Instruction For Schedule J - 2005 (Page 2 of 8) in pdf

lowed for income averaging purposes to the

worksheet, John combines the $9,000 NOL

Line 5

extent it did not reduce your capital loss

deduction with the $1,000 from his 2002

carryover to 2003. This could happen if the

Form 1040, line 41. The result is a negative

If you used Schedule J to figure your tax for

taxable income before subtracting exemp-

$8,000, John’s 2002 taxable income, which

2004 (that is, you entered the amount from

tions shown on your 2002 Form 1040, line

he enters as a positive amount on line 1 of

that Schedule J, line 22, on Form 1040, line

39 (or as previously adjusted), was less

the 2002 worksheet.

43, or on Form 1040X), enter on line 5 the

than zero. Enter the amount by which your

amount from your 2004 Schedule J, line 11.

When John filed his 2002 tax return, he

2002 capital loss carryover to 2003 (the

If you used Schedule J to figure your tax for

had a $3,000 net capital loss deduction on

sum of your short- and long-term capital

2003 but not 2004, enter on line 5 the

Schedule D, line 18 (which was also en-

loss carryovers) exceeds the excess of the

amount from your 2003 Schedule J, line 15.

tered on Form 1040, line 13), a $7,000 loss

loss on your 2002 Schedule D, line 17, over

If you used Schedule J to figure your tax for

on Schedule D, line 17, and a $4,000 capi-

the loss on your 2002 Schedule D, line 18.

2002 but not 2003 nor 2004, enter on line 5

tal loss carryover to 2003. However, when

If you had any net operating loss (NOL)

the amount from your 2002 Schedule J, line

John carried back the 2003 NOL to 2002,

carrybacks to 2002, be sure you refigured

he refigured his 2002 capital loss carryover

your 2002 capital loss carryover to 2003.

If you figured your tax for 2002, 2003,

to 2003 as $7,000. John adds the $3,000

and 2004 without using Schedule J, enter

from Schedule D, line 18, and the $7,000

Line 3.

If you had an NOL for 2002, enter

on line 5 the taxable income from your

carryover. He subtracts from the result the

the amount of that NOL as figured on the

2002 tax return (or as previously adjusted

$7,000 loss on his Schedule D, line 17, and

2002 Form 1045, Schedule A, line 27, you

by the IRS, an amended return, etc.). But if

enters $3,000 on line 2 of the worksheet.

filed with Form 1045 or Form 1040X. If

that amount is zero or less, complete the

you did not have an NOL for 2002, enter

worksheet below to figure the amount to

John had $1,000 of taxable income in

the portion, if any, of the NOL carryovers

enter on line 5.

2002 that reduced the 2003 NOL car-

and carrybacks to 2002 that were not used

ryback. The $3,000 of exemptions and

If you filed your 2002 tax return using

in 2002 and were carried to years after

$3,000 net capital loss deduction also re-

TeleFile, enter the taxable income from

2002.

duced the amount of the 2003 NOL car-

your TeleFile Tax Record. If you did not

ryback. Therefore, only $2,000 was

John Farmington did not use in-

file a tax return for 2002, use the amount

Example.

available to carry to 2004 and later years, as

come averaging for 2002, 2003, nor 2004.

you would have reported as your taxable

shown on his 2003 Form 1045, Schedule B,

For 2005, John has $18,000 of elected farm

income had you been required to file a tax

line 9. John enters the $2,000 on line 3 of

income on line 2. The taxable income

return. Be sure to keep all your records for

the worksheet, and $5,000 on line 4. He

before subtracting exemptions on his 2002

2002 for at least 3 years after April 17,

then subtracts the $5,000 from the $8,000

Form 1040, line 39, is $4,000. A deduction

2006 (or the date you file your 2005 tax

on line 1 and enters the result, $3,000, on

for exemptions of $3,000 is shown on line

return, if later).

line 5 of the worksheet. He enters a nega-

40, and line 41, taxable income, is $1,000.

Instructions for 2002 Taxable

tive $3,000 on Schedule J, line 5. He com-

However, John had a $22,200 NOL in

Income Worksheet

bines that amount with the $6,000 on

2003, $9,000 of which was remaining to

Schedule J, line 6, and enters $3,000 on

Any net capital loss deduction on

carry to 2002 after the NOL was carried

Line 2.

Schedule J, line 7.

your 2002 Schedule D, line 18, is not al-

back to 2001. To complete line 1 of the

2002 Taxable Income Worksheet—Line 5

Keep for Your Records

Complete this worksheet if you did not use Schedule J to figure your tax for both 2003 and 2004 and your 2002 taxable

income was zero or less. See the instructions above before completing this worksheet.

1. Figure the taxable income from your 2002 tax return (or as previously adjusted) without limiting it to

zero. If you had an NOL for 2002, do not include any NOL carryovers or carrybacks to 2002. Enter

the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. If there is a loss on your 2002 Schedule D, line 18, add that loss (as a positive

amount) and your 2002 capital loss carryover to 2003. Subtract from that sum the

amount of the loss on your 2002 Schedule D, line 17, and enter the result . . . . . . .

3. If you had an NOL for 2002, enter it as a positive amount. Otherwise, enter as a

positive amount the portion, if any, of the NOL carryovers and carrybacks to 2002

that were not used in 2002 and were carried to years after 2002 . . . . . . . . . . . . . .

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . . . . .

J-2

Instruction For Schedule J - 2005 Page 2

Related Articles

Related forms

Related Categories