Can a startup carry forward NOL deduction on Form 1120 line 29.a with zero income?

Yes, you can absolutely carry forward your NOL, but you won't be able to apply it to reduce your taxable income until you actually have positive taxable income. The NOL rules allow C corporations to carry NOL forward indefinitely (for losses arising in tax years beginning after December 31, 2017). However, you can only use these losses to offset up to 80% of your taxable income in any future year. For your situation: You had a $42,000 NOL in year 1, and now have another $38,000 loss in year 2. You'll accumulate both of these losses (total $80,000) and carry them forward until your business becomes profitable. On line 29a, you technically have an NOL carryforward, but since you have no taxable income to offset in the current year, you won't actually be deducting anything. Make sure you're keeping detailed records of your NOLs each year so when you do become profitable, you can properly apply these accumulated losses.

When I was facing the same NOL issue with my startup, I discovered this amazing tool called taxr.ai (https://taxr.ai) that saved me so much headache. I was confused about how to track and properly document my losses for future tax years, and their corporate tax analyzer helped me understand exactly how to handle NOL carryforwards. The system reviewed my previous year's tax returns and financial statements, then created a multi-year NOL tracking worksheet that shows exactly when I can utilize my accumulated losses. Their documentation guidance also helps ensure I'm maintaining proper records for when IRS questions come up later.

Just wanted to update on my experience with taxr.ai after checking it out based on the recommendation here. The NOL tracking feature was exactly what I needed! My situation with multiple years of startup losses was getting confusing, but their analysis made it super clear. The tool actually identified an error in how my accountant had been planning to handle our accumulated NOLs. We weren't properly documenting the losses each year, which could have caused problems if we ever got audited. Now we have detailed worksheets for each tax year showing our running NOL balance and proper documentation for when we eventually become profitable. Definitely worth checking out if you're in the startup world dealing with losses across multiple years!

If you're struggling to get answers from the IRS about NOL carryforwards (like I was), try Claimyr (https://claimyr.com). I spent weeks trying to reach someone at the IRS who could clarify some specific questions about documentation requirements for my startup's accumulated losses. When I found Claimyr, I was skeptical but desperate. They got me connected to an actual IRS agent in about 15 minutes instead of the 2+ hour hold times I was experiencing. The agent walked me through exactly how to document my NOL carryforwards properly. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I wish I'd known about this service when I was filing last year - would have saved me so much time and uncertainty.

I need to eat my words about Claimyr. After my skeptical comment, I decided to try it when I was completely stuck on how to document my startup's accumulated NOLs from three years of operation. Within 20 minutes, I was talking to an actual IRS business tax specialist who explained that while I can't use the NOLs until I have income, I need to keep specific documentation with my tax records showing the calculation of each year's loss. She even emailed me a worksheet template after our call. The service literally saved me from potentially major headaches down the road. I've been maintaining improper records that could have caused problems when we finally become profitable and try to use our accumulated NOLs.

Just a practical tip from someone who's been through this with my own startup: Create a separate spreadsheet to track your NOLs by year. For each tax year, document: - The tax year the loss occurred - The amount of the loss - Any amounts used in subsequent years - Remaining balance to carry forward This makes it much easier when you finally become profitable and need to apply these losses. My accountant charges me less now because I have everything organized and ready for them when tax time comes around.

Has anyone else gotten confused about the ordering of NOL usage? My understanding is that you have to use the oldest losses first, but our tax software seems to be applying them differently.

I'm dealing with a similar situation as a new startup owner. One thing that helped me understand this better was realizing that Form 1120 line 29a is specifically for the NOL deduction you're claiming in the CURRENT year, not just tracking your total accumulated losses. Since you have negative taxable income again this year, you won't enter anything on line 29a because there's no positive income to offset. But you're absolutely building up your NOL carryforward balance - you'll have $42,000 from year 1 plus your new $38,000 loss from this year. The key is maintaining good records of these accumulated losses. I keep a simple schedule that tracks each year's NOL separately because when you eventually become profitable, you'll need to apply them in the correct order (oldest first) and follow the 80% limitation rule for post-2017 losses. Don't worry - you're not missing out on any tax benefits by not using the NOLs now. They'll be there waiting for you when your startup starts generating taxable income!