@big toes , I am not quite sure of the situation here. So I will state what I understand as the scenario--
(a) you , a US person ( citizen / Green Card ) , living abroad and having self-employment foreign income yhat is generally eligible for Foreign Earned Income exclusion. You have taken advantage of this FEI Exclusion in the past to reduce double taxation effects.
(b) in 2022 you have loss --- under US tax laws ( ?? ) and under foreign laws (??? ).
So now the questions is , and absent any other foreign active income, how do you recognize the business loss for US tax purposes ? Does this describe the situation or am I missing the picture ?
I ask this because , if the purpose for Foreign Earned Income Exclusion is to avoid double taxation i.e. exclude i INCOME from US taxes , by having a loss you have already excluded the income from US taxes and furthermore you are able to carry the business loss back three years and forward till extinguished. You should have achieved the purpose -- to avoid double taxation. But may be this is not the picture -- please tell me more as to what you are trying to achieve and also if any of my assumptions are wrong and of course which country are you talking about -- ( your tax home ).
I will circle back once I hear from you
pk
