Form Nol-85a - Application Of Net Operating Loss Carryback Or Carryforward Page 2
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2XX00258A
Form NOL-85A – (8/16)
Page 2
PART III – Modified Adjusted Gross Income Percentage
(This section to be completed by nonresidents only)
15
Adjusted Gross Income From All Sources. Enter the adjusted gross income from all sources as shown on the
15
return to which the loss is being applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
16
Net Operating Loss to be Applied. Enter the amount shown on line 9, Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
17
Modified Adjusted Gross Income From All Sources. Subtract line 16 from line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
18
Modified Adjusted Gross Income From Alabama Sources. Enter the amount from line 10, Part II. . . . . . . . . . . . . . . . . . . . .
19
Percentage of Alabama Adjusted Gross Income to Total Adjusted Gross Income From All Sources After
19
Modifications. Divide the amount on line 18 by the amount on line 17 and enter percentage here (but not over 100%) . . . .
The percentage on line 19 should be used to recompute the Standard Deduction or Itemized Deductions, Federal Income Tax Deduction, Personal Exemption, and De pen dent
Exemption on lines 11a through 11e, Part II. NOTE: If you are married and filed separate Alabama returns and a joint Federal return, DO NOT use the percentage on line 19
to recompute the federal income tax deduction. See Special Instructions for Nonresidents.
Instructions For Completing Form NOL-85A
General Instructions
skip lines 8 through 13 and enter zero on line 14.
Line 8. The Adjusted Gross Income as shown on the return to which the loss
If you incurred a net operating loss for a taxable year beginning after December 31,
is being carried should be entered on line 8. If this return has been amended or
1984, Form NOL-85A should be used to carry the loss back or forward.
adjusted, enter the adjusted gross income as last amended or last adjusted. If
For loss years beginning before January 1, 1998, a net operating loss may
a net operating loss from another year has previously been applied to this year,
be carried back and deducted from taxable income of the three years preced-
then the amount on line 10 of Form NOL-85A should be entered on this line.
ing the loss. Any unused portion of the loss may then be brought forward for 15
years or until used up, whichever comes first. For loss years beginning after De-
NOTE: If more than one Net Operating Loss is applied to the same tax year,
cember 31, 1997, a net operating loss may be carried back and deducted from
the earliest loss incurred must be applied first. A separate NOL-85A must be
taxable income of the two years preceding the loss. Any unused portion of the
completed for each loss.
loss may then be brought forward for 15 years. The loss must be carried back
For further information on applying more than one net operating loss to the
before bringing forward, unless an election is made to forfeit the carryback pro-
same tax year, please refer to Regulation 810-3-15-.27 (Section 40-18-15.2,
vision or the loss is claimed on the subsequent year’s timely filed return.
Code of Alabama 1975). A copy of this regulation is available upon request.
Before Form NOL-85A can be completed, you must first complete Form
Special Instructions for Nonresidents
NOL-85 to determine the actual amount of the net operating loss that may be
carried back or brought forward.
Nonresidents must complete Part III before completing Part II, lines 11a
If a net operating loss is not used up the first year to which it is applied, you
through 11e. This is necessary in order to arrive at a new percentage to deter-
must complete another Form NOL-85A to carry the unused portion to the next
mine the Standard or Itemized Deductions, Federal Income Tax Deduction, Per-
available year.
sonal Exemption and Dependent Exemption allowable as a deduction after
Special Instructions
applying the net operating loss.
Most lines on Form NOL-85A are self-explanatory. The following information
If you are married and filed separate Alabama returns and a joint Federal
is provided for those lines needing further explanation.
return, you must make a separate computation to determine the Federal Income
In the top right corner, enter the tax year to which the loss is being carried.
Tax Deduction. Use the following worksheet to determine this percentage:
Line 2. If this is the first year to which the net operating loss is being ap-
plied, enter the amount shown on Form NOL-85, Part II, line 7. If the entire loss
1. Your Modified Adjusted Gross
was not used up the first year to which the loss was applied, then the amount
Income From All Sources as shown
shown on line 7 of the previous Form NOL-85A should be entered on line 2.
on line 17, Part III Form NOL-85A . . . . . $______________
Line 3. The taxable income as shown on the return to which the loss is car-
2. Your spouse’s Federal Adjusted
ried should be entered on this line. Example: If the loss is carried to a 2000 Form
Gross Income . . . . . . . . . . . . . . . . . . . . . ______________
40, the taxable income is on line 18.
Lines 4a and 4b. Enter the personal exemption and dependent exemption
3. Add the amounts on lines 1 and 2 . . . . . $______________
claimed on the return to which the loss is carried. If you did not receive a tax ben-
4. Divide the amount on line 1 by the
efit for the full amount of these exemptions, enter only the amount for which you
amount on line 3. . . . . . . . . . . . . . . . . . . . ____________%
received a tax benefit.
Line 7. Complete line 7 to determine if you have any unused net operating
Multiply the Federal Income Tax Liability by the percentage on line 4 and
loss to carry to another tax year.
enter the result on line 11c.
If the amount on line 7 is more than zero, this represents the unused net op-
erating loss that can be carried over to another tax year. This amount should be
entered on line 2 of Form NOL-85A for the tax year to which it is being carried.
A COPY OF FORM NOL-85A MUST BE ATTACHED
BEFORE COMPLETING LINES 8 THROUGH 14 — Compare the amounts
TO FORM 40X, FORM 40, OR FORM 40NR.
on lines 2 and 3. If the amount on line 2 is less than the amount on line 3, you
must complete lines 8 through 14 to determine the tax due after applying the net
BE SURE TO KEEP A COPY FOR YOUR RECORDS
operating loss.
FOR FURTHER REFERENCE.
If the amount on line 2 is equal to or greater than the amount on line 3,
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