Non qualified business & net operating loss

[wrnoof]

We have an LLC (partnership) running a charter sailboat business in the British Virgin Islands. Because all income is generated outside the US, we believe we are not a Section 199A qualified business. This year our K-1s show a loss greater than our individual income.

1. May we claim a net operating loss to carry forward to 2024?
2. Does TurboTax calculate that for us and where is it displayed? The only NOL we can find in TT relates to QBI on Form 8995 and the Carryover Wks. However, I can't find anything in Pub 536 limiting NOL to qualified businesses. Am confused.

[PatriciaV]

Yes, if the business loss results in a net operating loss on Form 1040 Line 15, you can choose to carry this loss forward to future returns. TurboTax does this automatically for you on a Carryover Worksheet.

You can read more about NOL carryovers in TurboTax by using the Search function (at the top right corner of the header) for "NOL" and clicking on the "jump to nol" link. The blue "Learn More" link on the NOL page provides extensive information on calculating NOL carryovers and how they may be used in TurboTax.

Per IRS FAQs on Section 199A, the qualified income must be effectively connected with a U.S. trade or business.

[wrnoof]

What really confused me was the fact the NOL is not reported in the year it is created. I kept trying to find a field to insert the prior year's NOL into the prior year's return so it would transfer to the current year return in TT. That field doesn't exist. The NOL year return is simply filed showing the zero or negative income and the NOL is then calculated and explained with an attachment when preparing the carry forward year return. This is not clear anywhere to the self-preparer, not in TT or in IRS pub 536. Once I had that figured out, everything else was easy.