Nebraska Individual Income Tax Net Operating Losses - Instructions (Page 4 of 5) in pdf

See How to Calculate your Nebraska NOL below. If

are three adjustments which must be made. The amount of

you do not have a Nebraska NOL, stop here.

the Nebraska NOL from line 35 of Schedule I, Form NOL,

is entered as an adjustment decreasing federal AGI (line 13

Step 3. Determine if you will carry your Nebraska NOL back to

of Forms 1040XN-2004, 1040XN-2003, 1040XN-2002,

past years or will carry it forward to future years. This

1040XN-2001, 1040XN-5 or 1040XN-4, or line 15 of Forms

will depend on whether you had a federal NOL in the

1040XN-3 or 1040XN-2). If a federal NOL has also been

same year. See When to Use a Nebraska NOL below.

deducted when calculating federal AGI for the carryback year

Step 4. Deduct the Nebraska NOL in the carryback or carry-

(line 5 of Forms 1040XN-2004, 1040XN-2003, 1040XN-2002,

forward year. See How to Claim an NOL Deduction

1040XN-2001, 1040XN-5, 1040XN-4, 1040XN-3 or 1040XN-2),

below.

this amount is entered as an adjustment increasing federal AGI

Step 5. Determine the amount of your unused NOL. See How

(line 12 of Forms 1040XN-2004, 1040XN-2003, 1040XN-2002,

to Calculate an NOL Carryover on page 5. Carry over

1040XN-2001, 1040XN-5 or 1040XN-4, or line 14 of

the unused Nebraska NOL to the next carryback or car-

Forms 1040XN-3 or 1040XN-2).

ryforward year and begin again at Step 4.

The third adjustment is made to Schedule III of the amended

return. The amount of the Nebraska NOL from line 35 of Schedule

How to Calculate Your Nebraska NOL

I, Form NOL, is entered as a net change decreasing income

Nebraska Form NOL is used to determine if you have a Nebraska

derived from Nebraska sources (line 59, Forms 1040XN-2004,

NOL and to ﬁgure the amount of the loss. The NOL form is similar

1040XN-2003, and 1040XN-2002; line 57, Form 1040XN-2001;

to Schedule A of Federal Form 1045; however, there are some

line 53 Form 1040XN-5; line 50, Form 1040XN-4; line 56, Form

important differences between these forms. The Nebraska Form

1040XN-3; or line 53, Form 1040XN-2).

NOL requires you to make adjustments increasing or decreasing

Deducting a Carryforward. A nonresident or partial-year resi-

federal AGI. In addition, differences can arise because Nebraska

dent makes three adjustments to properly deduct a Nebraska NOL

non-business itemized deductions do not include state or local

in a carryforward year. An adjustment to federal AGI is made as

income taxes.

an “other adjustment” on Part B of Schedule I of Form 1040N in

A nonresident or partial-year resident must also complete Schedule

the amount of the Nebraska NOL available as computed on line

I on the back of the Form NOL. The loss for the year is the smaller

35 of Schedule I, Form NOL.

of the federal loss with Nebraska adjustments or the loss derived

A federal NOL which has been deducted in computing federal

from Nebraska sources. It is possible to have a loss from Nebraska

AGI must be entered on Form 1040N, Schedule I, Part A as an

sources but not a Nebraska NOL.

adjustment increasing federal AGI.

When to Use a Nebraska NOL

The third adjustment is made to Schedule III. The amount of the

Individual taxpayers have the same NOL carryback and carryfor-

Nebraska NOL is deducted from income derived from Nebraska

ward periods as are permitted for Federal NOLs. For NOLs occur-

sources.

ring after 1997, generally the federal carryback period is two years

The taxpayer must attach a copy of the Form NOL for the year

while the carryforward period is twenty years. A farming loss may

of the loss to the Nebraska return if there is a carryforward of

be carried back ﬁve years. (P.L. 105-277) See Federal Publication

a Nebraska NOL. An additional schedule or statement must be

536 for the exceptions to these periods. Any NOL which is unused

attached if necessary to explain the deduction. If more than one

after the last carryforward period cannot be deducted. For NOL’s

Nebraska NOL deduction is taken in the same year, attach copies

occurring before 1998, the normal federal carryback period is three

of the Forms NOL for each tax year.

years and the carryforward period is 15 years.

Change in Marital Filing Status. If marital status changes

The Nebraska NOL must be applied in the same manner as the

because of divorce or death, or if married taxpayers change their

federal NOL. If the federal loss is carried back to past years, the

ﬁling status, the special rules used by the Internal Revenue Service

Nebraska loss must also be carried back. If an election has been

must also be used to compute a Nebraska NOL carryforward or

made to forego the entire carryback period for a federal NOL,

carryback. See Federal Publication 536 for the applicable rules.

this election will be followed for Nebraska purposes. A copy of

the federal election must be attached to the Nebraska return ﬁled

Change in Resident Status. When the resident ﬁling status

in the loss year.

of a taxpayer differs between the year of the loss and the year the

Nebraska NOL is deducted, special rules apply.

How to Claim an NOL Deduction

A nonresident’s or partial-year resident’s Nebraska NOL is lim-

Deducting a Carryback. A Nebraska NOL is carried back to a

ited to the amount of the loss that is derived from or connected

prior year by ﬁling an amended Nebraska income tax return. The

with Nebraska sources. If the nonresident or partial-year resident

Nebraska Form NOL for the year of the loss must be attached to

has both a federal NOL and a Nebraska NOL and carries the

the amended return when ﬁled. Also attach a copy of Schedule A

Nebraska NOL back to a year in which the taxpayer was a full-

(Federal Form 1045) and a copy of the Federal Form 1040X or

year resident, only the Nebraska loss (as computed on line 35 of

1045 ﬁled for the carryback year.

Schedule I, Form NOL) can be deducted. Although the federal

An amended Nebraska individual income tax return for a loss car-

NOL will be reﬂected on the amended return as a net change to

ryback must be ﬁled within three years after the due date, including

federal adjusted gross income (line 5 of Forms 1040XN-2004,

extensions, for ﬁling the return for the NOL year.

1040XN-2003, 1040XN-2002, 1040XN-2001, 1040XN-5,

When a nonresident or partial-year resident ﬁles an amended

1040XN-4, 1040XN-3, or 1040XN-2), an adjustment increas-

income tax return in order to deduct a Nebraska NOL, there

ing federal AGI (line 12, Forms 1040XN-2004, 1040XN-2003,

Nebraska Individual Income Tax Net Operating Losses - Instructions Page 4

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