Form Nol-F85a - Application Of Net Operating Loss Carryback Or Carryforward Page 2
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1
2Instructions For Preparation of Alabama
Form NOL-F85A
Application of Net Operating Loss Carryback or Carryfor-
amount by which the NOL will be reduced is called “modified tax-
ward – Fiduciary Return (Form 41)
able income.” The modification required by law provides that no
deduction is allowed for the personal exemption provided in §40-
This form is used to determine the amount of a net operating
loss (carried to the tax year from another tax year) that can be
18-19. If a prior NOL carryback or carryover was fully absorbed in
claimed as a net operating loss deduction during the tax year.
the year, and a subsequent NOL is carried to the year and cannot
Additional guidance concerning the computation of the net op-
be fully absorbed, the modification required above would be com-
erating loss, the carrying back of the net operating loss, and the
puted after taxable income has been recomputed for the year. If
carrying forward of the net operating loss, can be obtained from
the subsequent NOL can be fully absorbed, after taxable income
Alabama Income Tax Regulation Number 810-3-15.2-.01. Visit the
has been recomputed for the prior NOL, taxable income for the
year must be recomputed, with taxable income reduced again for
Alabama Department of Revenue’s Web site (
alabama. gov) to obtain copies of Alabama income tax forms,
the subsequent NOL.
schedules, and form preparation instructions.
Form Preparation
Carryback and Carryforward of an Alabama NOL. For loss
Enter the tax year information. Enter the name of the estate or
years beginning after December 31, 1997, an NOL may be carried
trust and the federal employer identification number of the estate
back and deducted from taxable income in each of the preceding
or trust.
two years or until exhausted.
Part I – Computation of Unused Net Operating Loss
NOL Carrybacks. When an NOL is carried back to a prior year,
Line 2. Enter the net operating loss as shown on line 17 of the
taxable income will be recomputed in such prior year. If the NOL
Alabama Form NOL-F85 for the tax year the loss was incurred. If
being carried back is equal to or greater than taxable income as
the net operating loss has previously been carried to a tax year,
previously reported or last adjusted (including any deductions for
enter the amount from line 4 of the Alabama Form NOL-F85A filed
NOLs carried over or carried back to such year from any loss year
for the tax year to which the net operating loss was carried.
prior to the current loss year), taxable income will be reduced to
Line 3. Enter the Alabama Taxable Income from page 1, line 5,
zero. If the NOL being carried back is less than taxable income as
of the Alabama Form 41 for the tax year to which the net operat-
previously reported or last adjusted (including any deductions for
ing loss is being carried.
NOLs carried over or carried back to such year from any loss year
Line 4. If the amount entered on line 2 exceeds the amount
prior to the current loss year), taxable income for the carryback
entered on line 3, enter on line 4 the amount that line 2 exceeds
year is reduced by the amount of the NOL.
line 3. Otherwise, enter zero.
Application of an NOL Carryforward. An NOL may be carried
Part II – Application to Carryback of Carryforward Year
forward 15 tax years subsequent to the loss year in order of time
Line 5. Enter the Alabama Taxable Income from page 1, line 5
or until exhausted, whichever occurs first.
of the Form 41 for the carryback or carryforward tax year.
Computation of Taxable Income in a Carryforward Year. If
Line 6. Enter the net operating loss to be applied to the carry-
the NOL being carried forward is equal to or greater than taxable
back or carryforward tax year. If the amount on line 4 is zero, enter
income, taxable income will be reduced to zero. Taxable income
the amount entered on line 2. Otherwise enter the amount that
is computed without considering the current NOL carryover to be
line 2 exceeds the amount on line 4.
applied, but will reflect any prior carryovers which have been ap-
Line 7. Enter the Alabama Taxable Income after Application of
plied. See Computation of Any Remaining NOL Carryover After
Net Operating Loss which equals the amount that line 5 exceeds
Application of an NOL below for the computation of any remaining
the amount entered on line 6.
NOL for carryover to a subsequent year.
Part III – Computation of Tax
If the NOL being carried forward is less than taxable income
Compute the tax as shown on the form for lines 8 through 10,
(computed without considering the NOL deduction to be applied);
entering the total on line 11. The amount from line 11 must be car-
taxable income will be reduced (but not below zero) by the amount
ried forward to page 1, line 6 of the Form 41 and “Alternate tax
of the NOL carried forward.
method” (ATM) should be checked.
Computation of Any Remaining NOL Carryover After Ap-
Please Note: losses from Estates and Irrevocable trusts can-
plication of an NOL. In order to determine the amount of an NOL
not be passed to beneficiary or owner see Code of Alabama 1975,
available for carryover, an adjustment must be made to the tax-
810.3.25.11(f), 810.3.25.05(8)b.
able income for the year in which the deduction was taken. The
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