Instructions For Schedule U-Nols - Member'S Shared Loss Carry Forwards

Combined Reporting Instructions

2012 Schedule U-NOLS Instructions

Member’s Shared Loss Carry Forwards

Schedule U-NOLS must be completed by every taxable member of a combined group that is

using a net operating loss (NOL) carry forward of another member of the group (i.e., where

the loss was incurred in a prior tax year by such other “contributing” member). If the member

is sharing an NOL carry forward from more than one group member, a single Schedule U-

NOLS may be used to report the NOL carry forwards that are being shared from all such

contributing group members.

A financial institution or a utility corporation as determined pursuant to Ch.63 is not entitled

deduct a NOL carry forward either itself or on shared basis and therefore cannot file

Schedule U-NOLS.

If any member has an NOL carry forward that derives from a loss incurred in “separate”

activities that were not accounted for as part of the determination of a combined group’s

taxable income included in a combined report, e.g., a NOL carry forward that derives from a

loss that was incurred in a tax year beginning prior to January 1, 2009, such carry forward

cannot be shared.

In general, a corporation taxable under M.G.L. c. 63, § 39 and an S corporation taxable under

M.G.L. c. 63, § 32D may carry forward and deduct an NOL for up to five taxable years. For

taxable years beginning on or after January 1, 2009, where a taxable member of a combined

group has an NOL carry forward that derives from the unitary business of such group, or the

general business activities of such group in the instance where the group is subject to an

affiliated group election, such NOL carry forward may be shared with another member of the

group under certain circumstances. In particular, where the combined group was not subject

to an affiliated group election in the tax year in which the loss was incurred, another member

of the group may share (i.e., deduct) an NOL carry forward belonging to the member that

incurred the loss if the loss was derived from activities of the unitary business and if such

other member was engaged in the unitary business in the tax year that the loss was incurred.

Further, in any case in which the combined group was subject to an affiliated group election

for the tax year in which the loss was incurred, another member of the group may share (i.e.,

deduct) an NOL carry forward of the member that incurred the loss if it was a member of the

combined group in the tax year that the loss was incurred, irrespective as to whether the

members were engaged in a unitary business in such prior tax year.

A member of a combined group must first deduct its own NOL carry forwards before it may

contribute its NOL carry forwards to another group member or, alternatively, share an NOL

carry forward that belongs to another group member. Thus, for example, a member may

contribute its NOL carry forwards to another member only if its taxable net income for the

tax year in question has been reduced to zero. For the requirements and limitations that apply

to the sharing of NOL carry forwards, see 830 CMR 63.32B.2 (8).

Instructions For Schedule U-Nols - Member'S Shared Loss Carry Forwards - 2012