Instructions For Schedule J - Income Averaging For Farmers And Fishermen

positive amount on line 1 of the 2001 work-

lines 25 and 39, or on the Schedule D Tax

return, if later), even if you did not file a tax

sheet.

Worksheet, lines 15 and 36).

return for 2002.

Instructions for 2002 Taxable

Exception.

You must use the 2001 Tax

When John filed his 2001 tax return, he

Computation Worksheet for Certain De-

Income Worksheet

had a $3,000 net capital loss deduction on

pendents and Nonresident Alien Individu-

Schedule D, line 18 (which was also en-

Line 2.

Any net capital loss deduction on

als on page J-3 if you, or your spouse if

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

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

filing jointly, did not receive (before offset)

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

lowed for income averaging purposes to the

an advance payment of your 2001 taxes and

tal loss carryover to 2002. However, when

extent it did not reduce your capital loss

either of the following apply.

John carried back the 2002 NOL to 2001,

carryover to 2003. This could happen if the

•

he refigured his 2001 capital loss carryover

You, or your spouse if filing jointly,

taxable income before subtracting exemp-

to 2002 as $7,000. John adds the $3,000

could be claimed as a dependent on some-

tions shown on your 2002 Form 1040,

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

one else’s 2001 tax return.

line 39 (or as previously adjusted), was less

•

carryover. He subtracts from the result the

You filed Form 1040NR for 2001.

than zero. Enter the amount by which your

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

2002 capital loss carryover to 2003 (the

If the 2001 Capital Gain Tax Worksheet

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

sum of your short- and long-term capital

or Schedule D also applies, follow the Spe-

loss carryovers) exceeds the excess of the

John had $1,000 of taxable income in

cial Rules on the worksheet on page J-3 to

loss on your 2002 Schedule D, line 17, over

2001 that reduced the 2002 NOL car-

figure your tax.

the loss on your 2002 Schedule D, line 18.

ryback. The $2,900 of exemptions and

If you had any NOL carrybacks to 2002, be

$3,000 net capital loss deduction also re-

sure you refigured your 2002 capital loss

duced the amount of the 2002 NOL car-

Line 9

carryover to 2003.

ryback. Therefore, only $2,100 was

available to carry to 2003 and later years, as

If you used Schedule J to figure your tax for

If you had an NOL for 2002, enter

Line 3.

shown on his 2002 Form 1045, Schedule B,

2003 (that is, you entered the amount from

the amount of that NOL as figured on the

line 9. John enters the $2,100 on line 3 of

that Schedule J, line 22, on Form 1040,

2002 Form 1045, Schedule A, line 27, you

the worksheet, and $5,100 on line 4. He

line 41, or on Form 1040X), enter on line 9

filed with Form 1045 or Form 1040X. If

then subtracts the $5,100 from the $8,000

the amount from your 2003 Schedule J, line

you did not have an NOL for 2002, enter

on line 1 and enters the result, $2,900, on

15. If you used Schedule J to figure your

the portion, if any, of the NOL carryovers

line 5 of the worksheet. He enters a nega-

tax for 2002 but not 2003, enter on line 9

and carrybacks to 2002 that were not used

tive $2,900 on Schedule J, line 5. He com-

the amount from your 2002 Schedule J, line

in 2002 and were carried to years after

bines that amount with the $6,000 on

2002.

Schedule J, line 6, and enters $3,100 on

Example. John Farmington did not use

If you figured your tax for both 2002

Schedule J, line 7.

income averaging for 2001, 2002, nor

and 2003 without using Schedule J, enter

2003. The taxable income before sub-

on line 9 the taxable income from your

tracting exemptions on his 2002 Form

2002 tax return (or as previously adjusted

Line 8

1040, line 39, is a negative $30,000. A de-

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

duction for exemptions of $3,000 is shown

that amount is zero or less, complete the

If line 7 is zero, enter -0- on line 8. Other-

on line 40, and line 41, taxable income, is

worksheet below to figure the amount to

wise, figure the tax on the amount on line 7

limited to zero. John subtracts from the

enter on line 9.

using:

$30,000 loss the $3,000 deduction for ex-

•

If you filed your 2002 tax return using

emptions. The result is a negative $33,000,

The 2001 Tax Rate Schedules on

TeleFile, enter the taxable income from

John’s 2002 taxable income, which he en-

page J-2,

your TeleFile Tax Record. If you did not

•

ters as a positive amount on line 1 of the

The 2001 Capital Gain Tax Work-

file a tax return for 2002, use the amount

2002 worksheet.

sheet on page J-3, or

you would have reported as your taxable

•

The Schedule D you filed for 2001

income had you been required to file a tax

John had a $3,000 net capital loss de-

(but use the 2001 Tax Rate Schedules on

return. Be sure to keep all your records for

duction on Schedule D, line 18 (which was

page J-2 instead of the 2001 Tax Table

2002 until at least 3 years after April 15,

also entered on Form 1040, line 13), and a

when figuring the tax on Schedule D,

2005 (or the date you file your 2004 tax

$7,000 loss on Schedule D, line 17 (as ad-

2002 Taxable Income Worksheet—Line 9

Keep for Your Records

Complete this worksheet if you did not use Schedule J to figure your tax for 2003 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 9 . . . . . . . . . .

J-4

Instructions For Schedule J - Income Averaging For Farmers And Fishermen - 2004 Page 4

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