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previous pagePrevious Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 12
next pageNext Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 16
 Use previous pagenext page to find additional occurrences of topic items.Index for these Instructions
taxmap/instr/i1040sj-008.htm#TXMP572ddd77

Line 13(p9)


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If you used Schedule J to figure your tax for 2007 (that is, you entered the amount from the 2007 Schedule J, line 22, on line 44 of your 2007 Form 1040, on line 41 of your 2007 Form 1040NR, or on Form 1040X for 2007), enter on line 13 the amount from your 2007 Schedule J, line 3.
If you did not use Schedule J to figure your tax for 2007, enter on line 13 the taxable income from your 2007 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 below to figure the amount to enter on line 13.
If you did not file a tax return for 2007, 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 2007 until at least 3 years after April 15, 2009 (or the date you file your 2008 tax return, if later).
taxmap/instr/i1040sj-008.htm#TXMP50ba8fae

Instructions for 2007 Taxable Income Worksheet(p9)


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taxmap/instr/i1040sj-008.htm#TXMP1a771229

Line 2.(p9)

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Any net capital loss deduction on your 2007 Schedule D, line 21, is not allowed for income averaging purposes to the extent it did not reduce your capital loss carryover to 2008. This could happen if the taxable income before subtracting exemptions—shown on your 2007 Form 1040, line 41, or your 2007 Form 1040NR, line 38 (or as previously adjusted)—was less than zero. Enter on line 2 the amount by which your 2007 capital loss carryover to 2008 (the sum of your short- and long-term capital loss carryovers) exceeds the excess of the loss on your 2007 Schedule D, line 16, over the loss on your 2007 Schedule D, line 21.
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Line 3.(p9)

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If you had an NOL for 2007, enter the amount of that NOL from line 25 of the 2007 Form 1045, Schedule A, you filed with Form 1045 or Form 1040X. If you did not have an NOL for 2007, enter the portion, if any, of the NOL carryovers and carrybacks to 2007 that were not used in 2007 and were carried to years after 2007.
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Example.(p9)

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John Farmington did not use income averaging for 2005, 2006, or 2007. The taxable income before subtracting exemptions on his 2007 Form 1040, line 41, is a negative $1,000. This amount includes an NOL deduction on his 2007 Form 1040, line 21, of $1,950. The $1,950 is the portion of the 2006 NOL that was remaining from 2005 to be carried to 2007. See the examples on pages J-3 and J-6. A deduction for exemptions of $3,400 is shown on Form 1040, line 42, and line 43, taxable income, is limited to zero. John does not have an NOL for 2007. John subtracts from the $1,000 negative amount on Form 1040, line 41, the $3,400 deduction for exemptions. The result is a negative $4,400, John's 2007 taxable income, which he enters as a positive amount on line 1 of the 2007 Taxable Income Worksheet.
When John filed his 2007 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 $5,000 capital loss carryover to 2008 (his 2007 capital loss carryover to 2008 was $5,000, not $4,000, because the amount on his Form 1040, line 41, was a negative $1,000). John adds the $3,000 from Schedule D, line 21, and the $5,000 carryover. He subtracts from the $8,000 result the $7,000 loss on his Schedule D, line 16, and enters $1,000 on line 2 of the worksheet.
John enters -0- on line 3 of the worksheet because he does not have an NOL for 2007 and did not have an NOL carryover from 2007 available to carry to 2008 and later years. The NOL deduction for 2007 of $1,950 was reduced to zero because it did not exceed his modified taxable income of $3,950. Modified taxable income is figured by adding back the $3,000 net capital loss deduction and the $3,400 exemption deduction to negative taxable income (figured without regard to the NOL deduction) of $2,450. John enters $1,000 on line 4 and $3,400 on line 5. He enters $3,400 as a negative amount on Schedule J, line 13. He enters $6,000 on Schedule J, line 14, and $2,600 on Schedule J, line 15. If he uses Schedule J to figure his tax for 2009, he will enter $2,600 on his 2009 Schedule J as his 2007 taxable income for income averaging purposes.
taxmap/instr/i1040sj-008.htm#w25514j08
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2007 Taxable Income Worksheet—Line 13

Complete this worksheet if your 2007 taxable income was zero or less. See the instructions above before completing this worksheet.
1.Figure the taxable income from your 2007 tax return (or as previously adjusted) without limiting it to zero. If you had an NOL for 2007, do not include any NOL carryovers or carrybacks to 2007. Enter the result as a positive amount 1.             
2.If there is a loss on your 2007 Schedule D, line 21, add that loss (as a positive amount) and your 2007 capital loss carryover to 2008. Subtract from that sum the amount of the loss on your 2007 Schedule D, line 16, and enter the result 2.               
3.If you had an NOL for 2007, enter it as a positive amount. Otherwise, enter as a positive amount the portion, if any, of the NOL carryovers and carrybacks to 2007 that were not used in 2007 and were carried to years after 2007 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 13 5.             
       
previous pagePrevious Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 12
next pageNext Page: Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen - Line 16
 Use previous pagenext page to find additional occurrences of topic items.Index for these Instructions