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Why would irs not accept the reduction of self employment taxes for a schedule c operating loss carryback

CS
Level 1

My client had an operating schedule c loss in 2017 which we carried back to 2015.

The IRS accepted everything other than the resultant reduction of self employment taxes of that same business in 2015.

The tax line agent could not help so I have manually resubmitted the 2015 returns with a cover letter explaining my position.No word yet.


Chris Smallman

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TaxGuyBill
Level 15

A Net Operating Loss only reduces Income tax on the amended return, not Self Employment tax.

Sorry, there is nothing you can do because there is nothing in the law that allows a NOL to reduce SE tax.

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TaxGuyBill
Level 15

A Net Operating Loss only reduces Income tax on the amended return, not Self Employment tax.

Sorry, there is nothing you can do because there is nothing in the law that allows a NOL to reduce SE tax.

View solution in original post

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abctax55
Level 15

An observation... a Sch C loss does not necessarily create a NOL.  You have to look at the entire return.

(I wanna be a member of the pot stirring club too)
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