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QUESTION DETAIL
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We are part of an LLC (S-corp). We are carrying over negative retained earnings from a previous year, but will be reporting a profit for this year. My question is where & how do we report the negative retained earnings on our personal Form 1040? Are the negative retained earnings considered NOL? We were never a C-corp. We had no basis last year (with a negative retained earnings of $13K). We have basis this year, with a profit of $22K.
ANSWER
The BIDaWIZ Team's Answer:
You are referring to previous year disallowed losses since the losses exceeded your basis. You can carry-forward previous disallowed losses to the current year and report it on Schedule E - page 2 of your form 1040 to offset against your current year income.
