Fillable Schedule Nol - Kentucky Net Operating Loss Schedule (Page 2 of 2) in pdf

41A720NOL (10-14)

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 Columns A, B and C. Reflect all

affiliated group that is required to file a mandatory nexus

columns as positive amounts.

consolidated return as provided by KRS 141.200(11) to

Schedule NOL-CF must be attached if the affiliated group

determine the net operating loss limitation as provided by KRS

includes a member having an NOL carryforward that was not

141.200(11)(b) and to track any available net operating loss

a member of the affiliated group in the prior year.

carryforward. Part II of this schedule is used by a corporation

filing a separate return as provided by KRS 141.200(10) to

Line 4—Multiply Column B, Line 3 by 50 percent (.50). This is

track any available net operating loss carryforward.

the limitation provided by KRS 141.200(11)(b).

Part I – Mandatory Nexus Consolidated Return

Line 5—The amount of the current year net operating loss(es)

that exceed(s) the 50 percent loss limitation. It is an add back

General Instructions—Part I, Sections A and B of this

in computing Kentucky net income and is entered on Form

schedule are used by an affiliated group filing a mandatory

720, Part III, Line 19. If an amount is entered on Line 5, skip

nexus consolidated return to determine the amount of net

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

loss carryforward (NOL carryforward).

Worksheet—Line 5

KRS 141.200(11)(b) provides that includible corporations

that have incurred a net operating loss shall not deduct an

Amount from Column C, Line 3 ..................$ __________________

amount that exceeds, in the aggregate, 50 percent (50%) of

2. Amount from Line 4 .....................................$ __________________

the income realized by the remaining includible corporations

3. Line 1 less Line 2. Enter here and on

that did not realize a net operating loss.

Part I, Section A, Line 5 (If less than

zero, skip and complete Line 6)...................$ __________________

A current year NOL or an NOL carryforward as applied to a

mandatory nexus consolidated return is the pre-apportioned

net operating loss or pre-apportioned net operating loss

carryforward. Consequently, NOL carryforwards which are

Line 6—If the amount of loss limitation, Line 4 is greater

apportioned may be converted to pre-apportioned amounts.

than the net operating loss(es) on Column C, Line 3, a prior

However, a corporation that does not wish to convert the

year NOL carryforward can be used to meet the 50 percent

NOL carryforward to a pre-apportioned amount may carry

loss limitation. Enter the lesser of Line 4 less Column C,

the NOL carryforward as an apportioned amount.

Line 3, or the amount entered on Column A, Line 3. If the

amount of Line 4 less Column C, Line 3, is equal to Column

If the corporation does not convert an apportioned NOL

A, Line 3, enter the amount from Column A, Line 3. Enter the

carryforward to a pre-apportioned amount, the apportioned

amount on Form 720, Part III, Line 19. This is a deduction in

NOL carryforward is binding for all future years. Should

computing Kentucky net income. Use worksheet below.

the corporation wish to convert the apportioned NOL

carryforward to a pre-apportioned NOL carryforward

in a future year, all tax returns filed which included the

apportioned NOL carryforward must be amended. Also, using

Worksheet—Line 6

an apportioned NOL carryforward does not affect the 50

Amount from Line 4 .....................................$ __________________

percent (50%) limitation provided by KRS 141.200(11)(b) and,

2. Amount from Column C, Line 3 ..................$ __________________

accordingly, the apportioned NOL carryforward is included

3. Line 1 less Line 2. (If less than zero,

in Part I, Section A of this schedule.

skip and complete Line 5 above) ................$ __________________

A corporation does not have an NOL carryforward if it did

4. Amount from Column A, Line 3 ..................$ __________________

not have Kentucky nexus during the tax year of the NOL. An

5. Lesser of Line 3 or Line 4. Enter

NOL may be carried forward 20 years following the loss year;

here and on Part I, Section A,

however, as provided by KRS 141.011(2), an NOL shall not

Line 6 .............................................................$ __________________

be carried back for tax years beginning on or after January

1, 2005.

Schedule NOL-CF is required if the affiliated group includes

Section B – Current Year Loss Disallowed and NOL

a member having an NOL carryforward that was not a

Carryforward

member of the affiliated group in the prior year.

General Instructions – Part I, Section B is used by an affiliated

Section A – Current Net Operating Loss Adjustment

group filing a mandatory nexus consolidated return as

provided by KRS 141.200(11) to track any available net

Enter the name and Kentucky Corporation/LLET account

operating loss carryforward. Follow the instructions on Lines

number of the parent and subsidiaries.

1 through 4.

Column A—Enter the prior year’s NOL carryforward of each

Part II – Separate Entity Return

parent and subsidiary.

Column B—Enter only Kentucky net income of includible

NOL Carryforward

corporations from Schedule KCR (Form 720), Line 18.

General Instructions – Part II is used by a corporation filing

Column C—Enter only Kentucky net losses of includible

a separate entity return as provided by KRS 141.200(10) to

corporations from Schedule KCR (Form 720), Line 18. Enter

track any available net operating loss carryforward. Follow

as a positive amount.

the instructions on Lines 1 through 4.

Schedule Nol - Kentucky Net Operating Loss Schedule Page 2

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