Yes, the form is a mechanism to enable the IRS to ensure you are not reducing your current year's taxes with technically disallowed losses because of unreported basis limitations. If you have a basis of $0 and you have carryover losses of $14,000, you take no loss in the current year and it is all carryover. Now, if next year you have income of $10,000 you can take $10,000 of the carryover loss and report $0 income from the business and have $4,000 loss to carryover to the next year.
It's good to get a handle on this form now because I have a feeling it's not going away any time soon!
@yoadrienne6
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