Instructions For Form K-45
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1INSTRUCTIONS FOR FORM K-45
GENERAL INSTRUCTIONS
SCHEDULE II: The net operating loss must be carried to the 3rd
year preceding the year of the loss (Column B). If any loss
Kansas tax laws regarding net operating losses are in
remains, it is carried to the 2nd year preceding the year of the loss
conformity with the federal net operating loss tax laws, so you
(Column C) and then to the year prior to the loss year (Column
must have a net operating loss at the federal level in order to have
D). The computations for Schedule II are essentially the same as
one at the Kansas level. Also, in order to have a Kansas net
those for Schedule I, with a few exceptions. The excess
operating loss, you must have one of the following: 1) income from
nonbusiness deductions are not added back.
Kansas sources; 2) loss from Kansas sources; or 3) must have
Line 7a—If the allowable portion of the charitable contributions
been a Kansas resident for at least part of the year the loss was
shown on the federal itemized deductions have been increased,
incurred.
show the same adjustment as shown on the federal net operating
Generally, a Kansas net operating loss must be carried forward
loss claim on line 7a.
or backward in the same manner as the federal net operating loss.
Line 7b—Add amounts shown on lines 2, 3 and 4 to your
This means if you claimed the option to forego the carry back on
Kansas adjusted gross income from the carry back year and
the federal return, you cannot file a Kansas net operating loss
recalculate the standard deduction based on the increased
carry back claim. If a net operating loss was incurred in a taxable
Kansas adjusted gross income. Subtract the recomputed
year beginning after December 31, 1987, the loss may ONLY be
standard deduction from the standard deduction shown on the
carried forward 10 taxable years. Form CRF, Kansas Net
return; any additional standard deduction will be shown as a
Operating Loss Carry Forward, must be completed.
negative figure on line 7b.
Once you have determined that you are eligible to claim a
Line 9—Add lines 1 through 7 to determine the modified taxable
Kansas net operating loss, you need to be sure that the Kansas
income and enter the total on line 9 (cannot be less than zero).
return, Form K-40, is complete for the loss year and has been filed
Line 10—This is the unused portion of the net operating loss.
with the state of Kansas. Partial completion of the Form K-40 for
Column B: If the loss exceeds modified taxable income, show the
the loss year may cause lengthy delays in processing claims or
difference on line 10b. Column C: If the loss exceeds modified
may cause reduced refunds due to lack of information.
taxable income, show the difference on line 10c.
If there was a change in marital status (divorce, marriage, or
Line 11—If the loss in Column D exceeds the modified income,
death of one of the spouses) between the year of the loss and
the remainder is shown on line 11 and must be carried forward
any of the years to which the loss is carried, see instructions for
(the carry forward is limited to 7 years).
Schedule IV.
LINE-BY-LINE INSTRUCTIONS
SCHEDULE III: Columns E, G and I are brought directly to
Schedule III from the carry back year returns UNLESS there has
There are three basic steps involved in a net operating loss
been a prior amendment or adjustment, in which case the
carry back: STEP 1 is computing the amount of the loss allowable
amounts entered should be those on the last amendment or
for carry back; STEP 2 is determining how much of the allowable
adjustment. Columns F, H and J are designed to show how these
loss will be absorbed in each carry back year; and, STEP 3 is
items would change after the loss is applied. The amounts on lines
applying the correct amount of loss to each year to determine the
10(a), 10(b), and 10(c) will be the amounts used for the
resulting refund. Each step corresponds to a schedule on this
corresponding year on line 13, Columns F, H and J.
form.
SCHEDULE I:
SCHEDULE IV: This schedule is used when there is a change in
Column A
marital status between the year of the loss and any of the years
Line 1—Enter the Kansas taxable income from the loss year.
to which the loss is to be carried. The net operating loss of one
This amount will be a negative figure.
spouse normally cannot be applied to the income of the other
Line 2—If you have any prior year net operating loss included
spouse; therefore, it is necessary to determine what portion of the
in the adjusted gross income, enter this amount on line 2. Since
jointly filed return applies to the spouse who sustained the loss.
you are reducing the allowable loss shown on line 1 by the
There are two situations which are exceptions to the rule.
amounts shown on succeeding lines, the amount entered will be
Situation 1—The taxpayer was married in the loss year, one
a positive figure.
spouse had a net operating loss but the other spouse did not, and
Line 3—Enter the same capital loss that was computed on your
the prior years were filed on a single or married filing separate
federal net operating loss claim as a positive figure.
basis. In this situation, the spouse who had no net operating loss
Line 4—Enter the portion of the federal long term capital gains
may file jointly with the spouse who had a net operating loss, but
excluded from income (60% of gains in most years).
the loss can only be carried back to the income of the spouse
Line 5—Enter the personal exemption claimed on the Kansas
who sustained the loss. In this situation, you should complete lines
return.
31 through 43 to verify that both spouses do not have a loss.
Line 6—Enter the amount of the Kansas nonbusiness
deductions in excess of Kansas nonbusiness income. Note that
Situation 2—A joint return is filed with the same spouse on both
although the same method is used to compute this as is used to
the loss year and all the years to which the loss is carried. In this
compute the federal net operating loss, income (i.e. municipal and
situation do not complete Schedule IV.
federal bonds, etc.) and deductions (i.e. itemized deductions or
NONRESIDENTS: For years after December 31, 1977, a
standard deductions, etc.) are not the same on the federal return
nonresident must determine the net operating loss as though he
as on the Kansas return, therefore, the Kansas net operating loss
were a Kansas resident. The information shown on the
in some cases will be a different amount.
nonresident allocation percentage schedule is NOT used to
Line 8—Reduce the loss on line 1 by the total of lines 2 through
determine a Kansas net operating loss. Please read the general
6. If the answer is a negative figure, this will be your Kansas net
instructions and the instructions for completing the Form K-45
operating loss. Carry the net operating loss from line 8 to line 10a,
above before completing your nonresident Kansas return.
Column B, Schedule II and also, to line 13, Column F, Schedule III.
Page 3
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