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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4027
Experience:  35 years tax experience, including four years at a Big 4 firm.
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Is single with no dependents and runs his own barber shop

Customer Question

Larry is single with no dependents and runs his own barber shop business. He had a
$15,000 NOL in tax year 2014 and elected to waive the carryback period and carry forward
the entire NOL. He has not had an NOL for any other tax year. For 2015, Larry’s return
does not require Schedule A, he has no income adjustments other than the deduction for
50% of his SE tax ($3,500). He also has a deduction for capital losses in excess of capital
gains of $2,000. His taxable income is $8,000 without the NOL deduction. What is his
modified taxable income which determines how much NOL is used for tax year 2015?How much, if any, of Larry’s NOL will carry forward to the next tax year?
Submitted: 14 days ago.
Category: Tax
Expert:  PDtax replied 14 days ago.

Hi from just answer. I'mCustomer I'll assist.

I want to put your question through our tax software to confirm the math, and i can do that shortly.

Customer: replied 14 days ago.
Thank you,CustomerReading through Pub 536 and Form 1045 instructions confused me. I could not tell which Schedule or worksheet to use and how to set up the calculation.
Thank you, ***** *****
Expert:  PDtax replied 14 days ago.

I used 49542 schedule C (to create the $3,500 SE deduction), a $2,000 capital loss, and 25,742 as another loss item to arrive at $8,000 taxable income for 2015 before the NOL.

His modified taxable income is taxable income plus exemption ($12,000) plus nonbusiness capital losses of $2,000, for a total of $14,000. That means there is $1,000 available for carryover to 2016.

Thanks again for asking at Just Answer. Positive feedback and a binus if warranted are appreciated. I'mCustomer

Customer: replied 14 days ago.
Thank you,Customer Let me review and see if I can calculate these numbers on the forms. I will follow-up with you. Thank you so much.
Expert:  PDtax replied 11 days ago.

Hi again.Customerhere.

I was prompted to follow up on my previous answer.

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