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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15312
Experience:  15years with H & R Block. Divisional leader, Instructor
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My client became a US resident in 2013. He reported an NOL

Customer Question

My client became a US resident in 2013. He reported an NOL for 2013 from his Mexican income. He also had NOL for 2012. On his 2014 Mexican return he had income. Most of it was absorbed by his NOLs from 2013 & 2012. Can he use the NOL from 2012 on his 2014 US tax return?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

A taxpayer may carry over any unused net operating losses from Business allocated and apportioned to income effectively connected with the conduct of Business in the United States while he is taxed as a nonresident alien, and may apply such losses against gross income from Business after he reacquires U.S. resident status.

A taxpayer may carry over any unused net operating losses from Business generated while he was taxed as a U.S. resident, if still available, against his gross income after he reacquires U.S. resident status.

The years in which Taxpayer is a nonresident alien will be taken into account in determining whether any such unused net operating losses from Business are still available under section 172(b)(1).

Section 172(b) generally allows for net operating loss carrybacks and carryovers, without regard to the resident status of a taxpayer. According to the legislative history of section 172(b), a nonresident alien’s net operating loss may be carried, in accordance with section 172(b), to other taxable years for which the tax is imposed pursuant to section 871(b).

If any of the NOL was shown on his 2012 as a NR from business sources in the US, and the NOL has not been used up it would still carryforward even after he became a resident alien.

He cannot carry a loss form a foreign country over to the US return.

I sincerely ***** ***** is helpful.

You can look to IRC Section 873 for further information.

Expert:  Robin D. replied 1 year ago.
I hope the information was useful.