Instructions For Schedule J (Form 1040) - Income Averaging For Farmers And Fishermen - 2017 Page 3

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line 42, or on Form 1040X for 2016),
adjusted)—was less than zero. Enter on
come, which he enters as a positive
enter on line 5 the amount from your
line 2 the amount by which your 2014
amount on line 1 of the 2014 Taxable
2016 Schedule J, line 11.
capital loss carryover to 2015 (the sum
Income Worksheet.
2015 but not 2016, enter on line 5
of your short- and long-term capital loss
When John filed his 2014 tax return,
the amount from your 2015 Schedule J,
carryovers) exceeds the excess of the
he had a $3,000 net capital loss deduc-
line 15.
loss on your 2014 Schedule D, line 16,
tion on Schedule D, line 21 (which was
2014 but not 2015 or 2016, enter
over the loss on your 2014 Schedule D,
also entered on Form 1040, line 13), a
on line 5 the amount from your 2014
line 21. If you had any Net Operating
$7,000 loss on Schedule D, line 16, and
Schedule J, line 3.
Loss (NOL) carrybacks to 2014, be sure
a $4,000 capital loss carryover to 2015.
you refigured your 2014 capital loss car-
However, when John carried back the
If you figured your tax for 2014,
ryover to 2015.
2015 NOL ($9,000 of which was carried
2015, and 2016 without using Sched-
Line 3. If you had an NOL for 2014,
to 2014), he refigured his 2014 capital
ule J, enter on line 5 the taxable income
enter the amount of that NOL from the
loss carryover to 2015 as $7,000. John
from your 2014 tax return (or as previ-
2014 Form 1045, Schedule A, line 25,
adds the $3,000 from Schedule D,
ously adjusted by the IRS, or corrected
you filed with Form 1045 or Form
line 21, and the $7,000 capital loss car-
on an amended return). But if that
1040X. If you didn't have an NOL for
ryover. He subtracts from the $10,000
amount is zero or less, complete the
2014, enter the portion, if any, of the
result the $7,000 loss on his Schedule D,
2014 Taxable Income Worksheet to fig-
NOL carryovers and carrybacks to 2014
line 16, and enters $3,000 on line 2 of
ure the amount to enter on line 5.
that weren't used in 2014 and were car-
the worksheet.
If you didn't file a tax return for
ried to years after 2014.
John had $850 of taxable income in
2014, use the amount you would have
2014 that reduced the 2015 NOL carry-
Example. John Farmington, who is
reported as your taxable income had you
back. The $3,950 exemption deduction
single, didn't use income averaging for
been required to file a tax return. Be
and $3,000 net capital loss deduction al-
2014, 2015, or 2016. For 2017, John has
sure to keep all your records for 2014
so reduced the amount of the 2015 NOL
$18,000 of elected farm income on
for at least 3 years after April 17, 2018
carryback. As a result, only $1,200
Schedule J, line 2a. The taxable income
(or the date you file your 2017 tax re-
($9,000 – $850 – $3,950 – $3,000 =
before subtracting exemptions on his
turn, if later).
$1,200) was available to carry to 2016
2014 Form 1040, line 41, is $4,800. A
and later years, as shown on his 2015
deduction for exemptions of $3,950 is
Instructions for 2014 Taxable
Form 1045, Schedule B, line 10. John
shown on line 42, and line 43, taxable
Income Worksheet
enters the $1,200 on line 3 of the work-
income, is $850. However, John had a
sheet, and $4,200 ($1,200 plus the
$20,600 NOL for 2015, $9,000 of which
Line 2. Any net capital loss deduction
$3,000 line 2 amount) on line 4. He then
was remaining to carry to 2014 after the
on your 2014 Schedule D, line 21, isn't
subtracts the $4,200 from the $8,150 on
NOL was carried back to 2013. To com-
allowed for income averaging purposes
line 1 and enters the result, $3,950, on
plete line 1 of the 2014 Taxable Income
to the extent it didn't reduce your capital
line 5 of the worksheet. He enters a neg-
Worksheet, John combines the $9,000
loss carryover to 2015. This could hap-
ative $3,950 on Schedule J, line 5. He
NOL deduction with the $850 from his
pen if the taxable income before sub-
combines that amount with the $6,000
2014 Form 1040, line 43. The result is a
tracting exemptions—shown on your
on Schedule J, line 6, and enters $2,050
negative $8,150, John's 2014 taxable in-
2014 Form 1040, line 41, or your 2014
on Schedule J, line 7.
Form 1040NR, line 39 (or as previously
2014 Taxable Income Worksheet—Line 5
Keep for Your Records
Complete this worksheet if you didn't use Schedule J to figure your tax for 2015 and 2016 and your 2014 taxable income was zero or
less. See the instructions above before completing this worksheet for line 5.
1. Figure the taxable income from your 2014 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2014, don't include any NOL carryovers or carrybacks to 2014. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2. If there is a loss on your 2014 Schedule D, line 21, add that loss (as a positive
amount) and your 2014 capital loss carryover to 2015. Subtract from that sum the
amount of the loss on your 2014 Schedule D, line 16, and enter the result . . . . . . . . .
2.
3. If you had an NOL for 2014, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2014
that weren't used in 2014 and were carried to years after 2014 . . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . . . . . . . . .
5.
J-3

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