$******$

Scenario $1$: NOL & Change in Ownership

A sole proprietorship generates a large NOL of $($$$120,000)$

Prior Year NOL carryforward available: $$0$

The following year, the business incorporates as a C$-$Corporation, and the original owner retains majority ownership.

Wages in the year of the NOL and the following year: $$0$

Interest and Dividend Income $($both years$)$: $$1,000$

Itemized Deductions $($both years$)$: $$15,000$

Allowable deduction for self$-$employment tax in the year of the NOL: $$9,500$

Questions:

How much of the NOL can be deducted in the year it was generated?

Can the NOL carryforward be used by the C$-$Corporation after the change in ownership? If so$,$ are there limitations$?$

Research relevant IRS rules and code sections $($e$.$g$.,$ Section $382)$ on NOLs and ownership changes.