skip navigation

Search Help
Navigation Help


Main Topics
A B C D E F G H I
J K L M N O P Q R
S T U V W X Y Z #


FAQs
Forms
Publications
Tax Topics


Comments
About Tax Map

previous pagePrevious Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 4
next pageNext Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 8
 Use previous pagenext page to find additional occurrences of topic items.Index for these Instructions
taxmap/instr/i1040sj-004.htm#TXMP1c76ecb5

Line 5(p2)


rule
spacer

If you used Schedule J to figure your tax for:
If you figured your tax for 2005, 2006, and 2007 without using Schedule J, enter on line 5 the taxable income from your 2005 tax return (or as previously adjusted by the IRS, or corrected on an amended return). But if that amount is zero or less, complete the worksheet on page J-3 to figure the amount to enter on line 5.
If you did not file a tax return for 2005, use the amount you would have reported as your taxable income had you been required to file a tax return. Be sure to keep all your records for 2005 for at least 3 years after April 15, 2009 (or the date you file your 2008 tax return, if later).
taxmap/instr/i1040sj-004.htm#TXMP4ec537ee

Instructions for 2005 Taxable Income Worksheet(p2)


rule
spacer

taxmap/instr/i1040sj-004.htm#TXMP3714d901

Line 2.(p2)

rule
spacer

Any net capital loss deduction on your 2005 Schedule D, line 21, is not allowed for income averaging purposes to the extent it did not reduce your capital loss carryover to 2006. This could happen if the taxable income before subtracting exemptions—shown on your 2005 Form 1040, line 41, or your 2005 Form 1040NR, line 38 (or as previously adjusted)—was less than zero. Enter on line 2 the amount by which your 2005 capital loss carryover to 2006 (the sum of your short- and long-term capital loss carryovers) exceeds the excess of the loss on your 2005 Schedule D, line 16, over the loss on your 2005 Schedule D, line 21. If you had any net operating loss (NOL) carrybacks to 2005, be sure you refigured your 2005 capital loss carryover to 2006.
taxmap/instr/i1040sj-004.htm#TXMP61fd400f

Line 3.(p3)

rule
spacer

If you had an NOL for 2005, enter the amount of that NOL from line 25 of the 2005 Form 1045, Schedule A, you filed with Form 1045 or Form 1040X. If you did not have an NOL for 2005, enter the portion, if any, of the NOL carryovers and carrybacks to 2005 that were not used in 2005 and were carried to years after 2005.
taxmap/instr/i1040sj-004.htm#w25514j02
pencil

2005 Taxable Income Worksheet—Line 5

Complete this worksheet if you did not use Schedule J to figure your tax for both 2006 and 2007 and your 2005 taxable income was zero or less. See the instructions that begin on page J-2 before completing this worksheet.
1.Figure the taxable income from your 2005 tax return (or as previously adjusted) without limiting it to zero. If you had an NOL for 2005, do not include any NOL carryovers or carrybacks to 2005. Enter the result as a positive amount 1.             
2.If there is a loss on your 2005 Schedule D, line 21, add that loss (as a positive amount) and your 2005 capital loss carryover to 2006. Subtract from that sum the amount of the loss on your 2005 Schedule D, line 16, and enter the result 2.               
3.If you had an NOL for 2005, enter it as a positive amount. Otherwise, enter as a positive amount the portion, if any, of the NOL carryovers and carrybacks to 2005 that were not used in 2005 and were carried to years after 2005 3.               
4.Add lines 2 and 34.             
5.Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 5.             
       
taxmap/instr/i1040sj-004.htm#TXMP7565a819

Example.(p3)

rule
spacer

John Farmington, who is single, did not use income averaging for 2005, 2006, or 2007. For 2008, John has $18,000 of elected farm income on Schedule J, line 2. The taxable income before subtracting exemptions on his 2005 Form 1040, line 41, is $4,050. A deduction for exemptions of $3,200 is shown on line 42, and line 43, taxable income, is $850. However, John had a $21,750 NOL for 2006, $9,000 of which was remaining to carry to 2005 after the NOL was carried back to 2004. To complete line 1 of the 2005 Taxable Income Worksheet, John combines the $9,000 NOL deduction with the $850 from his 2005 Form 1040, line 43. The result is a negative $8,150, John's 2005 taxable income, which he enters as a positive amount on line 1 of the 2005 Taxable Income Worksheet.
When John filed his 2005 tax return, he had a $3,000 net capital loss deduction on Schedule D, line 21 (which was also entered on Form 1040, line 13), a $7,000 loss on Schedule D, line 16, and a $4,000 capital loss carryover to 2006. However, when John carried back the 2006 NOL ($9,000 of which was carried to 2005), he refigured his 2005 capital loss carryover to 2006 as $7,000. John adds the $3,000 from Schedule D, line 21, and the $7,000 carryover. He subtracts from the $10,000 result the $7,000 loss on his Schedule D, line 16, and enters $3,000 on line 2 of the worksheet.
John had $850 of taxable income in 2005 that reduced the 2006 NOL carryback. The $3,200 exemption deduction and $3,000 net capital loss deduction also reduced the amount of the 2006 NOL carryback. Therefore, only $1,950 was available to carry to 2007 and later years, as shown on line 10 of his 2006 Form 1045, Schedule B. John enters the $1,950 on line 3 of the worksheet, and $4,950 ($1,950 plus the $3,000 line 2 amount) on line 4. He then subtracts the $4,950 from the $8,150 on line 1 and enters the result, $3,200, on line 5 of the worksheet. He enters a negative $3,200 on Schedule J, line 5. He combines that amount with the $6,000 on Schedule J, line 6, and enters $2,800 on Schedule J, line 7.
previous pagePrevious Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 4
next pageNext Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 8
 Use previous pagenext page to find additional occurrences of topic items.Index for these Instructions