Net Operating Loss (NOL)

Any allowable NOL can be entered as "Other Income" in the Schedule 1 income section where outlined in blue below. Be aware of the impact of NOL limitations spelled out below, which can be seen by clicking the (?) Icon outlined in red below.

NOTE: Holistiplan does not calculate NOL limitations within the software. Any NOL limitations will need to be calculated outside of Holistiplan, and the allowable amount of any NOL can be entered as described below.

NOL (Net Operating Loss) carryforwards are not automatically applied to scenarios within Scenario Analysis. The reason we do not support carryforwards is that Scenario Analysis doesn't require that people enter linearly sequential scenarios, so we wouldn't necessarily know which carryforwards to apply to which years. However, you can manually enter any applicable NOL in Scenario Analysis by clicking on the pencil icon in the "Other Income" field in the "Schedule 1 Income" section of Scenario Analysis.

TIP: IRS Publication 536 previously served as a resource on Net Operating Losses (NOLs), but was last updated for the 2023 tax year. IRS Publication 536 has since been replaced by Form 172 to account for NOLs. You can click the links to those forms in this tip for more details on the rules related to NOLs.

NOLs can effectively offset any income generated by the business that created the NOL. NOL carryforwards are generally limited to 80% of the net income of the business; however, so it's not a 1-to-1 application. For example, if your client had a $500,000 NOL and generated $600,000 of taxable income in the next tax year, he/she could use $480,000 of the NOL (not $500,000) to offset the taxable income and end up with $120,000 of income.

Remember, though, that you wouldn't just enter a negative number for that NOL. Instead, you would reduce the amount of taxable income on whichever schedule is appropriate for the business entity. Only NOLs arising after 2017 and carried forward to a year after 2020 are subject to the 80%-of-taxable-income limit.

The total amount of any NOL deduction for 2021 or thereafter that is attributable to NOLs from tax years after 2017 can’t exceed 80% of taxable income without regard to the NOL deduction or sections 199A or 250. For nonfarming businesses, since you can’t carry the NOL to an earlier year, your NOL deduction for the carryover year is equal to the sum of:

Any unused NOLs from tax years before 2018, plus
The lesser of:

The NOL from tax years after 2017, which includes any part of the NOL attributable to an excess business loss; or
80% of taxable income for the carryover year, determined before any NOL deduction and without regard to sections 199A or 250.

Net Operating Loss (NOL)

You'll want to use the "Other Income" field of the Schedule 1 income section to enter any NOL respective of the scenario.