2014 Alabama: Loss and Not At-Risk
There was an issue in TurboTax that could affect your 2014 Alabama returns. TurboTax is working closely with the Alabama Department of Revenue on this issue and you should also be receiving a letter in the mail from the Department explaining this issue.
Some of our calculations relating to losses from “at-risk” investments were not correct. We want to help to make sure your return is complete and accurate. Because of this error, certain taxpayers may have filed an incorrect Alabama return. We apologize for this error and the inconvenience it may cause you.
The federal 1040 return does not allow a loss in a business (Schedule C or F) or a rental property (Schedule E) to reduce your income if a box was checked during the interview process indicating that some or all of the investment was not ‘at-risk’. Instead, the loss is carried over on the federal return to future years and listed as an expense called “Section 465(d) Carryover.” When you have a business or rental profit on your federal return in future years, you will get that loss to reduce the income on your tax return.
Alabama, however, allows the entire loss to reduce your income on your Alabama return, even if the investment was not at-risk.
What is At Risk? The general rule is that the investment is at-risk if the money or investment in a business or rental would be lost if this business or rental stopped operations tomorrow.
If you have any questions or need any assistance in amending your Alabama return, please use the phone number in the email from TurboTax. Tell the representative you’re calling about 2014 Alabama: Loss and Not At-Risk.
Do I need to amend my Alabama return?
You will need to amend your Alabama return if ALL of the following apply to you:
- If you filed a 2014 Alabama tax return AND
- In a prior year you had a business or rental (Schedule C, F, or E) that had a loss AND
- That prior year, you indicated you were not at-risk for that business or rental AND
- That business or rental has an expense listed as Section 465(d) Carryover on your 2014 federal Schedule C, F or E.
How do I amend my Alabama return?
To amend your return:
- Follow these amend instructions for the TurboTax Online product.
- Follow these amend instructions for the TurboTax CD Download product.
- After you make the changes to your tax return, you will need to mail a copy of your amended state return and pay any additional taxes that may be due.
- Your printed return will include instructions on how and where to mail it.
If you need help in amending your return, please use the phone number in the email from TurboTax and tell the representative you’re calling about 2014 Alabama: Loss and Not At-Risk