Will a 2018 carry forward NOL reduce a 2022 Roth conversion?
I am a tts securities trader, utilizing section 475 (mark to market). I have a carry forward NOL from 2018. Will the NOL offset the taxable income of a ROTH conversion in 2022?
For example, if I have a remaining carry forward NOL of $500,000 from 2018, and I do a Roth conversion of $300,000 in 2022, will the tax on the conversion be $0 and the NOL will be reduced to $200,000?
My CPA indicates a NOL will offset a Roth conversion if both occur in the same year, but a carry forward NOL from a prior tax year will not offset a Roth conversion done in a different tax year. Can you please help to clarify the correct answer? Thank you very much for your help.
Permalink Submitted by Alan - IRA critic on Tue, 2022-01-11 15:48
The NOL carryforward remaining from 2018 can be used to offset up to 80% of 2022 taxable income from all sources. There are no special provisions for conversions to be treated differently than other taxable income.