Nebraska Individual Income Tax Net Operating Losses - Instructions

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Introduction
I N F O R M A T I O N
An individual income tax net operating loss (NOL) is generally the
excess of deductible business expenses over business income. An
NOL may also result from casualty and theft losses, moving expenses,
deductible job expenses such as travel expenses, work clothes, and
union dues, or a share of an operating loss from a partnership, S
corporation, or limited liability company.
A taxpayer with Nebraska tax table income of less than zero may
have a Nebraska NOL for the year. The determination of whether
there is a Nebraska NOL is made by completing Nebraska Form
NOL for the year of the loss.
Nebraska
After a Nebraska NOL has been computed, it may be taken as a
deduction from Nebraska income in earlier years (carryback) or in
Individual Income
later years (carryforward).
This publication will provide information on how to calculate a
Tax Net Operating
Nebraska NOL and how to use it. The first section will cover Ne-
braska NOLs for resident taxpayers. The second section will deal
Losses
with nonresidents, partial-year residents, and taxpayers who have
changed their resident status.
I. RESIDENTS
Revised May, 2005
NOL Steps
A resident taxpayer will use the following steps:
Step 1. Complete your federal and state income tax returns for the
year. You may have a Nebraska NOL if Nebraska tax table
For more information, check our Web site:
income is less than zero or you entered zero on the Nebraska
tax table line of your Nebraska return. If your Nebraska tax
table income is more than zero, you do not have a Nebraska
NOL.
Step 2. Determine whether you have an NOL by completing the
Nebraska Net Operating Loss Worksheet, Form NOL. See
How to Calculate Your Nebraska NOL below. If you
do not have a Nebraska NOL, stop here. If you do have a
Nebraska NOL, a Nebraska return must be filed for the loss
year.
Step 3. Determine if you will carry your Nebraska NOL back to
past years or will carry it forward to future years. This will
depend on whether you had a federal NOL in the same year.
See When to Use a Nebraska NOL on page 2.
Step 4. Deduct the Nebraska NOL in the carryback or carryforward
nebraska
department
year. See How to Claim an NOL Deduction on page 2. If
of revenue
your NOL deduction is equal to or less than your Nebraska
tax table income in the carryback or carryforward year, you
can stop here. You have used all of your Nebraska NOL.
Step 5. Determine the amount of your unused NOL, if applicable.
See How to Calculate an NOL Carryover on page 2. Carry
over the unused Nebraska NOL to the next carryback or
The purpose of this information
carryforward year and begin again at Step 4.
guide is to explain how to
calculate for individual income
How to Calculate Your Nebraska NOL
tax purposes a Nebraska net
Nebraska Form NOL is used to determine if you have a Nebraska
operating loss and how to deduct
NOL and to figure the amount of the loss. The NOL form is simi-
the loss in other tax years.
lar to Schedule A of Federal Form 1045; however, there are some
important differences between these forms. You must complete
Nebraska Form NOL even if Schedule A of Federal Form 1045 has
been completed.
G
U
I
D
E
8-546-1995 Rev. 5-2005
Supersedes 8-546-1995 Rev. 5-2004

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