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Category: Tax Questions

Prior Year Net Operating Loss (NOL) or Short/Long Term Loss Carryover

If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL).  A NOL is used to reduce your taxable income in another year or years.  A loss from operating a business is the most common reason for an NOL.

To have an NOL, your loss must generally be caused by deductions from your:
  • Trade or business
  • Work as an employee
  • Casualty and theft losses
  • Moving expenses
  • Rental property
Partnerships and S corporations generally cannot use an NOL.  However, partners or shareholders can use their separate shares of the partnership's or S Corporation’s business income and business deductions to figure their individual NOLs.

There are rules that limit what can be deducted when figuring an NOL.  In general, the following items are not allowed when figuring an NOL.
  • Any deduction for personal exemptions.
  • Capital losses in excess of capital gains.
  • Section 1202 exclusion of 50% of the gain from the sale or exchange of qualified small business stock.
  • Nonbusiness deductions in excess of nonbusiness income.
  • Net operating loss deduction.
  • The domestic production activities deduction.

Select the links below to display instructions for entering information in the tax program:

 Prior year net operating loss on Form 1040
 Unallowed loss on Schedule C
 Short term / long term loss carryover on Schedule D
 Unallowed loss on Schedule E
 Unallowed loss on Schedule F

NOTE: This is a guide on entering information into the TaxSlayer Pro program.  This is not intended as tax advice.

Additional link:
How To Input A Prior Year Loss Carryover On Form 1120

Last Updated: 6/5/2018

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