No NOL carryover due to lack of basis

A net operating loss that can’t be used in the current year may be carried forward. In a recent Tax Court decision, a taxpayer who had a number of interests in various LLCs that were developing movies claimed NOL carryovers, which the IRS disallowed. The court agreed with the IRS. While the businesses did indeed have losses, the taxpayer couldn’t show that he had enough basis in them to claim his share of NOLs. He was supposed to make capital contributions for his interests in the LLCs, but did he? No proof here. #IdeaoftheDay