5-year carryback of 2008 NOLs for eligible small businesses.(p1)
For 2008, you can choose a 3, 4, or 5-year carryback period for the part of your 2008 NOL that is an eligible small business loss. See Eligible small business (ESB) loss
Tax relief for federally declared disaster areas.(p1)
A 5-year carryback period applies to the portion of an NOL that is a qualified disaster loss. See Qualified disaster loss
Tax relief for the Kansas disaster area.(p1)taxmap/pubs/p536-000.htm#en_us_publink1000150466
Tax relief for the Midwestern disaster areas.(p1)taxmap/pubs/p536-000.htm#en_us_publink1000150468
Qualified GO Zone loss.(p1)
The definition of qualified GO Zone loss no longer includes certain deductions that expired before 2008. See Qualified GO Zone loss
, later. For a list of the deductions that have expired, see page 6 of Publication 4492. (See Publication 4492, pages 12 and 13, for the special depreciation allowance.
Photographs of missing children.(p2)
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). An NOL year is the year in which an NOL occurs. You can use an NOL by deducting it from your income in another year or years. taxmap/pubs/p536-000.htm#en_us_publink100096417
This publication discusses NOLs for individuals, estates, and trusts. It covers:
- How to figure an NOL,
- When to use an NOL,
- How to claim an NOL deduction, and
- How to figure an NOL carryover.
To have an NOL, your loss must generally be caused by deductions from your:
- Trade or business,
- Work as an employee,
- Casualty and theft losses,
- Moving expenses, or
- Rental property.
A loss from operating a business is the most common reason for an NOL.
Partnerships and S corporations generally cannot use an NOL. However, partners or shareholders can use their separate shares of the partnership's or S corporation's business income and business deductions to figure their individual NOLs. taxmap/pubs/p536-000.htm#en_us_publink100096418
You should keep records for any tax year that generates an NOL for 3 years after you have used the carryback/carryforward or 3 years after the carryforward expires.taxmap/pubs/p536-000.htm#en_us_publink100096419
The following topics are not covered in this publication.
- Bankruptcies. See Publication 908, Bankruptcy Tax Guide.
- NOLs of corporations. See Publication 542, Corporations.
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
You can email us at *email@example.com
. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.
to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
If you have a tax question, check the information available on www.irs.gov
or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.
You may want to see:
Publication 4492 Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma 4492-A Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes 4492-B Information for Affected Taxpayers in the Midwestern Disaster Areas Form (and Instructions) 1040X: Amended U.S. Individual Income Tax Return 1045: Application for Tentative Refund
See How To Get Tax Help
near the end of this publication for information about getting these publications and forms.
Follow Steps 1 through 5 to figure and use your NOL.taxmap/pubs/p536-000.htm#en_us_publink100096424
Complete your tax return for the year. You may have an NOL if a negative figure appears on the line below:
- Individuals — Form 1040, line 41, or Form 1040NR, line 38.
- Estates and trusts — Form 1041, line 22.
If the amount on that line is not negative, stop here — you do not have an NOL.taxmap/pubs/p536-000.htm#en_us_publink100096425
Determine whether you have an NOL and its amount. See How To Figure an NOL
, later. If you do not have an NOL, stop here.
Decide whether to carry the NOL back to a past year or to waive the carryback period and instead carry the NOL forward to a future year. See When To Use an NOL
Deduct the NOL in the carryback or carryforward year. See How To Claim an NOL Deduction
, later. If your NOL deduction is equal to or less than your taxable income without the deduction, stop here — you have used up your NOL.
Determine the amount of your unused NOL. See How To Figure an NOL Carryover
, later. Carry over the unused NOL to the next carryback or carryforward year and begin again at Step 4.
If your NOL deduction includes more than one NOL amount, apply Step 5 separately to each NOL amount, starting with the amount from the earliest year.