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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I have a huge non-passive loss on a real estate development

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I have a huge non-passive loss on a real estate development that went bad with the economy.Is there anyway to get a refund instead of using it to offset future income ?

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

If it is an operating loss, the rules require you to carry the loss back for two years before you carry it forward. If you paid tax in the prior years, you may be able to get a refund for those years.

Stephen G :

You'll need to see an accountant (I'd recommend a CPA) with all of your data in order to determine if your loss qualifies, compute the "net operating loss" if applicable and then prepare the refund claims on either 1040X for each year or Form 1045 for the "quickie carryback" if the periods are allowed.


I did the 2 years prior,but still have a sum in excess of $700,000. and am not making hardly any money now to use the credits.Is it legal to request a refund?

There's nothing to be refunded. You can only get a refund of taxes you've paid. The government doesn't give refunds for net operating losses if you don't have any income that was previously taxed to use to offset the losses. If you've received refunds for the prior two years taxes, then all you can do is hold the losses in abeyance to offset future income. If you don't generate future income, then you'll have no income to offset and the net operating loss will remain unused.

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