Question

Discuss the computation of NOL (Net operating losses) remaining to be carried forward after the NOL has been applied in a carryback year.

Keep the TCJA of 2017 in mind if there are any applicable changes that are relevant here. (There may or may not be)

Answer 1

If your deductions for the year are more than your income for the year, you may have NOL.

a ) After completion of tax return for the year. You will have NOL if a negative amount appears on the line below.

(i) Individuals — Form 1040, line 41, or Form 1040NR, line 39.

b ) Determine whether any NOL is appearing in the said line

c ) Decide whether to carry the NOL back to a past year or to waive the carryback period and instead carry the NOL forward to a future year.

d ) Deduct the NOL in the carryback or carryforward year.

e ) Determine the amount of your unused NOL.Carry over the unused NOL to the next carryback or carryforward year.

TCJA of 2017 says ,

" For NOLs arising in tax years beginning after December 31, 2017, an NOL carryforward generally can't be used to shelter more than 80% of taxable income in the carryforward year "