Charitable contributions are calculated with a modified taxable income and don’t factor in the amount of net operating loss (NOL) carryover. If you carry over contributions during a year with taxable income, your contributions will be used against the income first (up to the 10% adjusted gross income (AGI) limitation). The carried-over NOL is then applied against the remaining modified taxable income.
While it may seem like your contributions are converting to NOL, what’s really happening is your contributions are utilized before the NOL. Any remaining NOL that couldn’t be fully utilized in the current year will then carry over.
