I understand that TurboTax Home and Business does not automatically support the use of Net Operating Loss deductions generated by negative numbers in prior years after subtracting deductions from adjusted gross income. I did see on the discussion boards that some tax experts have commented on the proper use of NOL deduction for taxpayers wanting to use it.
Right now I’m using TurboTax Home and Business 2023 because I consider amending the 2023 tax year return. I plan on using a Net Operating Loss generated in prior years as a deduction on the amended 2023 return. The losses come from negative numbers after subtracting standard deduction from AGI. Most of the years that generated a Net Operating Loss had Schedule C loss that helped create the Net Operating Loss.
The 2023 Publication 536 states “NOL carryback eliminated. Generally, you can only carry NOLs arising in tax years ending after 2020 to a later year. An exception applies to certain farming losses…” When I first read this statement, I thought I would only consider using NOLs generated in 2021 and 2022 taxable years when amending the 2023 return. I since reconsidered my first interpretation of this statement and thought it would be okay to use NOLs generated as far back as 2015 as long as I followed the following rule when calculating the 2023 amended deduction:
“In general, your NOL deduction for tax years beginning after December 31, 2020, cannot exceed the sum of (1) the NOLs carried to the year from tax years beginning before January 1, 2018; plus, (2) the lesser of: (a) the NOLs carried to the year from tax years beginning after December 31, 2017, or (b) 80% of the excess (if any) of taxable income computed without regard to deductions for NOLs, or Qualified Business Income (QBI), or section 250 deductions, over the NOLs carried to the year from tax years beginning before January 1, 2018.”
My first question is, is this accurate, I can consider using in 2023 NOLs generated as far back as 2015 when figuring the 2023 amended deduction?
As background, I have copies of Publication 536 (“Net Operating Losses…for Individuals, Estates, and Trusts”) for each taxable year going back to 2015. I did not in any year before taxable year 2024 elect to waive carryback periods so I assume first I have to carryback the 2015 loss two years, at least on a worksheet I keep for myself, before carrying it forward to 2023. Or is it lost forever?
