Form Mi-1045 - Application For Michigan Net Operating Loss Refund Page 4
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4Instructions for Form MI-1045
2012 MI-1045, Page 4
NOTE: The Michigan NOL is generally carried back two years. Any remaining unused loss after the carryback period, may be carried forward
20 years. Certain exceptions and limitations to the general carryback period that apply to federal NOLs also apply to Michigan NOLs. See
U.S. Form 1045 instructions for more information on the general carryback rules for federal NOLs.
forms for each year the loss is being carried back. Attach the
What is a Net Operating Loss?
amended credit claim forms to Form MI-1045.
A net operating loss (NOL) occurs when a business has losses
The total amount of the federal NOLD used to arrive at federal
in excess of its gains. The Michigan NOL deduction (NOLD)
AGI must be added back on Form MI-1040. The Michigan NOLD
is subject to allocation and apportionment as required by the
is then subtracted in its place on Form MI-1040. This amount will
Michigan Income Tax Act. Income and losses attributed to other
be the NOL determined on Form MI-1045, page 1, line 22, less
states, and income and losses from oil and gas production subject
any of the loss used in previous years. See the MI-1040 instruction
to Michigan Severance tax included in the federal NOL must be
booklet for specific line references for the years involved.
eliminated from the Michigan NOL calculation in the loss year.
Required Attachments
The Michigan NOL may be carried back in the same manner as
prescribed in Section 172 of the Internal Revenue Code as in effect
You must attach a copy of your federal income tax return (U.S.
for the year the loss was incurred. If your NOL is not exhausted
Form 1040) and any supporting federal tax schedules or forms
in the carryback years, or you elect to forego the carryback, an
that support the NOL. Be sure to indicate the location (city and
NOL carryforward will exist for subsequent years. The carryover
state) of any income or loss. If you have income or loss subject to
period is limited to 15 years for loss years before 1998. Beginning
apportionment, see MI-1040H Schedule of Apportionment.
with the 1998 tax year, the carryback period is generally limited
NOL Effects on Homestead Property Tax Credit
to two years for both federal and Michigan taxes, and any unused
loss may be carried forward 20 years. Exceptions to the general
NOTE: Effective 2012, a NOL is not used to determine total
carryback periods for federal purposes also apply to Michigan.
household resources. The NOLD/FTMI adjustment is allowed on
The Michigan NOL
carrybacks only.
To determine household income for purposes of computing the
The Michigan Court of Appeals has ruled in two separate cases,
homestead property tax credit, the home heating credit, and the
Preston v Treasury, 190 Mich App 491; 476 NW 2d 455, (1991)
farmland preservation tax credit, an NOLD is allowed for tax
and Beznos v Treasury, 224 Mich App 717; 569 NW 2d 908 (1997),
year 2011 and prior. The amount of the NOLD that is allowed
that the Michigan NOL and NOLD are computed separately and
cannot exceed your FMTI in the year to which it is being carried
independently of the federal NOL and NOLD. If you incurred a
back or carried forward. Claim the amount of the allowed
federal NOL that you are carrying back to previous years, you
NOLD on the “other adjustments line” on the appropriate credit
must determine the allowed Michigan NOL, if any, by completing
forms for each applicable year. Caution: To deduct an NOLD
page 1 of Form MI-1045. If you incurred a Michigan NOL, but
from household income, you must have a corresponding federal
are electing to forego the carryback, and carry the Michigan NOL
NOLD. If you have a Michigan NOLD, but no federal NOLD,
forward, you do not need to file this form until the year you actually
you cannot take an NOLD in household income. Income and
use the loss to offset Michigan income. If you incurred an NOL
losses from other states, income and losses from oil and gas
from Michigan sources, but did not incur a corresponding federal
production, and federal itemized deductions must be considered
NOL, you must complete page 1 of Form MI-1045 to determine
when calculating the NOL and NOLDs used for household income.
your allowable Michigan NOL.
The amount of the allowable NOLD for use in household income
When to File Form MI-1045
is calculated on page 3 of the MI-1045 form for both carrybacks
and carryforwards. The amount of the carryback deduction will be
If you are carrying back your NOL to prior years, Form MI-1045
the smaller of lines 47 or 48, and the amount of the carryforward
must be filed within four years after the date set for filing the return
deduction will be the smaller of lines 47 or 53.
in which the NOL was incurred. For example: If the original NOL
was incurred in 2008, then the original 2008 return was due April 15,
Example: Your 2010 FMTI is $20,000, and your 2010 federal
2009. You must file Form MI-1045 by April 15, 2013, to carryback
NOLD is $50,000. The amount of the 2010 NOLD of $50,000 that
the 2008 Michigan NOL to a year that is otherwise outside of the
may be used in 2010 household income is limited to $20,000. The
general 4 year statute of limitations.
If your Michigan NOL is car-
balance of $30,000 will be available for use in 2011 to the extent
ried forward, Form MI-1045 should be filed in the year to which
of your 2011 FMTI.
it is being carried forward.
Note: Effective January 1, 2012 an NOLD cannot reduce total
Using Form MI-1045
household resources and is no longer used on Michigan Property
Tax Credit and Home Heating Credit. For additional information
Use page 1 of Form MI-1045 to calculate your Michigan NOL for
see instructions for Total Household Resources in the MI-1040
the year of the loss. If you are carrying the loss back, you must
booklet on page 23.
also complete page 2, Redetermining Your Michigan Income Tax.
Forms or Questions
Page 3 is used to determine the amount of your federal NOLD
that may be used to compute your household income for tax year
Michigan tax forms are available on Treasury’s Web site at
2011 or prior.
You may also call (517) 636-4486 to
If you are filing a refund claim from the carryback of a Michigan
have tax forms mailed to you or to ask technical questions.
NOL, you must also file the appropriate amended credit claim
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