The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), amended section 461(l) to restrict the limitation on excess business losses of noncorporate taxpayers to tax years beginning after 2020 and before 2026. The Act repealed the limitation for tax years 2018, 2019, and 2020. If you filed a 2018 and/or 2019 return(s) with the limitation, you can file an amended return. For more information, see IRS.gov About Form 461.
When a negative amount is reported on Form 461, Limitation on Business Losses, Line 16 as an excess business loss, although it is a loss, Form 461 instructions indicate this amount should be reported as a positive number on the Other Income line of your tax return with the description of ELA.
Other Income lines which could report this amount include:
- Schedule 1 (Form 1040), Line 8
- Form 1041, Line 8
- Form 1041-QFT, Part II, Line 4
- Form 1041-N, Part II, Line 4
- Form 990-T, Part I, Line 12 (applicable to trusts only)
