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Can I carryover a business loss from a sole proprietorship to following year. If so what form do i use.

 
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IsabellaG
Employee Tax Expert

Can I carryover a business loss from a sole proprietorship to following year. If so what form do i use.

Not unless your business loss creates a Net Operating Loss (NOL). Normally, a business loss reduces your other taxable income in the year that it occurred, and there is no carryover.

But you could have a carryback/carryover if you had an actual Net Operating Loss (NOL). If you had a negative taxable income in 2017 before considering personal exemptions, you might have had an NOL for 2017.Generally, if you have an NOL for a tax year ending in 2017, you must carry back the entire amount of the NOL to the 2 tax years before the NOL year (the carryback period), and then carry forward any remaining NOL for up to 20 years after the NOL year (the carryforward period). You can, however, choose not to carry back an NOL and only carry it forward.

 See this link to IRS Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. The calculation is one that you will have to do on your own, using IRS Form 1045. It doesn't automatically carry forward or back to other tax years.

To find the NOL section of TurboTax, type NOL in the search box in the upper right hand corner of your screen. Then click "Jump To" to be directed to that section. See the screenshot below. 

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4 Replies
IsabellaG
Employee Tax Expert

Can I carryover a business loss from a sole proprietorship to following year. If so what form do i use.

Not unless your business loss creates a Net Operating Loss (NOL). Normally, a business loss reduces your other taxable income in the year that it occurred, and there is no carryover.

But you could have a carryback/carryover if you had an actual Net Operating Loss (NOL). If you had a negative taxable income in 2017 before considering personal exemptions, you might have had an NOL for 2017.Generally, if you have an NOL for a tax year ending in 2017, you must carry back the entire amount of the NOL to the 2 tax years before the NOL year (the carryback period), and then carry forward any remaining NOL for up to 20 years after the NOL year (the carryforward period). You can, however, choose not to carry back an NOL and only carry it forward.

 See this link to IRS Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. The calculation is one that you will have to do on your own, using IRS Form 1045. It doesn't automatically carry forward or back to other tax years.

To find the NOL section of TurboTax, type NOL in the search box in the upper right hand corner of your screen. Then click "Jump To" to be directed to that section. See the screenshot below. 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
dermytaxi
New Member

Can I carryover a business loss from a sole proprietorship to following year. If so what form do i use.

> The calculation is one that you will have to do on your own, using IRS Form 1045. It doesn't automatically carry forward or back to other tax years.

 

Are you saying that there is nothing to help me with this in TurboTax? Huge omission. Please fix this!

 

> To find the NOL section of TurboTax, type NOL in the search box in the upper right hand corner of your screen. Then click "Jump To" to be directed to that section. 

 

Using 2020 TurboTax Home & Business

 

There is a ? in the upper right corner of the window (not screen). Is that what you mean? I entered NOL there and the only search results were articles. Nothing about navigating in the UI.

 

What do I do?

Thanks

 

Can I carryover a business loss from a sole proprietorship to following year. If so what form do i use.

There is no fix to be had ... even professional programs require an NOL to be computed manually.   Seek professional assistance if needed.  

Can I carryover a business loss from a sole proprietorship to following year. If so what form do i use.

 

If your AGI is negative, after you click "Done with Deductions" at the bottom of the screen "Your 2019 Deductions & Credits," a couple of screens later it will ask you if you have an NOL for 2019 . If you select Yes, the next screen will ask you whether or not you want to carry it back. If you elect not to carry it back, it will include the necessary election form in your return. I believe you will still be able to e-file.

 

You can also get to this topic in the interview by entering "nol elections, current year" in the Find box at the top right. When you type NOL, this will be one of the choices in the drop-down list.

 

No edition of TurboTax includes Form 1045. You can download the form and its instructions from the following links on the IRS web site. You have to do the calculations and fill out the form yourself. The form includes Schedules A and B. Form 1045 is not part of your tax return. It is filed separately.

Form 1045: http://www.irs.gov/pub/irs-pdf/f1045.pdf

Instructions: http://www.irs.gov/pub/irs-pdf/i1045.pdf

 

 

While inside the software and working on your return, type nol carryforward in the Search at the top of the screen (you may see a magnifying glass there).  There will be a popup that says Jump to nol carryforward.  Select that link.

Here's more information on NOLs that may be helpful to you: IRS Pub 536 Net Operating Loss

 

No edition of TurboTax includes Form 1045. You can download the form and its instructions from the following links on the IRS web site. You have to do the calculations and fill out the form yourself. The form includes Schedules A and B. Form 1045 is not part of your tax return. It is filed separately.

Form 1045: http://www.irs.gov/pub/irs-pdf/f1045.pdf

Instructions: http://www.irs.gov/pub/irs-pdf/i1045.pdf

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