NOL on rental income

Rentals can generate NOL's, if that's what you're asking. I assume the $18K falls under the special up-to-$25K passive loss allowance?

-Mark Bole

Yes is falls under the special $25K passive loss allowance. So, if the taxpaper does create this NOL in the 2010 tax year, he can file an amended return to decrease his 2008 taxable income by $18,000? His original taxable income in 2008 was $31000.

I think so, unless there is some odd interaction between NOL and passive loss -- I haven't researched it.

Carrying back the NOL and then re-calculating the affected returns going forward is not the simplest thing to do, and as I haven't prepared any returns lately with NOL carryback, I don't have any more specific advice

-- maybe someone else will chime in?

-Mark Bole