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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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How do NOL carryback and carryforwards work when the loss is

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How do NOL carryback and carryforwards work when the loss is coming from a S-Corp?

Randalltax :

NOL works the same way no matter what the business source is. First, after you determine that you have an eligible loss in your S-Corp (because a deductible loss CANNOT exceed your actual basis in the corporation), you would determine your Net Operating Loss carryback amount.

Randalltax :

THe NOL amount is computed on Form 1045, Schedule A.

Randalltax :

Just because the S-Corp has a loss, does NOT mean you have an NOL.

Randalltax :

The allowable S-Corp loss must then be greater than all your other positive income.

Randalltax :

Unless you make an election otherwise, the loss amount calculated on Schedule A is carried back TWO tax years. You fill out Form 1045 to show the effect. Any remaining loss can be carried to the next tax year. If an amount still exists, then it skips the current year (because it is alreadyd in there) and goes forward to the next year.

Randalltax :

If your S-Corp loss is greater than your basis (the amount you actually invested), then the loss remains unusable until you either have a gain to offset some of the loss or you increase your basis.

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Generally, my compatriot is correct, BUT since you originally asked for me & since I know your circumstances & Mr. Klein doesn't, you should know that if your S-Corp Operating loss results from the Special Election to expense Qualified Leasehold Improvements, there is NO CARRYFORWARD of the Section 179 deduction related to the expensing of the leasehold improvements;

The following is a link to an excellent summary of the rules relating to the 179 election as it applies to leasehold improvements as well as a discussion as the benefits of the bonus depreciation choices verses the Section 179 election; this article points out that in your particular circumstances, my general comment about using the Section 179 deduction being preferable, may not be the case for you.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7122
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Tax Specialists are ready to help you
Customer: replied 5 years ago.
Stephen E. Grizey, can you please reply to my other questions as well.. and let me know if the same situations applies to them as well... Bonus Depreciation vs Section 179

OK, but I think other experts have already answered them because we were working on another question & they all got moved to the general pool.
Customer: replied 5 years ago.
You can simply make similar comments talking about my situation and Bonus Depreciation vs section 179

OK, I'll check them out.

Ok, I'll do my best.