IRS Publication 536 - Net Operating Losses For Individuals, Estates, And Trusts

Definition of 'IRS Publication 536 - Net Operating Losses For Individuals, Estates, And Trusts'


A document published by the Internal Revenue Service (IRS) that provides guidance to individuals who have more deductions than income in a given tax year. If the total deductions a taxpayer claims are greater than that taxpayer's income for the year, the taxpayer is said to have a net operating loss (NOL). The NOL loss is typically caused by deductions related to business expenses, casualty or theft, moving expenses, rental property expenses or expenses related to being an employee.

Investopedia explains 'IRS Publication 536 - Net Operating Losses For Individuals, Estates, And Trusts'


To determine if there is a NOL, individual taxpayers should first complete their tax return. A negative number appearing in line 41 (in form 1040) or line 38 (in form 1040NR) may mean that there is a NOL. Taxpayers then must determine if the NOL is carryfoward, carryback or is to be used in the current tax year.

IRS Publication 536 does not cover bankruptcies or losses incurred by partnerships or S Corporations, though individual partners or S corporation shareholders can use the income or deductions from their personal shares in order to calculate their individual NOL.



comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
Trading Center