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Category: Tax
Satisfied Customers: 12050
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a subs loss that exceeds my income for 2015. Is the

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I have a subs loss that exceeds my income for 2015. Is the difference available to carry over on the 1040 to 2016. And if so how. is it a NOL.
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Submitted: 10 months ago.
Category: Tax
Expert:  Lane replied 10 months ago.

Hi. My name's Lane. I can help you here (sorry about the bot. I am truly a warm body)


You said "I have a subs loss ..." I'm going to assume that you mean an S-Corp loss (Subchapter S).


And yes, any business loss that passthrough to your 1040 and then exceeds your total taxable income for the tax return is indeed an NOL (Net Operating Loss)


The basic rules for using an NOL are:

  • Carry the amount back to the preceding two tax years and apply it against any taxable income, which can generate an immediate tax refund. You can waive this action and instead proceed directly to the next step; if so, attached a statement to your tax return in the year in which the NOL was generated, documenting the waiver.
  • Carry the amount forward for the next 20 years and apply it against any taxable income, which reduces the amount of taxable income in those years.
  • After 20 years, any remaining NOL is cancelled.

It makes financial sense to apply the NOL against the earliest periods possible, since the time value of money dictates that the tax savings in these periods is more valuable than for any tax savings in later periods.


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Thank you!


I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.