always have som invome
NPVAdvisor : yesincome yes?
Customer :

that if you "import" a previous year, then the program puts your NOL on line 7 automatically which is not correct if you don't plan to use it that year

NPVAdvisor : sameYup same issue, or logic
Customer :

ok good that you concure with me, I had to manually correct it....wooh that is the answer I wanted

NPVAdvisor : Assumption is that you always have some income
Customer :

that would be nice but I had 5 solid years of losses, real beating

Customer :

this year I can finally clime out and start over and I want to use those losses to get me going again

NPVAdvisor : That's what it's there for.... The tax policy is that there should be some incentive for hangin' in there
Customer :

ok, well to sum up

Customer :

1. carry all prior years NOL on line 21 and accumulate the losses with proper documentation for each year until I have a gain

Customer :

2. When I do have a gain, use line 7 to show I am using a portion of the loss carried on line 21 towards the gain

Customer :

that is line 7 of the line 21 supplemental statement

Customer :

Looks like I am good to go then

NPVAdvisor : sounds like you have your arms around it ...Yes, he supp for 21
NPVAdvisor : ok I see it
Customer :

ok thank you

NPVAdvisor : Nice job, what's the business form?
NPVAdvisor : Ok looks like no have what you need
NPVAdvisor : You mind I I change to q and a format? Helps me with MY documentation
Customer :

no problem

Customer :

I had a lot of rental real estate that fell apart

NPVAdvisor : You're not alone
Customer :

turned 5M into -5M

Customer :

oh yes a very big ouch

Customer :

won't do that one again

Customer :

anyway thanks for your time I appreciate it

NPVAdvisor : actuallyOuch actually you're doing this at a good time ... Lots of folks beginning to dig out ... So you situation is not so atypical
Customer :

I figured as much

Customer :

I barely avoided bankruptcy then one of my investments went positive and I recovered

Customer :

take care

NPVAdvisor : You as well .....Positive feedback appreciated ... That's how WE get paid :)
Expert:  Lane replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 1 year ago.

Gary,

I think you bolted before I replied.

You take care as well
Expert:  Lane replied 1 year ago.

Gary,

I was looking to see if you ever provided any feedback, and noticed that the years you are talking about amending begin with 2008.

IRS says that you can only go back three years to amend for refund purposes.

Now, since you're not asking for a refund for THAT year, you may be fine.

I even called my tax atty this AM and he said the same thing, that you should be fine, but you may want to think through how you present this.

One idea s to amend those first couple of years first, with your reason on the 1040x being that you wanted to correct NOL numbers.

Then later amend the most recent year(s).

Another route: get a good EA to work with to make the case that you are not amending for a 2008 refund.

Third idea: amend everything "to get it right," and then continue to use the losses in the future years ... You have until 2028.

Given your question about figuring the loss and correct form usage, my focus was not on the tax years themselves.

Lane

Expert:  Lane replied 1 year ago.
Hi Gary,

I'm just following up with you to see how everything is going. Did my answer help?

Let me know,
Lane

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Lane
Tax Professional
4379 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986