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IR7 Example 2 LTC loss limitation rule — current year non-allowable deductions only

The following details are for Company A which is an LTC:


IRD number


Total gross income






One owner (shareholder):

Sam (100%)

IRD number


Sam’s owner’s basis


Company A is in a partnership with another LTC.


Calculate the non-allowable deductions for Sam:

Box 3 is Sam’s non-allowable deductions this year. The amount in Box 3 ($4,500) is shown at Box 24O.

Box 5 is Sam’s non-allowable deductions to carry forward. The amount in Box 5 ($4,500) is shown at Box 24R.

Company A’s IR7L would look like this:

Sam’s Individual income tax return (IR3) Question 19 would look like this:

Sam’s adjusted LTC income is in effect calculated by subtracting his allowable deductions ($5,500) from Company A’s gross income ($6,000) = $500.

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