• net operation loss -1st step

    From Lenny Miller@21:1/5 to All on Mon Aug 8 10:19:29 2022
    The first step to calculate net operation loss is to subtract standard deduction or itemized deduction from AGI.

    Let's say my AGI is -12000 and the standard deduction is 12000. What's
    the result of the subtraction? is it -24000 or 0? I'm not sure if I
    should do the math using absolute number.

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  • From Stan Brown@21:1/5 to Lenny Miller on Mon Aug 8 15:22:04 2022
    On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:

    The first step to calculate net operation loss is to subtract standard deduction or itemized deduction from AGI.

    Let's say my AGI is -12000 and the standard deduction is 12000. What's
    the result of the subtraction? is it -24000 or 0? I'm not sure if I
    should do the math using absolute number.

    It's zero, but having two $12,000 numbers in your example makes that
    pretty obscure. The computation is AGI minus the total of several
    things including standard deduction or itemized deductions. Assuming
    you don't have any of those other things, AGI of $-12,000 minus
    standard deduction of $12,000 is $-24,000 mathematically.

    But take a look at form 1040. Line 15, which is where you enter the
    result of the subtraction, says "Taxable income. ... If zero or less,
    enter -0-".

    If your AGI is negative, subtrating _any_ positive number from it
    will give a result less than 0, so your taxable income will be zero,
    not negative.

    (I'm working from <https://www.irs.gov/pub/irs-pdf/f1040.pdf>, which
    is the 2021 form. But even if line 15 has a different number on the
    2022 Form 1040, I think it's overwhelmingly likely that the line
    where you enter taxable income will still have a floor of zero.

    --
    Stan Brown, Tehachapi, California, USA https://BrownMath.com/
    Shikata ga nai...

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Taxed and Spent@21:1/5 to Stan Brown on Wed Aug 10 10:36:04 2022
    On 8/8/2022 12:22 PM, Stan Brown wrote:
    On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:

    The first step to calculate net operation loss is to subtract standard
    deduction or itemized deduction from AGI.

    Let's say my AGI is -12000 and the standard deduction is 12000. What's
    the result of the subtraction? is it -24000 or 0? I'm not sure if I
    should do the math using absolute number.

    It's zero, but having two $12,000 numbers in your example makes that
    pretty obscure. The computation is AGI minus the total of several
    things including standard deduction or itemized deductions. Assuming
    you don't have any of those other things, AGI of $-12,000 minus
    standard deduction of $12,000 is $-24,000 mathematically.

    But take a look at form 1040. Line 15, which is where you enter the
    result of the subtraction, says "Taxable income. ... If zero or less,
    enter -0-".

    If your AGI is negative, subtrating _any_ positive number from it
    will give a result less than 0, so your taxable income will be zero,
    not negative.

    (I'm working from <https://www.irs.gov/pub/irs-pdf/f1040.pdf>, which
    is the 2021 form. But even if line 15 has a different number on the
    2022 Form 1040, I think it's overwhelmingly likely that the line
    where you enter taxable income will still have a floor of zero.


    So how is NOL calculated?

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Lenny Miller@21:1/5 to Stan Brown on Wed Aug 10 10:36:44 2022
    On 8/8/2022 3:22 PM, Stan Brown wrote:
    On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:

    The first step to calculate net operation loss is to subtract standard
    deduction or itemized deduction from AGI.

    Let's say my AGI is -12000 and the standard deduction is 12000. What's
    the result of the subtraction? is it -24000 or 0? I'm not sure if I
    should do the math using absolute number.

    It's zero, but having two $12,000 numbers in your example makes that
    pretty obscure. The computation is AGI minus the total of several
    things including standard deduction or itemized deductions. Assuming
    you don't have any of those other things, AGI of $-12,000 minus
    standard deduction of $12,000 is $-24,000 mathematically.

    But take a look at form 1040. Line 15, which is where you enter the
    result of the subtraction, says "Taxable income. ... If zero or less,
    enter -0-".

    If your AGI is negative, subtrating _any_ positive number from it
    will give a result less than 0, so your taxable income will be zero,
    not negative.

    (I'm working from <https://www.irs.gov/pub/irs-pdf/f1040.pdf>, which
    is the 2021 form. But even if line 15 has a different number on the
    2022 Form 1040, I think it's overwhelmingly likely that the line
    where you enter taxable income will still have a floor of zero.

    Thank you for the reply.

    I'm still confused. The instruction in the Worksheet 1 says:

    "1. For individuals, subtract your standard deduction or itemized
    deductions from your AGI and enter it here."

    If the mathematical result is -24,000, shouldn't I enter -24,000 in Line
    1 of Worksheet 1?

    For now, I'm only focusing on filling out Worksheet 1 (because I need to
    use this worksheet to figure out my net operation loss), not any other
    forms.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Stan Brown@21:1/5 to Lenny Miller on Wed Aug 10 17:19:13 2022
    On Wed, 10 Aug 2022 10:36:44 EDT, Lenny Miller wrote:

    On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:

    The first step to calculate net operation loss is to subtract standard
    deduction or itemized deduction from AGI.

    Let's say my AGI is -12000 and the standard deduction is 12000. What's
    the result of the subtraction? is it -24000 or 0? I'm not sure if I
    should do the math using absolute number.

    I'm still confused. The instruction in the Worksheet 1 says:

    Worksheet 1? That's not part of the instructions for Form 1040.(*)
    Which Form's instructions (or which Publication) are you referring
    to?

    (*) Or if it is, then the Find command in my PDF viewer doesn't work.

    --
    Stan Brown, Tehachapi, California, USA https://BrownMath.com/
    Shikata ga nai...

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)