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My 2016 Tax return shows a Sch E loss and my form 4797 shows a loss. Are these losses considered NOLs? How can I carry back these losses to the prior two years?

The losses were from a sale of an rental property.
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Accepted Solutions
PatriciaV
Employee Tax Expert

My 2016 Tax return shows a Sch E loss and my form 4797 shows a loss. Are these losses considered NOLs? How can I carry back these losses to the prior two years?

Unfortunately, Passive Activity Losses from rental activities are carried forward to future returns and are not eligible to be carried back to a prior tax year. These losses can be applied to any subsequent passive income from rental properties and are completely released for deduction when you sell the property.

Net Operating Losses (NOL) are different, as they arise from an AGI less than zero. NOLs must be carried back two years, then carried forward for up to 20 years.

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1 Reply
PatriciaV
Employee Tax Expert

My 2016 Tax return shows a Sch E loss and my form 4797 shows a loss. Are these losses considered NOLs? How can I carry back these losses to the prior two years?

Unfortunately, Passive Activity Losses from rental activities are carried forward to future returns and are not eligible to be carried back to a prior tax year. These losses can be applied to any subsequent passive income from rental properties and are completely released for deduction when you sell the property.

Net Operating Losses (NOL) are different, as they arise from an AGI less than zero. NOLs must be carried back two years, then carried forward for up to 20 years.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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