Tax Planning Opportunities for Individual Net Operating Losses
Journal of Taxation, Volume 119, Number 03, September 2013
23 Pages Posted: 11 Feb 2014
Date Written: September 30, 2013
The add-backs, adjustments, and other computations involved for individuals who incur a NOL, as well as the factors to consider in deciding if the carryback should be waived, can appear daunting.
NOLs relate only to business income and deduction items, so an individual taxpayer must separate out the nonbusiness items on the Form 1040 in computing the NOL. The modifications that apply in this process can be complex to derive and apply, even for the experienced tax professional. This article has provided explanations of the rules and illustrations of how they work, including a thorough case study to demonstrate the use of an NOL.
Keywords: tax, individual NOL, carryover, carryback, carryforward, income smoothing, case study
JEL Classification: H20, H25, K34
Suggested Citation: Suggested Citation