USA Does having a capital contribution negate the necessity of a NOL?


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Hi! :D I started a LLC in 2019 that made no income, but had business expenses of $54.15. In filling out a free tax filing form I've become stumped upon whether or not the aforementioned facts mean I must state the business is NOL. :eek: I don't understand NOL at all. :oops: The reason my business was able to spend $54.15 and not become bankrupt is that the business had a Capital Contribution of $100. Does having the capital contribution mean I don't need to list the business as NOL, please? o_O
 
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Drmdcpa

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Net operating loss is nothing to be afraid of. Capital contributions do not impact NOL. NOL is a profit and loss or income statement issue; capital contributions is a balance sheet issue. They are often needed when an NOL occurs due to the fact that the entity is not generating enough cash from operations.

Unless you have elected to have the LLC taxed as a C-corp, it does not have an NOL. If it is a disregarded entity or a pass thru entity, the loss gets reported on your personal return. Since you have made a capital contribution you have basis and can deduct the loss on your personal return. Whether you have an NOL on your personal return is a matter of all other factors on your personal return.
 
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It is taxed as a sole-proprietorship, since it is a single-member LLC … ; o_O It isn't elected to be taxed as a C-corp … , o_O so it must not have a NOL then! :D

This is my first year paying taxes … , and I am using chore and gift money that has been slowly accumulated over the years to pay for the business, so I have no personal income this year … ; :oops: I must then have a personal NOL. :eek:

Now I have to figure out if Intuit is referring to a NOL for my business or personal taxes. They seem to … mix the two into one. :oops: It's under Deductions and Credits on the Federal form section … . o_O Since, the business is being taxed as a sole proprietorship, and although it doesn't have a NOL, because I have a personal NOL, and the form mixes the two … :oops: . I think I need to say … I have a NOL. :eek:

My father is claiming me as a dependent … ; I don't think that matters though … . o_O
 

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