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It consists of at least one acre planted with

used in that year is carried to the 4th preceding

the due date of the return (excluding exten-

tree seedlings in the manner normally

year and then applied consecutively forward

sions). Attach a statement to your amended

used in forestation or reforestation.

through the 1st preceding year. Any such loss

return, and write “Filed pursuant to section

not applied in the 5 preceding years can be

301.9100-2” at the top of the statement. File the

Qualified timber property does not include

carried forward up to 20 years.

amended return at the same address you used

property on which you have planted shelter belts

for your original return. Once made, this choice

Qualified GO Zone casualty loss. A quali-

or ornamental trees, such as Christmas trees.

is irrevocable.

fied GO Zone casualty loss is any deductible

See Publication 4492, Information for Tax-

section 1231 loss of property located in the GO

payers Affected by Hurricanes Katrina, Rita, and

Waiving the Carryback

Zone if the loss was caused by Hurricane Ka-

Wilma, for a list of counties and parishes in-

Period

trina. For this purpose, the amount of the loss is

cluded in the GO Zone, Rita GO Zone, and

reduced by any recognized gain from an invol-

Wilma GO Zone.

You can choose not to carry back your NOL. If

untary conversion caused by Hurricane Katrina

you make this choice, then you can use your

Waiving the 5-year carryback. You can

of property located in the GO Zone. Any such

NOL only in the 20-year carryforward period.

choose to figure the carryback period for a farm-

loss taken into account in figuring your qualified

(This choice means you also choose not to carry

ing loss without regard to the special 5-year

GO Zone loss is not eligible for the election to be

back any alternative tax NOL.)

carry back rule. To make this choice for 2006,

treated as having occurred in the previous tax

To make this choice, attach a statement to

attach to your 2006 income tax return filed by the

year.

your original return filed by the due date (includ-

due date (including extensions) a statement that

Waiving the 5-year carryback. You can

ing extensions) for the NOL year. This statement

you are choosing to treat any 2006 farming

choose to figure the carryback period for a quali-

must show that you are choosing to waive the

losses without regard to the special 5-year car-

fied GO Zone loss without regard to the special

carryback period under section 172(b)(3) of the

ryback rule. If you filed your original return on

5-year carryback rule. To make this choice for

Internal Revenue Code.

time, you can make this choice on an amended

2006, attach to your 2006 income tax return filed

return filed within 6 months after the due date of

If you filed your return timely but did not file

by the due date (including extensions) a state-

the return (including extensions). Attach a state-

the statement with it, you must file the statement

ment that you are choosing to treat any 2006

ment to your amended return and write “Filed

with an amended return for the NOL year within

qualified GO Zone losses without regard to the

pursuant to section 301.9100-2” at the top of the

6 months of the due date of your original return

special 5-year carryback rule. If you filed your

statement. File the amended return at the same

(excluding extensions). Enter “Filed pursuant to

original return on time, you can make this choice

address you used for your original return. Once

section 301.9100-2” at the top of the statement.

on an amended return filed within 6 months after

made, this choice is irrevocable.

Once you choose to waive the carryback

the due date of the return (including extensions).

period, it is irrevocable. If you choose to waive

Attach a statement to your amended return, and

Qualified GO Zone loss. The carryback pe-

the carryback period for more than one NOL,

write “Filed pursuant to section 301.9100-2” at

riod for a qualified GO Zone loss is 5 years. Only

you must make a separate choice and attach a

the top of the statement. File the amended re-

the qualified GO Zone loss portion of the NOL

separate statement for each NOL year.

turn at the same address you used for your

can be carried back 5 years. A qualified GO

original return. Once made, this choice is irrevo-

Zone loss is the smaller of:

If you do not file this statement on time,

cable.

you cannot waive the carryback period.

1. The excess of the NOL for the year over

CAUTION

the specified liability loss for the year to

Specified liability loss. The carryback period

which a 10-year carryback applies, or

for a specified liability loss is 10 years. Only the

specified liability loss portion of the NOL can be

2. The total of the following deductions (to the

How To Carry an NOL Back

carried back 10 years. Generally, a specified

extent they are taken into account in com-

liability loss is a loss arising from:

or Forward

puting the NOL for the tax year):

•

Product liability, or

If you choose to carry back the NOL, you must

a. Qualified GO Zone casualty loss (de-

•

An act (or failure to act) that occurred at

first carry the entire NOL to the earliest car-

fined later),

least 3 years before the beginning of the

ryback year. If your NOL is not used up, you can

b. Moving expenses paid or incurred for

loss year and resulted in a liability under a

carry the rest to the next earliest carryback year,

the employment of an individual whose

federal or state law requiring:

and so on.

main home was in the GO Zone before

If you do not use up the NOL in the carryback

August 28, 2005, who was unable to

1. Reclamation of land,

years, carry forward what remains of it to the 20

remain in that home because of Hurri-

tax years following the NOL year. Start by carry-

cane Katrina, and whose main job loca-

2. Dismantling of a drilling platform,

ing it to the first tax year after the NOL year. If

tion (after the move) is in the GO Zone,

3. Remediation of environmental contamina-

you do not use it up, carry the unused part to the

c. Temporary housing expenses paid or

tion, or

next year. Continue to carry any unused part of

incurred to house employees of the tax-

the NOL forward until the NOL is used up or you

4. Payment under any workers compensation

payer whose main job location is in the

complete the 20-year carryforward period.

act.

GO Zone,

Example 1. You started your business as a

d. Depreciation or amortization allowable

Any loss from a liability arising from (1)

sole proprietor in 2006 and had a $42,000 NOL

for any qualified GO Zone property

through (4) above can be taken into account as

for the year. No part of the NOL qualifies for the

(even if you elected not to claim the

a specified liability loss only if you used an ac-

3-year, 5-year, or 10-year carryback. You begin

special GO Zone depreciation allow-

crual method of accounting throughout the pe-

using your NOL in 2004, the second year before

ance for such property) for the year

riod in which the act (or failure to act) occurred.

the NOL year, as shown in the following chart.

placed in service, and

For details, see section 172(f).

Carryback/ Unused

e. Repair expenses (including expenses

Waiving the 10-year carryback. You can

Year

Carryover

Loss

for the removal of debris) paid or in-

choose to figure the carryback period for a spec-

curred for any damage from Hurricane

ified liability loss without regard to the special

2004 . . . . . . . . . . . .

$42,000

$40,000

Katrina to property located in the GO

10-year carryback rule. To make this choice for

2005 . . . . . . . . . . . .

40,000

37,000

Zone.

2006, attach to your 2006 income tax return filed

by the due date (including extensions) a state-

2006 (NOL year) . . . .

See Publication 4492 for a list of counties

ment that you are choosing to treat any 2006

2007 . . . . . . . . . . . .

37,000

31,500

and parishes included in the GO Zone.

specified liability losses without regard to the

2008 . . . . . . . . . . . .

31,500

22,500

To the extent the NOL is a qualified GO Zone

special 10-year carryback rule. If you filed your

2009 . . . . . . . . . . . .

22,500

12,700

loss, that part of the loss is carried back to the

original return on time, you can make this choice

2010 . . . . . . . . . . . .

12,700

4,000

5th tax year before the loss. Any such loss not

on an amended return filed within 6 months after

2011 . . . . . . . . . . . .

4,000

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Publication 536 (2006)

Page 7

Publication 536 - Net Operating Losses (Nols) For Individuals, Estates, And Trusts - Internal Revenue Service - 2006 Page 7

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