State Form 46004 - Schedule It-40nol - Individual Income Tax Net Operating Loss Computation Page 3
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5Instructions for Schedule IT-40NOL and Carryforward Worksheet
A separate Schedule IT-40NOL must
Part 1 – Computation of Indiana
Net the following Indiana add-backs as
reported on the loss year’s return.
be used for each loss year.
NOL
For tax years 2003 and beyond (tax years
Public Law 81-2004 amended IC 6-3-
Enter the loss year (this is the year in
2009 and beyond for IT-40PNR fi lers), add:
2-2.5 and IC 6-3-2-2.6. It provides for
which the NOL occurred).
Tax add-back
a net operating loss (NOL) deduction
Lump sum distribution
from Indiana adjusted gross income. All
P.L. 81-2004, effective January 1, 2004,
Section 179 expense
loss years ending after January 1, 2004,
provides for an NOL deduction from
Bonus depreciation
and any existing NOL(s) carried over to
Indiana adjusted gross income equal to the
a taxable year after this date must be
amount of a federal NOL, computed under
For tax years 2009 and beyond, add:
recomputed by applying the amended
IRC Section 172, for the taxable year,
Unemployment compensation (2009
provisions of this Act. Deductions for net
that is derived from sources from within
only)
operating losses that were incurred in
Indiana, and adjusted for modifi cations
Deferral of business indebtedness
taxable years ending before January 1,
under IC 6-3-1-3.5. The federal NOL for
discharge and reacquisition
2004, and carried back or forward and
individuals, which refl ects the IRC Section
Qualifi ed restaurant property
deducted in taxable years ending before
172 application, is computed on federal
Qualifi ed retail improvement property
January 1, 2004, are calculated under
Schedule A from Form 1045.
Qualifi ed disaster assistance property
the law in effect for the year the NOL was
Qualifi ed refi nery property
incurred.
Note. The use of Indiana modifi cations
Qualifi ed fi lm or television production
may result in an Indiana net operating loss
Qualifi ed preferred stock
Important: In order to carry a pre-2004
even if there is no federal NOL.
Indiana NOL to tax year 2004 and
For tax years 2010 and beyond, add:*
beyond, you must:
Line 1 – Full-year Indiana residents
Discharge of debt of a principal
You must complete Schedule A from
residence
Step 1 – refi gure the NOL using the
federal Form 1045 before fi guring your
Educator expense**
new method on Form IT-40NOL revised
Indiana net operating loss (NOL). If the
Employer-provided educational
R3/ 10-04, or after;
amount on the last line of Schedule A is:
expenses**
Step 2 – reduce the refi gured NOL by
negative (a loss), enter that amount
IRA charitable distribution**
any amount previously used in any pre-
here as a negative fi gure;
Motorsports entertainment complex**
2004 intervening year;*
zero*, enter zero here; or
Qualifi ed advance mining safety
Step 3 – use any remaining NOL on line
positive*, enter that amount here as a
equipment**
17 of Carryforward Worksheet 2.
positive fi gure.
Qualifi ed environmental remediation
costs**
* The application of the NOL in the pre-
* Due to the application of Indiana
Qualifi ed leasehold improvement
2004 tax year(s) must conform with the
modifi cations, it is possible to have an
property**
rules that govern those years. Do not
Indiana NOL without fi rst having a federal
Qualifi ed transportation fringe
refi gure the amount of deduction used
NOL as computed under IRC Section 172.
expenses**
in the pre-2004 tax years.
If you think you have an Indiana NOL after
Start-up expenditures**
the application of Indiana modifi cations,
Student loan interest**
then you must fi rst complete Schedule A of
Tuition and fees**
the Form 1045 to arrive at the amount to
When to use an Indiana NOL
be entered on this line.
*Do not include the following add-backs:
Carryback and carryforward years.
Domestic production activities
Full-year and part-year Indiana
Public Law 172-2011 amendeds IC 6-3-
Oil and gas well depletion deduction
nonresidents
2-2.5 and IC 6-3-2-2.6. It provides that no
Qualifi ed electric utility amortization
Apply like kind modifi cations (as computed
Indiana net operating loss carryback claim
RIC dividends to nonresident aliens
under IRC Section 172) derived from
may be fi led after Dec. 31, 2011.
Indiana sources to the amount from line
**Apply the following if 2010 is the loss
1 of Form IT-40PNR, and enter the result
Example. Paul has an Indiana NOL for the
year. While these add-backs were fi rst
here. If the modifi ed amount from line 1 of
2010 tax year. Paul did not fi le an Indiana
required for the 2010 tax year, individuals
Form IT-40PNR is:
NOL carryback claim before Jan. 1, 2012.
were given a choice to report them on
negative (a loss), enter that amount
Therefore, he will have to carry the loss
either their 2010 or their 2011 Indiana tax
here as a negative fi gure;
forward.
return. Therefore, if 2010 is the loss year,
zero, enter zero here; or
include on line 2 only those add-backs,
positive, enter that amount here as a
Note. This rule will have no impact on
which were reported on the 2010 tax
positive fi gure.
carryback claims fi led before Jan. 1, 2012.
return.
Line 2 – Certain Indiana modifi cations as
Example. Ross has a $200,000 Indiana
For tax year 2011 and beyond, add:
reported on the loss year IT-40/IT-40PNR
NOL for the 2010 tax year. In October
Certain trade or business deductions
should be refl ected here.
of 2011 he carried this loss back to his
based on employment of unauthorized
2008 and 2009 Indiana returns. He used
alien
Important: Full-year and part-year Indiana
$75,000 of the loss in 2008, and $100,000
nonresidents who fi le Form IT-40PNR for
of the loss in 2009. He has a $25,000 loss
For tax year 2012 and beyond, add:
tax year 2008 or before should skip line 2
available to be carried to tax year 2011.
OOS municipal obligation interest
and enter the amount from line 1 on line 4.
Otherwise, continue.
Indiana NOLs may be carried forward for
up to 20 years after the NOL year (loss
year).
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