NOL Carryover From 2010 to 2011(p15)

If you had an NOL deduction carried forward from a year prior to 2010 that resulted in your having taxable income on your 2010 return of zero (of less than zero, if an estate or trust), complete Table 1, Worksheet for NOL Carryover From 2010 to 2011 on the following page. It will help you figure your NOL to carry to 2011. Keep the worksheet for your records.

At the top of the worksheet, enter the NOL year for which you are figuring the carryover.

If your 2010 NOL deduction includes amounts for more than one loss year, complete this worksheet only for one loss year. To determine which year, start with your earliest NOL and subtract each NOL separately from your taxable income figured without the NOL deduction. Complete this worksheet for the earliest NOL that results in your having taxable income below zero. Your NOL carryover to 2011 is the total of the amount on line 10 of the worksheet and all later NOL amounts.

Your taxable income for 2010 is $5,000 without your $9,000 NOL deduction. Your NOL deduction includes a $2,000 carryover from 2008 and a $7,000 carryover from 2009. Subtract your 2008 NOL of $2,000 from $5,000. This gives you taxable income of $3,000. Your 2008 NOL is now completely used up. Subtract your $7,000 2009 NOL from $3,000. This gives you taxable income of ($4,000). You now complete the worksheet for your 2009 NOL. Your NOL carryover to 2011 is the unused part of your 2009 NOL from line 10 of the worksheet.

Treat your NOL deduction for the NOL year entered at the top of the worksheet and later years as a positive amount. Add it to your negative taxable income (figured without the NOL deduction). Enter the result on line 2.

You must refigure the following income and deductions based on adjusted gross income.

1. The special allowance for passive activity losses from rental real estate activities.
2. Taxable social security and tier 1 railroad retirement benefits.
3. IRA deductions.
4. Excludable savings bond interest.
5. Excludable employer-provided adoption benefits.
6. The student loan interest deduction.

If none of these items apply to you, enter zero on line 6. Otherwise, increase your adjusted gross income by the total of lines 3 through 5 and your NOL deduction for the NOL year entered at the top of the worksheet and later years. Using this increased adjusted gross income, refigure the items that apply, in the order listed above. Your adjustment for each item is the difference between the refigured amount and the amount included on your return. Combine the adjustments for previous items with your adjusted gross income before refiguring the next item. Keep a record of your computations.

Enter your total adjustments for the above items on line 6.

Enter zero if you claimed the standard deduction. Otherwise, use lines 11 through 38 of the worksheet to figure the amount to enter on this line. Complete only those sections that apply to you.

Enter zero on line 7 if you did not claim any miscellaneous deductions on Form 1041, line 15b, or a casualty or theft loss. Otherwise, refigure these deductions by substituting modified adjusted gross income (see below) for adjusted gross income. Subtract the recomputed deductions from those claimed on the return. Enter the result on line 7.

To refigure miscellaneous itemized deductions of an estate or trust (Form 1041, line 15b), modified adjusted gross income is the total of the following amounts.

• The adjusted gross income on the return.
• The amounts from lines 3 through 5 of the worksheet.
• The exemption amount from Form 1041, line 20.
• The NOL deduction for the NOL year entered at the top of the worksheet and for later years.

To refigure the casualty and theft loss deduction of an estate or trust, modified adjusted gross income is the total of the following amounts.

• The adjusted gross income amount you used to figure the deduction claimed on the return.
• The amounts from lines 3 through 5 of the worksheet.
• The NOL deduction for the NOL year entered at the top of the worksheet and for later years.

Treat your NOL deduction for the NOL year entered at the top of the worksheet and for later years as a positive amount. Add it to your adjusted gross income. Enter the result on line 11.

Is your modified adjusted gross income from line 13 of this worksheet more than $260,000 ($135,000 if married filing separately)?

□ Yes. Your deduction is limited. Refigure your deduction using the New Motor Vehicle Tax Deduction Worksheet in the 2010 Schedule A (Form 1040). On line 4 of the New Motor Vehicle Tax Deduction Worksheet, enter the amount from line 13 of this worksheet.

□ No. Your deduction is not limited. Enter the amount from line 19 on line 20 and enter -0- on line 21.

Is your modified adjusted gross income from line 13 of this worksheet more than $100,000 ($50,000 if married filing separately)?

□ Yes. Your deduction is limited. Refigure your deduction using the Mortgage Insurance Premiums Deduction Worksheet in the 2010 Instructions for Schedule A (Form 1040). On line 2 of the Mortgage Insurance Premiums Deduction Worksheet, enter the amount from line 13 of this worksheet.

□ No. Your deduction is not limited. Enter the amount from line 22 on line 23 and enter -0- on line 24.

If you had a contributions carryover from 2009 to 2010 and your NOL deduction includes an amount from an NOL year before 2009, you may have to reduce your contributions carryover. This reduction is any adjustment you made to your 2009 charitable contributions deduction when figuring your NOL carryover to 2010. Use the reduced contributions carryover to figure the amount to enter on line 26.