NOL for 2020 in NY state and federal

[StatenIsland]

I am working on the amendment to my federal and NY state returns for 2020

The AIG is $16,097. TurboTax calculated NOL as the same amount. Since I missed deadline for carryforward/carryback, I assume that  I should  file amendment to 2015 federal return.

Since NY does not follow CARES Act, I am filing IT-558 decoupling form. I am reading the following:

"Your recomputed federal NOL deduction is the amount that your federal NOL deduction would have been if computed using the rules in place prior to any changes made to the IRC after March 1, 2020. For example:
- your federal NOL deduction for losses incurred in tax year 2018 or later is limited to 80% of your current year federal taxable income (computed as if the changes to the IRC after March 1, 2020, did not occur)"

How would I recompute federal NOL deduction? Should I multiply $-16,097 by 80%, which comes to $-12,877? Or, since the taxable income is negative just put 0?

Thank you

[ThomasM125]

I'm not sure from your post what your federal taxable income was. That would be the amount on line 15 of your form 1040. To that number, you would have to add back any net operating loss (NOL), as entered on line 8 of schedule 1. That would give you your taxable income before the NOL deduction, and you would multiply that amount by 80% to get the NOL deduction allowed for the state.

I assume you have positive taxable income, so that would give you a number for the NOL deduction. If you had no taxable income or it was negative, then you would have no NOL deduction for the current year.

[StatenIsland]

Thank you for the quick response.

I assume that my taxable income for 2020 was negative, as the major positive portion of my total income was Social Security Benefits. I had a huge loss on my rental property.

Line 15 on 1040 is zero. But I am a little confused about line 8 of schedule 1. Schedule 1 (Additional income and Adjustments to Income) line 8 "Other income. List type and amount" is empty.  I do have $-19,992 on the line 5 (Rental real estate, royalties, partnerships, S corporations etc.). Also I do not see NOL anywhere on schedule 1

[ThomasM125]

The net operating loss deduction for the current year would show up as a negative amount on line 8 of schedule 1, it is part of "Other Income."  It would only occur if you had a NOL from another year carried over to it. If you have a NOL in the current year, it will be deducted in other years. Since you have no taxable income this year, you have no NOL deduction this year. 

[StatenIsland]

Thank you so much! I have more questions on this topic, if you do not mind, but I need to double check a couple things first

[StatenIsland]

I am working on the amendments for 2018 and 2019 as well, due to a different issue

My tax situation for 2019 is very similar to 2020 (very little taxable income and huge rental loss)

Could you please help me out? How can I make TurboTax 2019 Premier calculate possible federal NOL and include it in the amended return? When I did the amendment for 2020, TurboTax 2020 gave me an opportunity to enter NOL once I finished deductions section. Turbotax 2019 does not provide this option. So, either I do not have NOL (despite a huge loss), or TT 2019 does not have this option. Thank you

[MarilynG1]

Click this link for instructions and screenshots for Entering a Rental Loss Carryover on Schedule E.  You may have to input the amount manually. 

This link has detailed discussion on the topic of Rental Loss Carryovers.

If your Rental Loss Carryover creates an NOL situation for you, click this link for more info on Passive Activity Loss and NOL.

This data should flow into your New York return.

[StatenIsland]

I think, that now the question is mostly about active vs. passive participation. Since I became disabled in 2018, I less participate in the decision making, which is mostly done by my daughter. However I am somehow involved and my wife and I are 100% owners.

It is easier to put it as a passive loss and carryforward, but I do not want to be in a trouble if it will be decided that I actively participated.

What is your opinion?

Thank you

[RobertB4444]

You actively participate in a rental activity if you own at least 10% of the rental property and you make all the management decisions in a significant way.

Actively participating in renting your house out doesn't mean you have to do the repairs or cleaning yourself.  But you get to decide who does.

Here's more to read on the subject.