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    2 Replies Latest reply on Mar 16, 2008 11:13 PM by dublincpa

    Business loss and income averaging.

    ceegee1 Newbie
      I am new to this site, but appreciate all the knowledgeable people who are helping those of us who need it. After 30 years as a retail manager, my store was forced to close in 2001. My wife and I took our life savings and opened our own business. It lost money each year and after 3 1/2 years we closed it. It was an S Corporation and our corporate tax return each year showed losses in excess of $20,000, but we had very little income, so those large losses were never offset with taxable income.

      Now three years later, we have sold a fully depreciated rental property and have a long term capital gain of about $25,000. I know that income averaging is no longer allowed except for farmers and fishermen. But, is there any kind of way to take advantage of those large losses three to 5 years ago and use them to offset this gain this year?

      Any advice would be appreciated.

        • Re: Business loss and income averaging.
          LUCKIEST Guide
          ceegee, welcome to this web site. Business loss and income averaging.
          You sound more knowledgeable about taxes than most people.
          Did you have an accountant??
          Every business should have an Accountant and a Lawyer.
          There is an Accountant (Member) " dublincpa " who has great answers.
          Hopefully he or another Member can help.
          Good luck, LUCKIEST
          • Re: Business loss and income averaging.
            dublincpa Scout
            In the preparation of your individual tax returns, the losses would have been absorbed by any other taxable income first. If the loss was greater than the other sources of income, you should might have elected to carry the Net Operating Loss (NOL) into each subsequent year essentially stockpiling the cumulative losses.

            If no election was made your NOLs would have to be carried back to two years first and then any remainder carried forward.

            Any losses carried to the year with the gain would offset the gain.

            This is a complicated area. Please feel free to email me directly to point you in a specific direction.