Today TaxMama® hears from Dennis in the TaxQuips Forum, who wonders… “Can you use a business net operating loss carryforward to offset personal gambling winnings? The business generating the NOL is a Schedule C. On the surface, it doesn’t seem right to be able to do this, but who knows?”
Sure, why not. Your Schedule C losses end up on the front of the Form 1040. NOL carryforwards from prior years end up on Line 21. The gambling winnings go on line 21, other income – and if they happen to offset each other – terrific.
BUT…if you have provable gambling losses, report them – up to the amount of your gambling winnings. They go on a special line of the Schedule A (line 28) – and are not reduced by 2% of your adjusted gross income.
Why do you want to do this? Because if you use these losses to reduce your income – you may have business losses left over to use as Net Operating Losses. If the NOLs are new, you carry the NOLs back to two years earlier (and get instant refunds) – or elect to carry them forward (and get future refunds). Older NOLs just get carried forward.
I hope you big and consistently. (But that never seems to happen, does it…so know when to stop.)
And remember, you can find answers to all kinds of questions about offsetting deductions and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
Please post all Comments and Replies in the new TaxQuips Forum .