Do Federal NOLs follow the person or the company?

Forum|Forum|1 year ago
August 27, 2024
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I had a single-member LLC in CA which had some NOLs.
I moved out of CA and shut down the LLC.
As far as I can tell, my state NOLs are essentially terminated/ no longer pertain to anything - whether that's bc I have no more income in that or bc the LLC is closed, I'm not sure.
My question is if my Federal NOLs would still be available to use against my current (non-CA) W2 income? Are those NOLs attributed to me or the shut-down LLC?

TIA!

AmeliesUncle

Was this business reported on Schedule C of your personal tax return (it was a Single Member LLC that did NOT elect to be taxed as a corporation)?

If so, if the business had a loss, that loss offsets other income on your tax return. If there was no other income (or not enough for the loss to offset), that creates a Net Operating Loss (NOL).

In answer to your question, the business had a "loss" (negative income for the business), but YOU had the NOL (negative income on the entire tax return). That means it follows you, regardless if the business exists or not.

username333Author

Thanks your reply, Unc.

Yes, the business was reported on my Sch C and did NOT elect to be taxed as a corp.

If I may, just to be clear: I can still use my Federal NOLs to offset future Federal income and the CA NOLs, unless I have CA income, are "retired." Is that accurate?

Mike9241

in the case losses from schedule C, NOL carryforwards are computed at the individual level not the business. for example, if you had $30K of wages and $30K of schedule C losses, there would be no NOL to carryforward.

put simply an NOL carryforward would exist when there is an excess of business losses over business income reduced by the excess, if any, of nonbusiness income over nonbusiness losses and deductions.

Turbotax does not compute NOL c/f use PUB 536 worksheet 1 or form 1045 schedule A to figure your NOL.

also, if an NOL exists it is not reported on schedule C rather it is shown on schedule 1 line 8a (2023)