I closed a few businesses in 2019 resulting in a carry over loss. Where is that indicated on my 2020 return?

[bwbarbour-gmail-]

Does the negative amount shown on my 2019 Schedule 1, line 9 go on a special line on my 2020 return?

[JohnB5677]

No, Schedule 1 line 9 is the sum of lines 1 thru 8.  This includes line 3 business income/loss, line 4 Other gains and losses, and line 5 Rental real estate.

All of this was used to determine your 2019 tax return.

However, there is a Capital Loss Carryforward and a Passive Activity Loss Limitation form that would be brought forward to 2020.

[bwbarbour-gmail-]

This loss from my 2019 return was not a capital loss but rather a large loss due to expenses realized in discontinued businesses.  It should be considered a NOL and either carried back 5 years or ahead until exhausted.  From my research, it needs to be dealt with via a Form1045 or an amended return 1040X. Due to the size of the loss report on my 2019 return, I would never completely realize the benefit with a capital loss limit of $3,000/year.  I was looking for help on how to calculate the NOL in my 2020 return and for following years.  The EA at Turbotax seemed ignorant of this issue.

[DawnC]

You are going to need the form and the instructions to calculate your NOL.  You can enter a NOL in TurboTax, but TurboTax does not support the calculation of your NOL.  

If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL).

Publication 536 covers NOLs for individuals, estates and trusts:

• How to figure an NOL.
• When to use an NOL.
• How to claim an NOL deduction.
• How to figure an NOL carryover.

IRS Publication 536 provides worksheets and examples for you to follow, step by step. It also explains adjustments that you may need to make to your net operating loss as you carry it from year to year.

A note about states:

Depending on how the state(s) in which you reside conforms to the different provisions of the federal NOL rules, you may need to calculate a separate state NOL or adjust your state income for differences in NOL rules. States may apply limits to the NOL amount that can be deducted and may not allow the same NOL carryback opportunities. Look for more information on NOLs when preparing your state return.