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For the tax years: 2008,2009,2010,2011 I realized NOL for

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For the tax years: 2008,2009,2010,2011 I realized...
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: 4 years ago.Category: Tax
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Answered in 4 minutes by:
12/1/2012
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,847
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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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
JACUSTOMER-1d8g727w- :

ok, so just a little more advice

JACUSTOMER-1d8g727w- :

to make sure I understand you

NPVAdvisor : Of course
JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

I have a math background by the way

JACUSTOMER-1d8g727w- :

I compute the NOL on form 1045 schedule A

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

and I keep adding it up, with correct supplement statement

JACUSTOMER-1d8g727w- :

until I finall hit this year

JACUSTOMER-1d8g727w- :

when I realized a big gain

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

so I am correct?

JACUSTOMER-1d8g727w- :

hello?

NPVAdvisor : Absolutely, you've done it well. It's not "rocket science"
NPVAdvisor : just so ...
JACUSTOMER-1d8g727w- :

ok then one last question same topic

NPVAdvisor : 1. You can substantiate the losses
JACUSTOMER-1d8g727w- :

yes

NPVAdvisor : 2. A large transaction will raise the flag
JACUSTOMER-1d8g727w- :

ok on line 21 other income statement, I see

NPVAdvisor : butflag but it sounds like you've documented well
JACUSTOMER-1d8g727w- :

yeah I know, and I have documented it very well

JACUSTOMER-1d8g727w- :

on the supplemental statement line 7

NPVAdvisor : Ok
JACUSTOMER-1d8g727w- :

Net operating loss caryover from prior year

JACUSTOMER-1d8g727w- :

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?
JACUSTOMER-1d8g727w- :

no this is protax

JACUSTOMER-1d8g727w- :

just need to know that I also understand this line

JACUSTOMER-1d8g727w- :

sorry not pro tax

JACUSTOMER-1d8g727w- :

pro series

JACUSTOMER-1d8g727w- :

it is sort of like lacert

NPVAdvisor : ok, intuit's product ... Yes used it
JACUSTOMER-1d8g727w- :

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?
JACUSTOMER-1d8g727w- :

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 : Yup
NPVAdvisor : sameYup same issue, or logic
JACUSTOMER-1d8g727w- :

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
JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

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
JACUSTOMER-1d8g727w- :

ok, well to sum up

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

that is line 7 of the line 21 supplemental statement

JACUSTOMER-1d8g727w- :

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
NPVAdvisor : yes
JACUSTOMER-1d8g727w- :

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
JACUSTOMER-1d8g727w- :

no problem

JACUSTOMER-1d8g727w- :

I had a lot of rental real estate that fell apart

NPVAdvisor : You're not alone
JACUSTOMER-1d8g727w- :

turned 5M into -5M

NPVAdvisor : Ouch
JACUSTOMER-1d8g727w- :

oh yes a very big ouch

JACUSTOMER-1d8g727w- :

won't do that one again

JACUSTOMER-1d8g727w- :

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
NPVAdvisor : yw
JACUSTOMER-1d8g727w- :

I figured as much

JACUSTOMER-1d8g727w- :

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

JACUSTOMER-1d8g727w- :

take care

NPVAdvisor : You as well .....Positive feedback appreciated ... That's how WE get paid :)
Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 years ago

Gary,

I think you bolted before I replied.


You take care as well
Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 years 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

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 years ago
Hi Gary,


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


Let me know,
Lane
Ask Your Own Tax Question
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,847
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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