Page 306 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Line 13 if you could have entered a negative tal loss deduction on Schedule D, line 21
(which was also entered on Form 1040,
amount on that line. Enter on line 2 the
If you used Schedule J to figure your tax amount by which your 2021 capital loss line 7); a $7,000 loss on Schedule D,
for 2021 (that is, you entered the amount carryover to 2022 (the sum of your line 16; and a $5,000 capital loss carry-
from the 2021 Schedule J, line 23, on short- and long-term capital loss carry- over to 2022 (the farmer’s 2021 capital
your 2021 Form 1040, 1040-SR, or overs) exceeds the excess of the loss on loss carryover to 2022 was $5,000, not
1040-NR, line 16; or on Form 1040-X, your 2021 Schedule D, line 16, over the $4,000, because the amount on the Form
line 6, for 2021), enter on line 13 the loss on your 2021 Schedule D, line 21. 1040, line 15, would have been a nega-
amount from your 2021 Schedule J, Line 3. If you had an NOL for 2021, tive $1,000 if the farmer could have en-
line 3. enter the amount of that NOL from the tered a negative number on that line).
If you didn't use Schedule J to figure 2021 Form 1045, Schedule A, line 24, The farmer adds the $3,000 from Sched-
your tax for 2021, enter on line 13 the you filed with Form 1045 or Form ule D, line 21, and the $5,000 carryover.
taxable income from your 2021 tax re- 1040-X. If you didn't have an NOL for The farmer subtracts from the $8,000 re-
turn (or as previously adjusted by the 2021, enter the portion, if any, of the sult the $7,000 loss on the Schedule D,
IRS or corrected on an amended return). NOL carryovers and carrybacks to 2021 line 16, and enters $1,000 on line 2 of
But if that amount is zero or less, com- that weren't used in 2021 and were car- the worksheet.
plete the worksheet below to figure the ried to years after 2021. The farmer enters -0- on line 3 of the
amount to enter on line 13. Example. The farmer didn't use in- worksheet because the farmer doesn't
If you didn't file a tax return for come averaging for 2019, 2020, or 2021. have an NOL for 2021 and didn't have
2021, use the amount you would have The taxable income on the farmer’s an NOL carryover from 2021 available
reported as your taxable income had you 2021 Form 1040, line 15, would have to carry to 2022 and later years. The
been required to file a tax return. Be been a negative $1,000 if the farmer NOL deduction for 2021 of $5,150 was
sure to keep all your records for 2021 could have entered a negative number reduced to zero because it didn't exceed
until at least 3 years after April 18, 2023 on that line. This amount includes an the farmer’s modified taxable income of
(or the date you file your 2022 tax re- NOL deduction on the farmer’s 2021 $7,150. Modified taxable income is fig-
turn, if later). Schedule 1 (Form 1040), line 8a, of ured by adding back the $3,000 net capi-
$5,150. The $5,150 is the portion of the tal loss deduction to taxable income (fig-
Instructions for 2021 Taxable 2020 NOL that was remaining from ured without regard to the NOL deduc-
Income Worksheet 2019 to be carried to 2021. See the ex- tion) of $4,150. The farmer enters
$1,000 on line 4 and $0 on line 5 of the
amples earlier. The farmer’s taxable in-
Line 2. Any net capital loss deduction come is limited to zero and the farmer worksheet. The farmer enters $0 on
on your 2021 Schedule D, line 21, isn't doesn’t have an NOL for 2021. The re- Schedule J, line 13. The farmer enters
allowed for income averaging purposes sult is a negative $1,000, the farmer’s $6,000 on Schedule J, line 14, and
to the extent it didn't reduce your capital 2021 taxable income, which the farmer $6,000 on Schedule J, line 15. If the
loss carryover to 2022. This could hap- enters as a positive amount on line 1 of farmer uses Schedule J to figure the
pen if the taxable income—shown on the 2021 Taxable Income Worksheet. farmer’s tax for 2023, the farmer will
your 2021 Form 1040, 1040-SR, or enter $6,000 on the farmer’s 2023
1040-NR, line 15 (or as previously ad- When the farmer filed the 2021 tax Schedule J as the 2021 taxable income
justed)—would have been less than zero return, the farmer had a $3,000 net capi- for income averaging purposes.

2021 Taxable Income Worksheet—Line 13 Keep for Your Records

Complete this worksheet if your 2021 taxable income was zero or less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2021 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2021, don't include any NOL carryovers or carrybacks to 2021. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. If there is a loss on your 2021 Schedule D, line 21, add that loss (as a positive
amount) and your 2021 capital loss carryover to 2022. Subtract from that sum the
amount of the loss on your 2021 Schedule D, line 16, and enter the result . . . . . . . . 2.
3. If you had an NOL for 2021, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2021
that weren't used in 2021 and were carried to years after 2021 . . . . . . . . . . . . . . . . . 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 13 . . . . . . . . . . . . . . 5.

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