What is the correct way to input NOL from last year?

[asanyal]

What is the correct way to input NOL from last year for the following situation? -

• 2018 K1 / 1120S loss = $200K
• 2019 K1 / 1120S income = $50K

• Schedule 1 is showing Part 1 Additional Income Line 5 S Corp = negative $150K

• Schedule E, p2 is showing the following -
  • Part II Line 28 A (k) Nonpassive Income $50K
  • Part II Line 28 B (i) PYA (prior year)  Loss K1  $200K
  • Line 32 Total S Corp loss = $150K
  • Form 1040 Line 7a = negative $150K

Can this be right way to report the prior year carryover NOL?  

[Anonymous_ · Accepted solution]

@asanyal 

You need to provide additional details concerning your K-1s because what you posted for the years thereof is confusing.

Particularly, you mentioned a 2018 K-1 with a loss and a 2019 K-1 with income with both, apparently, originating from an S corporation (1120-S) and then later indicated some sort of combination of the two figures. 

Note that the 2018 K-1 should have been entered into your 2018 individual income tax return; it appears as if you are now combining that K-1 with the 2019 K-1 which, of course, is not the correct procedure.

[asanyal]

• 2018 K1 / 1120S loss was $200K
• 2019 K1 / 1120S income is $50K

2018 K1 Loss was reported in individual 1040 in 2018 to result in negative AGI of -$200K.

Where do I input the AGI of -$200K to carry over from 2018 to 2019 in TT Home & Biz?

Thank you.   

[Anonymous_ · Accepted solution]

Click the Business tab and scroll down to the Less Common Business Situations section. Click the Start or Update button to the right of Net Operating Loss/QBI Carryforward Loss.

[Anonymous_]

Also, note that for losses arising in taxable years beginning after Dec. 31, 2017, the net operating loss deduction is limited to 80% of taxable income (determined without regard to the deduction).

See https://www.irs.gov/publications/p536

[asanyal]

I appreciate your response.  Would the following procedure be correct? -

• Input 2019 S Corp income of $150k from K1 into Schedule 1 Line 5
• Input 2018 AGI Loss carryover of $200k in Schedule 1 Line 8 as NOL/QBI Carryforward Loss (from Less Common Business Situations in TT Step by Step)

Thank you.

[Anonymous_]

Yes, but please recall that your NOL deduction is limited to 80% of taxable income before the deduction.