Skip to main content
February 19, 2023
Question

NOL carryover multiple years - what form(s)?

  • February 19, 2023
  • 1 reply
  • 0 views

We are non-residental foreigners who have a rental property owned through an LLC. This is the only business we have in the US, all other income is made in our home country.  The startup year incurred lots of costs, and due to high depreciations (5 digits each year), it is unlikely that we will ever have any income. 

When selling the property however, the value will probably be well above the taxable asset value, due to the high depreciations we are forced to take. We do not wish to pay Capital Gains Taxes on what isn't actually a real capital gain.

So how do we manage to get the NOLs to carryover for all the years we will keep the property? 

On form 1065? On Schedule K-1? On form 1040NR (non-resident)? 

If we don't roll this over, we will eventually have a property that is hardly worth anything according to IRS, and even if we then sell it for exactly the same price that we bought it for, we would have to pay a lot in CG taxes.

I wish we didn't have to take the depreciations (this is often optional in other countries), but the value will be set lower no matter if we claim them each year or not, so our only option is to use NOL carryovers. 

 

I hope someone can help me.

1 reply

February 22, 2023

The loss from the LLC will carry over to the personal tax return of the partners, which is a form 1040-NR since you are not a resident. TurboTax does not support the form 1040-NR, so I am not qualified to address the issue of reporting a net operating loss (NOL) on a form 1040-NR. You will need to report the gain on sale of the property on the same form, however, so you need to inquire of someone familiar with form 1040-NR to see if you can report a NOL on that form. If so, you may need to file those forms on a yearly basis to report and track your NOL.  Here is a link to the instructions for form 1040-NR: Form 1040-NR instructions

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"