In my situation, is filing a 1040x or Form 1045 better for a carryback claim for 2016 resulting from an NOL (Net Operating Loss) in 2017?

[WiseIconoclast]

I am asking about individual income taxes. I have a Net Operating Loss that results from the losses of a Publicly Traded Partnership (PTP) sold in 2017. I cannot use carryback credit for 2015, as the only tax paid in 2015 was self-employment tax. But it is possible to reduce my taxable income in 2016 using an NOL carryback.

My taxes are not particularly complicated, except perhaps for this PTP. I don't think I make enough income for Alternative Minimum Tax, e.g., my AGI line 22 was only about 22K for 2016 and was -5K for 2017. (I had business income of 10K for 2017, no wages.)  And Turbotax has told me I do not have to pay the AMT so far.

But there is a potentially daunting list of forms that have to be attached to both a 1040X and Form 1045 when claiming NOL carryback credit. I am prepared to attach the forms. But for Form 1045 the AMTNOL or ATNOLD calculations are specifically mentioned as attachments. But these calculations (Form 6251) look quite daunting to me, even though I don't think they apply to me.

The AMTNOL and ATNOLD are not specifically mentioned for Form 1040X, so I am thinking that maybe the 1040X is a better option for me. I am also thinking that if perhaps I don't get everything exactly correct with the 1040X as far as attachments, that perhaps they'll just ask for more information, rather than a complete resubmission of the form, as I think they might for the 1045. Does anybody have any comment about this?

The most complicated part of my taxes is the PTP I sold in 2017, with the associated K-1s. There is a small AMT entry, a minus number in Box 17A of Part III of the 2017 K-1, which I have entered into Turbotax.  And there is, what appears to be a small AMT adjustment (a negative number) on the 2017 K-1 (in a part entitled "Sales Schedule use for Federal Tax Return") to the Capital Loss (for Schedule D of 1040) from the sale of the PTP. This small AMT adjustment is less than 0.5% of the total Capital Loss. I have tried to enter these numbers into Turbotax as accurately as I can. I do not really feel I make enough to consult a tax professional. I bought the PTP at the strong suggestion of a relative; I don't think I'll be doing something like this again.

Thank you,

W.I.

[Anonymous]

with regard to the PTP make sure they did not provide you with a supplemental schedule showing ordinary income recapture.  in most cases, when a PTP has losses that are suspended, there is ordinary income recapture on disposition They will include a worksheet to calculate capital gain/loss and ordinary gain/loss. this ordinary income recapture may almost entirely eliminates the loss carryover.  

if you do indeed have a NOL it must be carried back to 2015 and any remaining carried forward to 2016 and if any is left used on 2018 and subsequent returns. 

you do have the option to elect out of the carry back and would then carry the entire nol to 2018.

and yes you'll have different NOL's for reqular tax purposes and amt purposes.  you will also have different capital gain/loss for regular tax and amt tax puposes. 

form 1045A is what is used to calculate the nol and generally must be submitted regardless of whether you do a carryback or carryforward or use 1045 or 1040x.   .  

don't forget the state. 

You get your refund faster by using Form 1045. If you use Form 1040X, you must use a separate Form 1040X for each carryback year. Both forms allow you to refigure your total tax liability for a carryback year. Generally, you must file Form 1045 on or after the date you file your tax return, but no later than one year after the NOL year. Form 1040X must be filed with three years after the due date, including extension.  in either case 1045A must accompany the submission.

[Anonymous]

one more thing the basis that the broker shows on the 1099-B is usually wrong and is not provided to the IRS (code B or D)

[WiseIconoclast]

Thank you TaxPro. I have attempted to educate myself much on this situation of the sale of the PTP, basis, hot assets, section 751 gain, etc., and I am aware of much of what you've said.

But I have a specific question: Can I reasonably avoid sending in Form 6251 (which looks very burdensome & confusing) and getting involved with Alternative Minimum Tax in claiming a NOL carryback?

It appears that getting involved with the ATNOL, ATNOLD, etc is only necessary when it applies to an individual taxpayer.

If I submit a 1045 or 1040X, Will the IRS know immediately from looking at my small income that calculating AMT, ATNOL, ATNOLD, etc, is not necessary in my case?

If I send in a 1040X without any information regarding AMT, AMTNOL, ATNOLD, etc, will the IRS  know immediately that Form 6251 and similar forms are not necessary?

I am trying to avoid having to fill out and file a Form 6251, which looks very confusing & burdensome. Form 6251 apparently is used to calculate Alternative Minimum Taxes and  AMTNOL or ATNOLD. My income is so small, for all the tax years in question, that according to Turbotax (and also what I know about AMT) I do not have to pay Alternative Minimum Tax. I am also not claiming any Domestic Production Activities Deduction, or itemizing my deductions using 1040 Schedule A.

Thank you,

W.I.

[WiseIconoclast]

There is also no state income tax in the state in which I live.