Did California walk back the Suspension of NOLS with AGI's $1,000,000 ? - Spidell

Did California walk back the Suspension of NOLS with AGI’s $1,000,000 ?

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Message Board Did California walk back the Suspension of NOLS with AGI’s $1,000,000 ?

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    • #314770
      Jim Sabbatini

      Okay I was working on a taxpayer last night that had AGI of over $1,000,000 due to ranch sale of $992,000 and Pension income. Last night the NOL was disallowed by Lacerte. However I efiled some returns and I had to update the software to efile. Today after the update the California NOL was allowed.

      In addition on a previous client that owed a $121,000 to California because of the suspension of the NOL, I opened up the return and now he owes $1,693.

      Is Lacerte wrong or did California reverse there position on the disallowance of the NOL ? I see no news on it.


    • #314778
      Jim Sabbatini

      I am on the phone with Lacerte at this point and they are reviewing their software update. I hope it was a tax change and not a programming error. I will post what I find out.

    • #314789
      Jim Sabbatini

      So after two hangups  I learned that Lacerte contracts with people to maintain their software so you will not be able to speak with a software developer.

      The instructions on the 2020 FTB 3805V  says Taxpayers with Net Business Income  or modified adjusted gross income of less than $1,000,000 may continue  to use the NOL.

      It appears the issue what do you define as Net Business Income.  My taxpayer who is a farmer had only net Schedule F income of $81,000.

      However he had schedule D income of  $1,216,000. He had a developer want to buy his land and were going to push his Vineyard so with no depreciation recapture it was reported on a schedule D.  However if I put a minus 1 to trigger a 4797 the NOL is still allowed.

      I assume Lacerte made a change and if a farmer sells his ranch property that gain is not considered business income and the NOL is allowed. The first time around they disallowed the NOL.

      Lynn are Ranch gains not considered business income ?


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