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$4,050 is shown on Form 1040, line 42,

(his 2016 capital loss carryover to 2017

fied taxable income of $3,200. Modified

and line 43, taxable income, is limited to

was $5,000, not $4,000, because the

taxable income is figured by adding

zero. John doesn't have an NOL for

amount on his Form 1040, line 41, was a

back the $3,000 net capital loss deduc-

2016. John subtracts from the $1,000

negative $1,000). John adds the $3,000

tion and the $4,050 exemption deduction

negative amount on Form 1040, line 41,

from Schedule D, line 21, and the

to negative taxable income (figured

the $4,050 deduction for exemptions.

$5,000 carryover. He subtracts from the

without regard to the NOL deduction) of

The result is a negative $5,050, John's

$8,000 result the $7,000 loss on his

$3,850. John enters $1,000 on line 4 and

2016 taxable income, which he enters as

Schedule D, line 16, and enters $1,000

$4,050 on line 5. He enters $4,050 as a

a positive amount on line 1 of the 2016

on line 2 of the worksheet.

negative amount on Schedule J, line 13.

Taxable Income Worksheet.

He enters $6,000 on Schedule J, line 14,

John enters -0- on line 3 of the work-

and $1,950 on Schedule J, line 15. If he

When John filed his 2016 tax return,

sheet because he doesn't have an NOL

uses Schedule J to figure his tax for

he had a $3,000 net capital loss deduc-

for 2016 and didn't have an NOL carry-

2018, he will enter $1,950 on his 2018

tion on Schedule D, line 21 (which was

over from 2016 available to carry to

Schedule J as his 2016 taxable income

also entered on Form 1040, line 13), a

2017 and later years. The NOL deduc-

for income averaging purposes.

$7,000 loss on Schedule D, line 16, and

tion for 2016 of $1,200 was reduced to

a $5,000 capital loss carryover to 2017

zero because it didn't exceed his modi-

2016 Taxable Income Worksheet—Line 13

Keep for Your Records

Complete this worksheet if your 2016 taxable income was zero or less. See the instructions above before completing this worksheet.

1. Figure the taxable income from your 2016 tax return (or as previously adjusted) without limiting it to

zero. If you had an NOL for 2016, don't include any NOL carryovers or carrybacks to 2016. Enter the

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

2. If there is a loss on your 2016 Schedule D, line 21, add that loss (as a positive

amount) and your 2016 capital loss carryover to 2017. Subtract from that sum the

amount of the loss on your 2016 Schedule D, line 16, and enter the result . . . . . . . .

3. If you had an NOL for 2016, enter it as a positive amount. Otherwise, enter as a

positive amount the portion, if any, of the NOL carryovers and carrybacks to 2016

that weren't used in 2016 and were carried to years after 2016 . . . . . . . . . . . . . . . . .

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

5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 . . . . . . . . . . . . . .

ule D Tax Worksheet, lines 42 and 44);

Worksheet to figure the tax on the

Line 16

amount on line 3 of the Foreign Earned

The 2016 Foreign Earned Income

Income Tax Worksheet.

If line 15 is zero or less, enter -0- on

Tax Worksheet, later.

line 16. Otherwise, figure the tax on the

When completing the Schedule D

amount on line 15 using: