Schedule It-40nol Carryback Worksheet 1/2 (Page 2 of 5) in pdf

Instructions for Schedule IT-40NOL and NOL Carryback/Carryforward Worksheets 1 and 2

A separate Schedule IT-40NOL must be

In the absence of a federal NOL, the taxpayer

loss as computed under IRC Section 172. If

used for each loss year.

may make an election to waive the carryback

you think you would have an Indiana NOL after

of its Indiana NOL. This election is reﬂ ected

the application of the modiﬁ cations on lines 2

Public Law 81-2004 amends IC 6-3-2-2.5 and IC

by checking the box titled Election to Waive the

through 11 of Part 2, then you must ﬁ rst complete

Carryback of the Indiana Net Operating Loss

Schedule A of the Form 1045 to arrive at the

6-3-2-2.6 to provide a net operating loss (NOL)

Deduction. To ofﬁ cially make this election you

beginning amount.

deduction from Indiana adjusted gross income.

All loss years ending after January 1, 2004, and

must timely file the Indiana loss year return

any existing NOL(s) carried over to a taxable year

(including extensions), and attach Schedule IT-

Full-year and part-year Indiana nonresi-

40NOL showing your state election choice. Note:

dents

after this date must be recomputed by applying

Failure to timely ﬁ le this election will result in your

Apply like kind modiﬁ cations (as computed under

the amended provisions of this Act. Deductions

for net operating losses that were incurred in

being required to carry back your Indiana NOL.

IRC Section 172) derived from Indiana sources

to the amount from line 1 of Form IT-40PNR, and

taxable years ending before January 1, 2004,

enter the result here.

and carried back or forward and deducted in

taxable years ending before January 1, 2004, are

Carryback and carryforward

calculated under the law in effect for the year the

If the modiﬁ ed amount from line 1 of Form IT-

years

40PNR is:

NOL was incurred.

• negative (a loss), enter that amount here as a

For loss years beginning before August 6,

When to File

negative ﬁ gure;

1997 - the NOL deduction remaining after a

• zero, enter zero here; or

A refund due to an NOL carryback must be

three year carryback (if not timely waived) may

• positive, enter that amount here as a positive

claimed within three years from the original due

be carried forward to 15 tax years following the

date of the loss year’s return (including exten-

ﬁ gure.

loss year. Certain losses may be carried up to

sions). An amended carryback claim, if not

20 years, following federal provisions.

Lines 2 and 3 - Certain Indiana modiﬁ cations

refunded within 90 days from the date ﬁ led, the

as reported on the loss year IT-40 should be

date the tax payment was due, or the date the

Effective for tax years beginning after August

tax was paid, whichever is latest, accrues interest

reﬂ ected on these lines.

5, 1997 - federal legislation generally decreased

from the initial due date of the return in which the

the NOL carryback period from three years to two

Important: Full-year and part-year Indiana

loss was incurred. NOL carryforward deductions

years, while the carryforward period increased

fall within regular statutory requirements.

nonresidents who ﬁ le Form IT-40PNR should

from 15 to 20 years. Exception: For tax years

skip lines 2 through 5 and enter the amount from

ending in 2001 and 2002, the carryback period

line 1 on line 6.

Important: In order to carry a pre-2004

is extended to ﬁ ve years unless an election to

Indiana NOL to tax year 2004 and beyond,

carryback was waived.

you must:

Line 4 - An exception must be made for the bo-

nus depreciation deduction for property placed

Farm losses - Effective for tax years beginning

in service after September 11, 2001. Figure the

Step 1 - reﬁ gure the NOL using the new

after December 31, 1997, any part of an NOL

net income (or loss) which would have been

method on Form IT-40NOL revised R3/ 10-

attributed to a loss from farming operations may

04, or after;

included in federal adjusted gross income had

be treated as a separate NOL and may be carried

the additional ﬁ rst year deduction allowed under

back ﬁ ve years, following federal provisions.

Section 168(k) of the Internal Revenue Code not

Step 2 - reduce the reﬁ gured NOL by any

amount previously used in any pre-2004

been used. Enter the difference, which may be a

Part 2 - Computation of Indiana

positive or negative amount (enter the negative

intervening year*

NOL

amount in (brackets)).

P.L. 81-2004, effective January 1, 2004, provides

Step 3 - use any remaining NOL on line 17

for an NOL deduction from Indiana adjusted gross

of Carryforward Worksheet 2.

For tax years 2003 and beyond, add-back your

income equal to the amount of a federal NOL,

share of the total IRC Section 179 deduction

computed under IRC Section 172, for the taxable

claimed for federal tax purposes that exceeds

* The application of the NOL in the pre-2004

year, that is derived from sources from within

tax year(s) must conform with the rules that

the $25,000 ceiling allowed (per entity) for state

Indiana and adjusted for modiﬁ cations under IC

tax purposes.

govern those years. Do not reﬁ gure the

6-3-1-3.5. The federal NOL for individuals, which

amount of deduction used in the pre-2004

reﬂ ects the IRC Section 172 application, is com-

Lines 7 through line 10 - Enter the following

tax years.

puted on federal Form 1045, Schedule A. Note:

deductions claimed on your loss year return’s

It is possible to have an Indiana net operating loss

Schedule 1 (IT-40) or Schedule D (IT-40PNR):

without also having a federal NOL.

any non-Indiana locality earnings deduction, state

Schedule IT-40NOL

tax refund &/or other recovered itemized deduc-

Line 1 - Full-year Indiana residents

tions, interest from U.S. government obligations,

Part 1 - Election of Intent to Carry

You must complete Schedule A from federal

and any social security and railroad retirement

Net Operating Loss

Form 1045 before ﬁ guring your Indiana net op-

beneﬁ ts.

Pursuant to the Internal Revenue Code, a tax-

erating loss (NOL). If the amount on line 25 of

payer may irrevocably elect, by the loss year’s

Schedule A is:

Line 12 - Subtract line 11 from line 6 and enter

due date (including extensions), to waive the

• negative (a loss), enter that amount here as a

the total here.

entire carryback period. If this election is made

negative ﬁ gure;

for the loss year on the federal return, the NOL

• zero*, enter zero here; or

• If the line 12 entry is a negative amount, you

deduction may only be carried forward for federal

• positive*, enter that amount here as a positive

have an Indiana NOL. Enter as a positive

and state income tax purposes. If an election to

ﬁ gure.

amount in the appropriate column on line 17

forgo the carryback period has been made at the

of the Carryback/Carryforward Worksheet

federal level, check the box marked ‘yes’. If not,

* Due to the application of Indiana modiﬁ cations,

(see Carryback/Carryover Worksheet line 17

check the box marked ‘no’.

it is possible to have an Indiana net operating

instructions).

loss without ﬁ rst having a federal net operating

Schedule It-40nol Carryback Worksheet 1/2 Page 2

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