For most taxpayers, NOLs arising in tax years ending after 2020 can only be carried forward. See Net operating losses for more information.
Follow these steps to enter an NOL carryover in the Corporate module:
- From the Input Return tab, go to Deductions ⮕ Net Operating Losses ⮕ Regular NOL Deduction.
- Scroll down to the Net Operating Loss Carryovers section.
- Under the Net Operating Loss column, enter the amount in the field for the year the loss was incurred.
- Repeat step 6 for each year a loss was incurred.
- Enter the amount utilized in the Utilizations column for the applicable year.
- Enter the year the amount was actually used in the Description column.
- Repeat steps 8-9 for each utilization.
The information you enter will print on a statement on Form 1120, line 29a and reflect any amount of NOL available to be used in the current year. Any current NOL carryover and utilization will proforma to the next tax year.
Why are corporate charitable contributions converting to a NOL carryover?
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.