Schedule Nol (Form 41a720nol) - Net Operating Loss Schedule Page 2
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241A720NOL (10-11)
Page 2
Commonwealth of Kentucky
INSTRUCTIONS FOR SCHEDULE NOL (FORM 720)
DEPARTMENT OF REVENUE
Purpose of Schedule—Part I of this schedule is used by an
Line 3—Enter the totals for Column A and Column B. Reflect
affiliated group that is required to file a mandatory nexus
Column B as a positive amount.
consolidated return as provided by KRS 141.200(11) to
Line 4—This is the limitation provided by KRS 141.200(11)(b).
determine the net operating loss limitation as provided by
KRS 141.200(11)(b) and to track any available net operating
Line 5—Enter the prior year NOL carryforward as a positive
loss carryforward. Part II of this schedule is used by a
amount. A Schedule NOL-CF must be attached if the affiliated
corporation filing a separate return as provided by KRS
group includes a member having an NOL carryforward that
141.200(10) or an elective consolidated return as provided
was not a member of the affiliated group in the prior year.
by KRS 141.200(4) to track any available net operating loss
Line 6—This is the total NOL available.
carryforward.
Line 7—This is the amount of the current year net operating
Part I – Mandatory Nexus Consolidated Return
loss(es) that exceed(s) the 50 percent loss limitation. It is an
General Instructions—Part I, Sections A and B of this
add back in computing Kentucky net income and is entered
schedule are used by an affiliated group filing a mandatory
on Form 720, Part III, Line 19. If an amount is entered on Line
nexus consolidated return to determine the amount of net
7, skip to Section B. Use worksheet below.
operating loss (NOL) deduction that can be utilized during
the current tax year and to track any available net operating
Worksheet—Line 7
loss carryforward (NOL carryforward).
1.
Amount from Line 3, Column B ..................$ __________________
KRS 141.200(11)(b) provides that includible corporations
2. Amount from Line 4, Column A ..................$ __________________
that have incurred a net operating loss shall not deduct an
amount that exceeds, in the aggregate, fifty percent (50%) of
3. Line 1 less Line 2. Enter here and on
Part I, Section A, Line 7 (If less than
the income realized by the remaining includible corporations
zero, skip and complete Line 8)...................$ __________________
that did not realize a net operating loss.
A current year NOL or an NOL carryforward as applied to a
mandatory nexus consolidated return is the pre-apportioned
Line 8—If the amount of loss limitation, Line 4, Column A is
net operating loss or pre-apportioned net operating loss
greater than the net operating loss(es) on Line 3, Column B,
carryforward. Consequently, NOL carryforwards which are
a prior year NOL carryforward can be used to meet the 50
apportioned may be converted to pre-apportioned amounts.
percent loss limitation. Enter the lesser of Line 4, Column
However, a corporation that does not wish to convert the NOL
A less Line 3, Column B or the amount entered on Line 5,
carryforward to a pre-apportioned amount may elect to carry
Column C. If the amount of Line 4, Column A less Line 3,
the NOL carryforward as an apportioned amount by checking
Column B is equal to Line 5, Column C, enter the amount
the box on page 1 of this schedule.
from Line 5, Column C. Enter the amount on Form 720, Part
III, Line 19. This is a deduction in computing Kentucky net
An election to use an apportioned NOL carryforward is
income. Use worksheet below.
binding for all future years. If a corporation chooses to use
a pre-apportioned NOL carryforward in a future year, all
Worksheet—Line 8
tax returns filed under the election to use an apportioned
NOL carryforward must be amended. Also, an election to
1.
Amount from Line 4, Column A ..................$ __________________
use the apportioned NOL carryforward does not change the
2. Amount from Line 3, Column B ..................$ __________________
limitation provided by KRS 141.200(11)(b) and, accordingly,
3. Line 1 less Line 2. (If less than zero,
the apportioned NOL carryforward is included in Part I,
skip and complete Line 7 above) ................$ __________________
Section A of this schedule.
4. Amount from Line 5, Column C ..................$ __________________
A corporation does not have an NOL carryforward if it did
5. Lesser of Line 3 or Line 4. Enter
here and on Part I, Section A,
not have Kentucky nexus during the tax year of the NOL. An
Line 8 .............................................................$ __________________
NOL may be carried forward 20 years following the loss year;
however, as provided by KRS 141.011(2), an NOL shall not
be carried back for tax years beginning on or after January
Section B – Current Year Loss Disallowed and NOL
1, 2005.
Carryforward
General Instructions – Part I, Section B is used by an affiliated
Schedule NOL-CF is required if the affiliated group includes
group filing a mandatory nexus consolidated return as
a member having an NOL carryforward that was not a
provided by KRS 141.200(11) to track any available net
member of the affiliated group in the prior year.
operating loss carryforward. Follow the instructions on Lines
Section A – Current Net Operating Loss Adjustment
1 through 4.
Enter the name, Kentucky Corporation/LLET account
Part II – Separate Entity Return or Elective Consolidated
number and prior year’s NOL carryforward of the parent and
Return
subsidiaries.
NOL Carryforward
Column A—Enter only Kentucky net income of includible
General Instructions – Part II is used by a corporation filing a
corporations from Schedule KCR (Form 720), Line 18.
separate entity return as provided by KRS 141.200(10) or an
elective consolidated return as provided by KRS 141.200(4)
Column B—Enter only Kentucky net losses of includible
to track any available net operating loss carryforward.
corporations from Schedule KCR (Form 720), Line 18. Enter
Follow the instructions on Lines 1 through 4.
as a positive amount.
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