At risk scenario

[lescott027]

I am a sole proprietor, single member LLC, married filing jointly.  I have put 100% of my own money (after tax) dollars into my business.  I myself run all the daily activities for my business, no other investors or people involved what so ever.  Filling out schedule C 1040, my business had a net loss.  I assumingly checked the box 32a "All investment is at risk".  Does my net loss qualify to be a SECTION 465(d) CARRYOVER to next year or will my net loss get absorbed by or offset my husbands income which is much larger income than my business made obviously?

[Critter-3]

The Sch C loss goes on the current  tax return and is netted against other ordinary income like your spouse's wages.  Your loss is allowed since all your investment is "at risk" of being lost.   Only an NOL on the form 1040 gets carried forward.  

Section 465 (d) carryover refers to the at-risk rules of Section 465 of the Internal Revenue Code.  Your losses are limited to the amount you have "at risk" in the activity.  A loss that was disallowed because of the at-risk rules is generally treated as a deduction from the same activity in the following tax year (a carryover).

The figure you see for Section 465 (d) carryover is the amount of loss you weren't able to take last year and may be able to take this year.

For more information see IRS Pub. 925 - Passive Activity and At-Risk Rules