How to get Turbo Tax take into account the 80 percent rule on NOL carry forwards for passive income?

[ccub]

 TT is carrying forward my NOL for passive income from previous years.  However, does Turbotax know to apply the 80% income limit for the NOL deduction, which was part of the tax law act in 2018.  As an example, if my NOL carryforward is $150,000 and I enter that into TurboTax, but my income is $100,000, TurboTax can only use $80,000 (80% of my income) as a deduction.  Does someone know how to get this to work in Turbo Tax?  

[ThomasM125]

No, TurboTax will not calculate the 80% limitation on the net operating loss (NOL) deduction. You can put the allowable deduction in the program, but you need to calculate the amount to deduct. What you need to do is calculate your allowable deduction, using IRS publication 536 if necessary.  Then, use the Search icon on the top right of your screen and input "NOL" to search for help with that topic. You will find a "jump to" link there you can click on to bring you to where in TurboTax you can enter your NOL deduction.

[ccub]

Thank you for your response.

 I have a couple of questions still.   The first is that it seems like Publication 536 no longer exists and has been replaced with Form 172.     

The second dilemma I am having is that when I follow the instructions that you posted, it takes the modified NOL carryforward I am using and then applies that to my personal income.   I am using a NOL carryforward for an S corp K1 which is passive income.   TurboTax is still using the full amount of the NOL Carryforward for the S Corp, along with erroneously taking the NOL I put in against my personal income.   

[AmeliesUncle]

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@ccub wrote:

then applies that to my personal income.  

I am using a NOL carryforward for an S corp K1 which is passive income.  

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An NOL is applied to any income on your personal tax return.

We may need to clear up some terminology.  If your personal return (Form 1040) has net negative income (AGI would be negative, although there is more to it than that), perhaps caused from a loss from the S-corporation that was allowed to be used on the personal tax return, that is an NOL.  Is that what happened?  If so, that "NOL" is no longer connected with the S-corporation in any way - it is your personal NOL.

There are other carryover losses that could be from the S-corporation, such as due to Basis limitations or for Passive Loss reasons.  Those are VERY different than an "NOL", so if either of those are what you are talking about, you will need to clarify things and give more details about the situation.

[ccub]

Thank you for your response.  It sounds like my terminology was confusing.    My 1040 is not negative.  I have w2 income that has nothing to do with the Scorp.  

It is a passive loss carryforward from an S corp (1) whose losses accrued after 2017.   The passive carry-forward loss from the scorp is applied to the Scorps' profit this year.   The carry-forward losses exceed this year's profit.  TurboTax is taking all that into account and applying the carry-forward amount to the total 2025 profit but not applying the 80/20 rule. The total amounts appear on K1 (Passive Activity to Adjustment to Income or Loss and Form 8582 Passive Activity Loss Limitations. It is not due to Basis limitations.   

[AmeliesUncle]

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@ccub wrote:

My 1040 is not negative.  

It is a passive loss carryforward from an S corp

The carry-forward losses exceed this year's profit.  TurboTax is taking all that into account and applying the carry-forward amount to the total 2025 profit but not applying the 80/20 rule.

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It sounds like you do NOT have a NOL, you have a Passive Loss Carryforward.

A Passive Loss Carryforward is NOT subject to the 80/20 rule for NOLs.

If you (a) Actively Participate in the rental activity or (b) the Passive Activity was disposed in a "fully taxable transaction), then the carryover Passive Losses might be able to be used against non-passive income (but as I said before, there is no 80/20 rule for Passive Loss Carryovers).