2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

positive amount on line 1 of the 2001 work- lines 25 and 39, or on the Schedule D Tax return, if later), even if you did not file a tax
sheet. Worksheet, lines 15 and 36). return for 2002.
When John filed his 2001 tax return, he Exception. You must use the 2001 Tax Instructions for 2002 Taxable
had a $3,000 net capital loss deduction on Computation Worksheet for Certain De- Income Worksheet
Schedule D, line 18 (which was also en- pendents and Nonresident Alien Individuals
on page J-3 if you, or your spouse if
Line 2. Any net capital loss deduction on
tered on Form 1040, line 13), a $7,000 loss
filing jointly, did not receive (before offset)
your 2002 Schedule D, line 18, is not al-
on Schedule D, line 17, and a $4,000 capilowed
for income averaging purposes to the
an advance payment of your 2001 taxes and
tal loss carryover to 2002. However, when
either of the following apply.
extent it did not reduce your capital loss
John carried back the 2002 NOL to 2001,
carryover to 2003. This could happen if the
he refigured his 2001 capital loss carryover • You, or your spouse if filing jointly, taxable income before subtracting exempto
2002 as $7,000. John adds the $3,000 could be claimed as a dependent on some- tions shown on your 2002 Form 1040,
from Schedule D, line 18, and the $7,000 one else’s 2001 tax return. line 39 (or as previously adjusted), was less
carryover. He subtracts from the result the • You filed Form 1040NR for 2001. than zero. Enter the amount by which your
$7,000 loss on his Schedule D, line 17, and
If the 2001 Capital Gain Tax Worksheet
2002 capital loss carryover to 2003 (the
enters $3,000 on line 2 of the worksheet.
or Schedule D also applies, follow the Speloss
carryovers) exceeds the excess of the
sum of your short- and long-term capital
John had $1,000 of taxable income in cial Rules on the worksheet on page J-3 to
2001 that reduced the 2002 NOL car- figure your tax.
loss on your 2002 Schedule D, line 17, over
ryback. The $2,900 of exemptions and
the loss on your 2002 Schedule D, line 18.
$3,000 net capital loss deduction also resure
you refigured your 2002 capital loss
If you had any NOL carrybacks to 2002, be
duced the amount of the 2002 NOL carcarryover
to 2003.
ryback. Therefore, only $2,100 was Line 9
available to carry to 2003 and later years, as If you used Schedule J to figure your tax for Line 3. If you had an NOL for 2002, enter
shown on his 2002 Form 1045, Schedule B, 2003 (that is, you entered the amount from the amount of that NOL as figured on the
line 9. John enters the $2,100 on line 3 of that Schedule J, line 22, on Form 1040, 2002 Form 1045, Schedule A, line 27, you
the worksheet, and $5,100 on line 4. He line 41, or on Form 1040X), enter on line 9 filed with Form 1045 or Form 1040X. If
then subtracts the $5,100 from the $8,000 the amount from your 2003 Schedule J, line you did not have an NOL for 2002, enter
on line 1 and enters the result, $2,900, on 15. If you used Schedule J to figure your the portion, if any, of the NOL carryovers
line 5 of the worksheet. He enters a nega- tax for 2002 but not 2003, enter on line 9 and carrybacks to 2002 that were not used
tive $2,900 on Schedule J, line 5. He com- the amount from your 2002 Schedule J, line in 2002 and were carried to years after
bines that amount with the $6,000 on 3. 2002.
Schedule J, line 6, and enters $3,100 on
Schedule J, line 7.
If you figured your tax for both 2002 Example. John Farmington did not use
and 2003 without using Schedule J, enter income averaging for 2001, 2002, nor
on line 9 the taxable income from your 2003. The taxable income before sub-
2002 tax return (or as previously adjusted tracting exemptions on his 2002 Form
Line 8
by the IRS, an amended return, etc.). But if 1040, line 39, is a negative $30,000. A de-
that amount is zero or less, complete the duction for exemptions of $3,000 is shown
If line 7 is zero, enter -0- on line 8. Otherworksheet
below to figure the amount to on line 40, and line 41, taxable income, is
wise, figure the tax on the amount on line 7
enter on line 9.
limited to zero. John subtracts from the
using:
$30,000 loss the $3,000 deduction for ex-
If you filed your 2002 tax return using
• The 2001 Tax Rate Schedules on
emptions. The result is a negative $33,000,
TeleFile, enter the taxable income from
page J-2,
John’s 2002 taxable income, which he en-
your TeleFile Tax Record. If you did not
• The 2001 Capital Gain Tax Work-
ters as a positive amount on line 1 of the
file a tax return for 2002, use the amount
sheet on page J-3, or
2002 worksheet.
you would have reported as your taxable
• The Schedule D you filed for 2001 income had you been required to file a tax John had a $3,000 net capital loss de-
(but use the 2001 Tax Rate Schedules on return. Be sure to keep all your records for duction on Schedule D, line 18 (which was
page J-2 instead of the 2001 Tax Table 2002 until at least 3 years after April 15, also entered on Form 1040, line 13), and a
when figuring the tax on Schedule D, 2005 (or the date you file your 2004 tax $7,000 loss on Schedule D, line 17 (as ad-
2002 Taxable Income Worksheet—Line 9 Keep for Your Records
Complete this worksheet if you did not use Schedule J to figure your tax for 2003 and your 2002 taxable income was zero or
less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2002 tax return (or as previously adjusted) without limiting it
to zero. If you had an NOL for 2002, do not include any NOL carryovers or carrybacks to 2002.
Enter the result as a positive amount ............................................... 1.
2. If there is a loss on your 2002 Schedule D, line 18, add that loss (as a positive
amount) and your 2002 capital loss carryover to 2003. Subtract from that sum
the amount of the loss on your 2002 Schedule D, line 17, and enter the result . . 2.
3. If you had an NOL for 2002, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to
2002 that were not used in 2002 and were carried to years after 2002 ........ 3.
4. Add lines 2 and 3 ............................................................. 4.
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 .......... 5.
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