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Waiving the Carryback

The remaining $1,000 is carried to 2009 with the

business day. For example, if you are a calendar

$38,000 NOL that you must begin using in 2009.

year taxpayer with a carryback from 2011 to

Period

2009, you must file Form 1045 on or after the

Carryback/ Unused

date you file your tax return for 2011, but no later

You can choose not to carry back your NOL. If

Year

Carryover

Loss

than December 31, 2012.

you make this choice, then you can use your

NOL only in the 20-year carryforward period.

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

$4,000

$1,000

Form 1040X. If you do not file Form 1045, you

(This choice means you also choose not to carry

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

39,000

37,000

can file Form 1040X to get a refund of tax be-

back any alternative tax NOL.)

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

37,000

34,000

cause of an NOL carryback. File Form 1040X

To make this choice, attach a statement to

within 3 years after the due date, including ex-

your original return filed by the due date (includ-

2011 (NOL year)

tensions, for filing the return for the NOL year.

ing extensions) for the NOL year. This statement

2012 . . . . . . . . . . . .

34,000

28,500

For example, if you are a calendar year taxpayer

must show that you are choosing to waive the

and filed your 2009 return by the April 15, 2009,

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

2013 . . . . . . . . . . . .

28,500

19,500

due date, you must file a claim for refund of 2006

Internal Revenue Code.

2014 . . . . . . . . . . . .

19,500

9,700

tax because of an NOL carryback from 2009 by

If you filed your return timely but did not file

2015 . . . . . . . . . . . .

9,700

1,000

April 17, 2012.

the statement with it, you must file the statement

with an amended return for the NOL year within

Attach a computation of your NOL using

2016 . . . . . . . . . . . .

1,000

-0-

6 months of the due date of your original return

Form 1045, Schedule A, and, if it applies, your

(excluding extensions). Enter “Filed pursuant to

NOL carryover using Form 1045, Schedule B,

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

discussed

later.

Once you choose to waive the carryback

How To Claim

period, it generally is irrevocable. If you choose

Refiguring your tax. To refigure your total tax

to waive the carryback period for more than one

an NOL Deduction

liability for a carryback year, first refigure your

NOL, you must make a separate choice and

adjusted gross income for that year. (On Form

attach a separate statement for each NOL year.

1045, use lines 10 and 11 and the “After car-

If you have not already carried the NOL to an

ryback” column for the applicable carryback

If you do not file this statement on time,

earlier year, your NOL deduction is the total

year.) Use your adjusted gross income after

you cannot waive the carryback period.

NOL. If you carried the NOL to an earlier year,

applying the NOL deduction to refigure income

CAUTION

your NOL deduction is the carried over NOL

or deduction items that are based on, or limited

minus the NOL amount you used in the earlier

to, a percentage of your adjusted gross income.

year or years.

Refigure the following items.

If you carry more than one NOL to the same

How To Carry an NOL Back

year, your NOL deduction is the total of these

1. The special allowance for passive activity

or Forward

carrybacks and carryovers.

losses from rental real estate activities.

2. Taxable social security and tier 1 railroad

If you choose to carry back the NOL, you must

NOL resulting in no taxable income. If your

retirement benefits.

first carry the entire NOL to the earliest car-

NOL is more than the taxable income of the year

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

you carry it to (figured before deducting the

3. IRA deductions.

carry the rest to the next earliest carryback year,

NOL), you generally will have an NOL carryover

and so on.

4. Excludable savings bond interest.

to the next year. See

How To Figure an NOL

If you do not use up the NOL in the carryback

Carryover, later, to determine how much NOL

5. Excludable employer-provided adoption

years, carry forward what remains of it to the 20

you have used and how much you carry to the

benefits.

tax years following the NOL year. Start by carry-

next year.

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

6. The student loan interest deduction.

Deducting a Carryback

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

7. The tuition and fees deduction.

next year. Continue to carry any unused part of

the NOL forward until the NOL is used up or you

If more than one of these items apply,

If you carry back your NOL, you can use either

complete the 20-year carryforward period.

refigure them in the order listed above, using

Form 1045 or Form 1040X. You can get your

your adjusted gross income after applying the

refund faster by using Form 1045, but you have

Example 1. You started your business as a

NOL deduction and any previous item. (Enter

a shorter time to file it. You can use Form 1045

sole proprietor in 2011 and had a $42,000 NOL

your NOL deduction on Form 1045, line 10. On

to apply an NOL to all carryback years. If you

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

line 11, using the “After carryback” column,

use Form 1040X, you must use a separate Form

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

enter your adjusted gross income refigured after

1040X for each carryback year to which you

using your NOL in 2009, the second year before

applying the NOL deduction and after refiguring

apply the NOL.

the NOL year, as shown in the following chart.

any above items.)

Estates and trusts that do not file Form 1045

must file an amended Form 1041 (instead of

Next, refigure your taxable income. (On

Carryback/ Unused

Form 1040X) for each carryback year to which

Form 1045, use lines 12 through 15 and the

Year

Carryover

Loss

NOLs are applied. Use a copy of the appropriate

“After carryback” column.) Use your refigured

year’s Form 1041, check the Amended return

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

$42,000

$40,000

adjusted gross income (Form 1045, line 11, us-

box, and follow the Form 1041 instructions for

ing the “After carryback” column) to refigure cer-

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

40,000

37,000

amended returns. Include the NOL deduction

tain deductions and other items that are based

2011 (NOL year)

with other deductions not subject to the 2% limit

on or limited to a percentage of your adjusted

(line 15a). Also, see the special procedures for

gross income. Refigure the following items.

2012 . . . . . . . . . . . .

37,000

31,500

filing an amended return due to an NOL car-

•

The itemized deduction for medical ex-

2013 . . . . . . . . . . . .

31,500

22,500

ryback, explained under

Form

1040X, later.

penses.

2014 . . . . . . . . . . . .

22,500

12,700

Form 1045. You can apply for a quick refund

•

The itemized deduction for qualified mort-

2015 . . . . . . . . . . . .

12,700

4,000

by filing Form 1045. This form results in a tenta-

gage insurance premiums.

tive adjustment of tax in the carryback year. See

2016 . . . . . . . . . . . .

4,000

-0-

•

The itemized deduction for casualty

the

Form 1045 illustrated at the end of this dis-

losses.

If your loss were larger, you could carry it

cussion.

forward until the year 2031. If you still had an

If the IRS refunds or credits an amount to you

•

Miscellaneous itemized deductions subject

unused 2011 carryforward after the year 2031,

from Form 1045 and later determines that the

to the 2% limit.

you would not be allowed to deduct it.

refund or credit is too much, the IRS may assess

•

The overall limit on itemized deductions

and collect the excess immediately.

(do not apply after December 31, 2009).

Example 2. Assume the same facts as in

Generally, you must file Form 1045 on or

Example

1, except that $4,000 of the NOL is

after the date you file your tax return for the NOL

•

The phaseout of the deduction for exemp-

attributable to a casualty loss and this loss quali-

year, but not later than one year after the end of

tions.

fies for a 3-year carryback period. You begin

the NOL year. If the last day of the NOL year falls

•

Qualified motor vehicle tax (do not apply

using the $4,000 in 2008. As shown in the fol-

on a Saturday, Sunday, or holiday, the form will

lowing chart, $3,000 of this NOL is used in 2008.

be considered timely if postmarked on the next

after December 31, 2009).

Page 8

Publication 536 (2011)

Publication 536 - Net Operating Losses (Nols) For Individuals, Estates, And Trusts - 2011 Page 8

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