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Carry-Forward Loss from Schedule-C

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ParisJF

Member
Carry-Forward Loss from Schedule-C: My question is; Do I need to use the carry-forward loss in 2018? Or can I save it for some future year?
... I have a net carry-forward loss from a 2017 Schedule-C. The loss exceeded all other income in 2017, the net of which is carried-forward to 2018.
 


LdiJ

Senior Member
Carry-Forward Loss from Schedule-C: My question is; Do I need to use the carry-forward loss in 2018? Or can I save it for some future year?
... I have a net carry-forward loss from a 2017 Schedule-C. The loss exceeded all other income in 2017, the net of which is carried-forward to 2018.
It would be helpful to know why you want to do that.
 

ParisJF

Member
It would be helpful to know why you want to do that.
2017 was not a good year. 2018 was good, but not good enough for applying the carry-forward to make a difference in the taxes (has no impact on Self Employment Tax, only net income). I expect 2019 to be a very good year where applying the carry-forward will have a benefit.
 

LdiJ

Senior Member
I wish I could see your exact numbers, but I will give you an example of what I want to make sure that you understand.

2017 net loss carryforward: 25,000
2018 profit: 5,000, remaining carryforward: 20,000
2019 profit: 15,000, remaining carryforward: 5,000
2020 profit: 25,000, last amount of carryforward reduces profit to 20,000

A carryforward does not necessarily get used just once. It gets used until its used up.
 

ParisJF

Member
I wish I could see your exact numbers, but I will give you an example of what I want to make sure that you understand.

2017 net loss carryforward: 25,000
2018 profit: 5,000, remaining carryforward: 20,000
2019 profit: 15,000, remaining carryforward: 5,000
2020 profit: 25,000, last amount of carryforward reduces profit to 20,000

A carryforward does not necessarily get used just once. It gets used until its used up.
Thank you. And yes, I understand that. Let's use my example...
2016 and prior were very good years ($200k++)
2017 NOL; $25,000
2018 Income from all sources (lines 1-21) is $50,000.
... After "Adjustments to Income (lines 23-35), and my Standard Deduction (line 8) my income is nil.
... I did not need my NOL to get to nil, yet I used it.
... Still have to pay self-employment tax. Not effected by NOL.
2019 is going to be a very good year (back on track).
... I would like to take the NOL in 2019 and not waste it in 2018.
... Since the NOL was incurred prior to 2018, it is not subject to the 80% of income limitation

Question is: Can I skip taking the NOL in 2018 and use it in 2019?
 

LdiJ

Senior Member
Thank you. And yes, I understand that. Let's use my example...
2016 and prior were very good years ($200k++)
2017 NOL; $25,000
2018 Income from all sources (lines 1-21) is $50,000.
... After "Adjustments to Income (lines 23-35), and my Standard Deduction (line 8) my income is nil.
... I did not need my NOL to get to nil, yet I used it.
... Still have to pay self-employment tax. Not effected by NOL.
2019 is going to be a very good year (back on track).
... I would like to take the NOL in 2019 and not waste it in 2018.
... Since the NOL was incurred prior to 2018, it is not subject to the 80% of income limitation

Question is: Can I skip taking the NOL in 2018 and use it in 2019?
The simple answer, is no, you cannot do that. The more complex answer is that some of it may possibly carryforward to 2019 anyway. You need a tax professional. Its April 13th and you aren't going to get one before April 15th at this point. You probably need to file for an extension so you can see one after the 15th.
 

ParisJF

Member
The simple answer, is no, you cannot do that. The more complex answer is that some of it may possibly carryforward to 2019 anyway. You need a tax professional. Its April 13th and you aren't going to get one before April 15th at this point. You probably need to file for an extension so you can see one after the 15th.
Thank you again. I have a CPA and he is working today (and tomorrow, and on Monday). I just thought I would get a jump on it.
... The actual IRS instructions do not specify the NOL must be taken in the year(s) immediately following the year the NOL occurs until exhausted, only that it can be taken in subsequent years (implying there is some discretion as to the year). This is unlike a Capital Gains Loss.
... And I have only read from various tax accountant sources that it can (not must) be taken in the following year(s) until exhausted or expired (20yrs), but not that it must be taken in the year immediately following the year of the NOL if eligible.

The snippet I sent to my CPA...
https://www.irs.gov/publications/p536#en_US_2018_publink1000177402
“… Deducting a Carryforward
If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the "Other income" line of Schedule 1 (Form 1040) or Form 1040NR (line 21 for 2018). Estates and trusts, include an NOL deduction on Form 1041, line 15b, for 2018. You must attach a statement that shows all the important facts about the NOL. Your statement should include a computation showing how you figured the NOL deduction. If you deduct more than one NOL in the same year, your statement must cover each of them.”
ParisJF: Here it says “… to a tax year after the NOL year…” I cannot find anywhere where it specifies that you actually MUST apply the NOL to the following year(s) until exhausted.

But thank you again for your time, consideration, and help. Greatly appreciated.
 

LdiJ

Senior Member
Thank you again. I have a CPA and he is working today (and tomorrow, and on Monday). I just thought I would get a jump on it.
... The actual IRS instructions do not specify the NOL must be taken in the year(s) immediately following the year the NOL occurs until exhausted, only that it can be taken in subsequent years (implying there is some discretion as to the year). This is unlike a Capital Gains Loss.
... And I have only read from various tax accountant sources that it can (not must) be taken in the following year(s) until exhausted or expired (20yrs), but not that it must be taken in the year immediately following the year of the NOL if eligible.

The snippet I sent to my CPA...
https://www.irs.gov/publications/p536#en_US_2018_publink1000177402
“… Deducting a Carryforward
If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the "Other income" line of Schedule 1 (Form 1040) or Form 1040NR (line 21 for 2018). Estates and trusts, include an NOL deduction on Form 1041, line 15b, for 2018. You must attach a statement that shows all the important facts about the NOL. Your statement should include a computation showing how you figured the NOL deduction. If you deduct more than one NOL in the same year, your statement must cover each of them.”
ParisJF: Here it says “… to a tax year after the NOL year…” I cannot find anywhere where it specifies that you actually MUST apply the NOL to the following year(s) until exhausted.

But thank you again for your time, consideration, and help. Greatly appreciated.
All of us are working today, tomorrow and Monday. Its just that I would be surprised if anyone had any appointments left. I certainly don't and neither does anyone else in our firm.
 

ParisJF

Member
My CPA and I go way back. We don't do appointments as I am in Frankfurt and he is in New York, but we correspond via eMail (and maybe a call if it is necessary). We get together when I am back for a casual meet.
... All the best in your final push.! And thank you again for your time and consideration.!
 
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