even a net business loss is not the same as an NOL. simplified an NOL is the excess of business income over business deductions reduced by the excess, if any, of nonbusiness income over nonbusiness deductions. passive loss and other limitations can affect the amounts used for these items. see PUB 536 and its worksheet.
https://www.irs.gov/pub/irs-pdf/p536.pdf
or Form 1045 Schedule A
https://www.irs.gov/pub/irs-pdf/f1045.pdf
example loss from rental real estate subject to PAL limit $100,000 (before PAL limit). nonbusiness income $20,000. standard deduction $12,400. PAL limit $25,000. excess of nonbusiness income over nonbusiness deductions (standard deduction) =$20,000 - $12,400 = $7,600. NOL $25,000 - $7.600 = $17,400. the other $75K loss from rental real estate is acrryover to the following year.
