Skip a year carrying NOL forward

Forum|Forum|1 year ago
August 8, 2024
1 reply
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Here's the scenario. In retirement my LLC has negligible income, but I'm involved in a lawsuit. Given these numbers, what's the best way to file my taxes:
2022 - I have a $140,000 loss due to legal fees.

2023 - I have normal personal income from SS and IRA of $50,000

2024 - I settle the lawsuit for $200,000 and add that to my income

Question, can I carry that 2022 NOL loss to my 2024 return? Or do I have to take it in 2023. If I do, then the 80% limit means I can only take $40,000 of the loss in 2023. Can I take the rest in 2024, or defer the whole loss to 2024? Or am I totally screwed having to take the full $200,000 + normal $50,000 as taxable income in 2024. Very confused reading IRS 536.

Best answer by Mike9241

you can't skip years. the NOL will have to be carried to 2023 and then any remainder to 2024.

for 2022 you say you'll have a business loss of $140K but what about any IRA distributions which would reduce any NOL c/f. Social security would likely not be taxable if any was received.

Turbotax does not compute the NOL carryforward. use IRS PUB 536 worksheet 2

Mike9241Answer

you can't skip years. the NOL will have to be carried to 2023 and then any remainder to 2024.

for 2022 you say you'll have a business loss of $140K but what about any IRA distributions which would reduce any NOL c/f. Social security would likely not be taxable if any was received.

Turbotax does not compute the NOL carryforward. use IRS PUB 536 worksheet 2