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  • 1.  80% NOL Limitations

    Posted 07-26-2023 12:44 PM

    Hey All,

    Had a quick Q regarding the 80% limitation on NOL that I seemingly cannot find a response to. My question is does the 80% rule only apply to NOL amounts being carried forward, or does it apply to current year NOLs as well? 

    Example: say you have a business owner that lost $$ in 2022 of 50k, but has 30k of personal interest/dividend income. Does this mean the 50k current year NOL is limited to 24k or it would be a full loss in 2022? I know in 2023 the NOL carryforward would definitely be subject to 80% of taxable income but not sure about current year losses if someone can chime in on it.

    Note: this example is ignoring the standard deduction/taxable income amounts because I do believe the 80% is based on taxable income and in this example say MFJ taxable income would only be around 5k or so, so in reality the numbers may be capped at 4k if the 80% applies to current year NOLs

    Thanks in advance



    ------------------------------
    Matthew R. Savello, CPA
    Prestige Tax & Accounting, LLC
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  • 2.  RE: 80% NOL Limitations

    Gold Most Valuable Member
    Posted 07-27-2023 07:44 PM

    Post TCJA NOL Carryovers are limited.  I think your question relates a 2022 business loss for a 2022 return on extension.  That is not a carryforward.  The usual loss limitations apply ex. Basis, At-Risk, PAL and then 461(l) for post TCJA items.   You need to separately calculate and segregate pre and post TCJA years.  We will cover this in more detail at The Symposium at a lunch topic.

     

    Very truly yours,

     

    ROBERT S. BARNETT

     

     

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