Instructions For 2010 Form 4cl: Net Capital Loss Adjustments For Combined Group Members Page 2
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4Form 4CL Instructions
To compute the amount on line 2, you’ll need to allo-
If the result is a net capital gain, enter the amount of
cate a share of the group’s aggregate net capital loss
that net capital gain on line 3. If the result is a net
to each member that would have had a net capital
capital loss, enter the amount of that net capital loss
loss if its items included in the aggregate computation
on line 4 as a positive number.
were netted on a separate entity basis. The example
■ Lines 5 through 7. Available Capital Loss
below illustrates:
Carryovers – Compute the available non-sharable
Example for Line 2:
and sharable capital loss carryovers using the work-
sheets in Parts II, III, and IV. See the instructions for
Combined Group STU consists of Member S, Mem-
Parts II, III, and IV.
ber T, and Member U. In the taxable year 2010, S, T,
and U have the following capital gain/loss items in-
■ Line 8. Net Capital Gain from Separate Entity
cludable in the group’s aggregate computation:
Items – The amount on line 8 represents the total net
capital gain you must include on Form 4N on the ap-
__S__
__T__
__U__
propriate line or lines corresponding to the type of
Long term
income. If the net capital gain is attributable to more
capital gain
$5,000
than one type of income on Form 4N, allocate the net
Short term
capital gain to the types of income which generated
capital loss
($12,000)
($6,000)
the net capital gain, in proportion to the total capital
gain attributable to each type of income.
Section 1231
gain/loss
($500)
$2,000
$1,500
NOTE: If the net capital gain on line 8 is attribut-
able to amounts reportable in Part II of Form 4N,
When S, T, and U aggregate each class of capital
include the net capital gain in the pre-apportioned
gains and losses and section 1231 gains and losses,
amount.
Group STU has a suspended net capital loss of
($10,000) and therefore enters $0 on Form 4R,
line 18.
If you have an amount on line 8, note the following
ordering rules regarding your capital loss carryovers:
However, if S, T, and U’s capital gains and losses
and section 1231 gains and losses are netted for
The current year net capital loss reported on
each member separately, S would have a net capital
line 2 is considered used before the capital loss
loss of ($12,000) (its section 1231 loss would be
carryovers reported on line 7.
treated as ordinary under section 1231(a)(2) of the
If capital loss carryovers from line 7 were used,
Internal Revenue Code), T would have a net capital
they are considered used in the order incurred. If
loss of ($4,000), and U would have a net capital gain
both sharable and non-sharable carryovers were
of $6,500.
incurred in the same taxable year, the amount
Since only S and T would have a net capital loss if
used from each type is determined on a pro rata
their capital gain/loss items included in the aggrega-
basis according to each type available from that
tion were netted on a separate entity basis, only S
year.
and T complete line 2 of Form 4CL.
■
Of Group STU’s ($10,000) suspended net capital
Line 9a. Available Carryovers After Applying
loss, you would allocate ($7,500) to S (= ($10,000) x
Capital Gain from Separate Entity Items – If you
($12,000)/($16,000)) and ($2,500) to T (= ($10,000) x
reported current year net capital gain from separate
($4,000)/($16,000)).
entity items on line 3, subtract that amount from the
available capital loss carryovers you reported on
Therefore, on line 2 of Member S’s Form 4CL, you
line 7. Line 9a represents the total remaining capital
would enter $7,500, and on line 2 of Member T’s
loss carryovers after applying them against current
Form 4CL, you would enter $2,500. Note that these
year net capital gains from separate entity items.
loss amounts should be entered as positive numbers.
■
Line 9b. Available Carryovers After Applying
■ Lines 3 and 4. Current Year Net Capital Gain or
Capital Loss from Separate Entity Items – If you
Loss from Separate Entity Items – If the corpora-
reported current year net capital loss from separate
tion has capital gain/loss items that are reportable on
entity items on line 4, add that amount to the avail-
Form 4N (and thus couldn’t be included in the aggre-
able capital loss carryovers you reported in line 7.
gate computation on Form 4R, line 18), net those
Line 9b represents the total available capital loss
amounts separately, without regard to capital loss
carryovers, including current year net capital losses
carryovers. The capital loss carryovers will be ac-
from separate entity items.
counted for later on lines 8 and 9.
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