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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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I am Trustee of a Trust where the parent has died in 2008.

Resolved Question:

I am Trustee of a Trust where the parent has died in 2008. In the Trust is a small rental property.

I had a 2012 NOL for the rental in the amount of about $7000, primarily for refurbishing after a bad renter. I have completed a form 1045, and carried the loss back to 2010 and 2011. There is still $2200 to carry forward to 2013.

The question is this: For the $2200 NOL remaining on Schedule B of form 1045, where does it go next? I assume it has to be carried forward somewhere.

Publication 536 (page 8) indicates it goes on Form 1041, "with other deductions not subject to the 2% limit (line 15a for 2012)". If I do this, this is then carried to line 16, and then subtracted from my original NOL ($7000) and results in a line 17 value of ($7000)-($2200) = ($9200). This seems to make no sense, as I end up adding the carryover to the ORIGINAL NOL amount... and then it just stops on line 22.

I assume I need to document this somewhere CORRECTLY, or I'll lose it.
Submitted: 1 year ago.
Category: Tax
Expert:  MequonCPA replied 1 year ago.
Hi and welcome to JustAnswer:

If the NOL was from 2012, the return itself determines the amount to carryback and carryover. The Line 15a reference will apply when you carry the excess loss to 2013. You will enter the ~$2,200 on Line 15a on the 2013 return.
Customer: replied 1 year ago.

Thanks for the reply, but my question is for documenting the carry forward amount remaining; Seems I am still missing something.


From what you are saying, the $2200 remaining NOL carryover to 2013 is NOT DOCUMENTED anywhere on my 2012 Form 1041?


 


If so, this means that the full ($7000) 2012 NOL from Schedule E, line 26 is transferred to the Trust 1041 line 5, carried down with other deductions, and then just stops at line 22, Taxable Income.


 


The (modified) NOL deduction is then used on Form 1045 to figure carry back amounts, and the remaining $2200 just...stops at line 10 on the 1045 after the 2011 tax year. This is what seems so odd; why is this not then documented elswhere? And how will the IRS know where my 2013 NOL carry forward amount of $2200 came from when I file for taxes next year?


 


Lord this is a pita. Thanks for your answer sir.

Expert:  MequonCPA replied 1 year ago.
Hi -

The IRS knows there is an NOL on the 2012 return, and can calculate it from the information provided. What it doesn't yet know is how it is being applied. When you file the amended 2010 and 2011 you've put them on record as to the carryback.

When you file the 2013 return you should attach a schedule showing the full 2012 loss and the amounts that were applied to 2010 and 2011 the balance will be the entry on Line 15a.

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2322
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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