I have a client with an NOL carryback. I had filed a 1040X for the years affected. The IRS sent my client a letter stating that form 1045 Schedule B is the only form approved by the Internal Revenue Service to compute an NOL carryover. I thought you could do either, (1040X or Form 1045) but guess not.

The IRS is stating a different NOL carryforward than Lacerte computed on Federal Statements worksheet. The IRS is not taking into account that Social Security is no longer taxable and Itemized deductions have changed. So, their calculations use up much more NOL than what the Lacerte worksheet calculated in Federal Statements.

Is the worksheet that Lacerte has to calculate the NOL carryforward incorrect? I was going to populate box 2 of form 1045 Sch B with the amounts from the Lacerte worksheet. Then I just need to figure out how to get Itemized Deductions adjustment to populate.

The Lacerte worksheet has itemized Deductions adjustments when calculating the NOL carryforward, but I cannot get form 1045 box 7 to populate. The form 1045 instructions for Line 7 states it only use it if you put something in line 3-5, which I did not, so I am wondering why Lacerte worksheet has itemized deductions adjustments

For reference. The NOL carryback is $41,937. The original form 1040 had taxable income of $ 12,630.00 -. The Lacerte NOL worksheet has taxable income of -2950.00. Which is the new taxable income with the NOL added back in. Lacerte then added back $ 2421.00 in itemized deductions. IRS wants to use up $ 16,630 of NOL. Lacerte worksheet only used up $3,471.00. I would really like to have the IRS agree with the $3,471.00.

Is the Lacerte worksheet correct, and the IRS should have taken into account that Social Security is no longer taxable, and itemized deductions have changed?

Thank you in advance for the help.