Knowledge Base

15863: 461 - Limitation on Business Losses

1040 Individual Generally

What is Form 461 and for what is it used? 


The Tax Cuts and Jobs Act limited the amount of losses from trades or businesses of non-corporate taxpayers that can be claim each year. This was originally set to apply to tax years beginning after December 31, 2017. Form 461 will be used to determine if there is an excess business loss. The taxpayers cannot deduct an excess business loss in the current year, however, according to the Form 461 Instructions the excess business loss is treated as a net operating loss (NOL) carryover to the next year. The CARES Act retroactively suspended this limitation until tax years beginning after December 31, 2020.


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