Net Operating Loss Worksheet / Form 1045
Generally, when there is a NOL at the end of the year, then you have to carryback the whole NOL to the two tax years before the NOL year ('carryback period'). Then, if there is any leftover NOL after the carryback period, you carryforward the balance for up to 20 years after the NOL year ('carryforward period'). You can't deduct any part of the NOL after the carryforward period.
The taxpayer can elect to waive the two-year carryback period and use the NOL for the carryforward period only. This may be advantageous if the taxable income in the past two years was low or if they expect to have a lot of taxable income after the NOL year. To waive the carryback period, attach a statement to the original tax return for the NOL year specifying that you're foregoing the carryback period.
In order to calculate the refund for a NOL carryback, tax preparers can either use Form 1045, Application for Tentative Refund or Form 1040X, Amended US Individual Income Tax Return. When using Form 1045, only one form needs to be prepared and can include up to three previous years of NOL carryback. If Form 1040X is used, a separate form must be prepared for each year the NOL is being carried back.
To display instructions for creating Form 1045 in the tax program click here.
From the Main Menu of the Tax Return (Form 1040) select:
- Miscellaneous Forms
- Net Operating Loss Worksheet/Form 1045
- Form 1045 - Application for Tentative Refund
- Enter the number of years you wish to carry back the NOL
- Select the year you want to apply the NOL to first and complete the worksheet for that year.
If you wish to forego the carryback period, select IRC Sec 172(b)(c) Election to Forego the Carryback Period, and select 'YES'.
NOTE: This is a guide on entering Form 1045 into the TaxSlayer Pro program. This is not intended as tax advice.
Instructions for Form 1045 - Application for a Tentative Refund
Last Updated: 10/14/2016