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Anon9
New Member

If the value on Form 1041, Line 22 is a negative number, how do I handle that? The deduction for this complex trust -- property tax -- was larger than the income . . .

. . . which was interest from a regular bank account.
Is this a Net Operating Loss?
Is there anything I need to do apart from entering the value on line 22 and $0 for tax due?

1 Best answer

Accepted Solutions
tagteam
Level 15

If the value on Form 1041, Line 22 is a negative number, how do I handle that? The deduction for this complex trust -- property tax -- was larger than the income . . .

" Is this a Net Operating Loss?"

Most likely there is no net operating loss because a net operating loss cannot be created when nonbusiness deductions exceed nonbusiness income. See https://www.irs.gov/publications/p536/ar02.html#en_US_2016_publink1000177329

Also, the exemption is not included when figuring an NOL. See https://www.irs.gov/instructions/i1041/ch02.html#d0e3851

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4 Replies
tagteam
Level 15

If the value on Form 1041, Line 22 is a negative number, how do I handle that? The deduction for this complex trust -- property tax -- was larger than the income . . .

" Is this a Net Operating Loss?"

Most likely there is no net operating loss because a net operating loss cannot be created when nonbusiness deductions exceed nonbusiness income. See https://www.irs.gov/publications/p536/ar02.html#en_US_2016_publink1000177329

Also, the exemption is not included when figuring an NOL. See https://www.irs.gov/instructions/i1041/ch02.html#d0e3851

Anon9
New Member

If the value on Form 1041, Line 22 is a negative number, how do I handle that? The deduction for this complex trust -- property tax -- was larger than the income . . .

Thanks so much for your reply. So, for my second question, do I simply enter the negative taxable income amount on line 22, and $0 for tax due and submit the return? Or do I not need to submit the return if no tax is due?
tagteam
Level 15

If the value on Form 1041, Line 22 is a negative number, how do I handle that? The deduction for this complex trust -- property tax -- was larger than the income . . .

I would suggest submitting the return showing the negative taxable income on Line 22.
Anon9
New Member

If the value on Form 1041, Line 22 is a negative number, how do I handle that? The deduction for this complex trust -- property tax -- was larger than the income . . .

Thank you.

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