Section 465(d) carryover refers to a loss that was limited in a prior year due to the "at risk" rules. At risk is a test that the IRS uses to see if you can deduct losses from investments and businesses that you own.
The basic rule is that you can't deduct a loss from your investment or business if the loss doesn't actually cause you to lose money.
Money you've invested in your business that is not at risk includes:
- Nonrecourse loans; that is, financing for which you're not personally liable.
- Cash, property, or borrowed amounts protected against loss by a guarantee, a stop-loss agreement, or a similar agreement.
- Money borrowed from a person who has an interest in the business, other than as a creditor.
If you think you may have reported that you are not at risk in error, this is how to change it:
- Open and continue your return.
- Click on the word Federal from the menu.
- Click on Income & Expenses.
- Find Self-Employment Income & Expenses on the list.
- Click Review on the right.
- Click Review to the right of your business name.
- Find Uncommon Situations near the bottom of the list.
- Click Edit to right.
- Carefully review your answers to these questions.
If you are using TurboTax Desktop, installed on your computer, you can look at Schedule C in Forms mode, by clicking on the Forms icon in the upper right corner. Look at line 32b of Schedule C to see if this box is checked.
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