Carryback of 2008 or 2009 net operating losses (NOLs).(p1)
You can elect to carry back either a 2008 or 2009 NOL, but not both, for a period of 3, 4, or 5 years. If you make this election by filing a statement with your income tax return for the tax year of the NOL, you must also attach a copy of the statement to any Form 1045 or Form 1040X on which you deduct the NOL. If you previously elected to waive the entire NOL carryback period for an NOL arising in a tax year ending before November 6, 2009, you can revoke that election if you elect to carry the NOL back 3, 4, or 5 tax years. For more information, see Special Rules for 2008 or 2009 NOLs
. See also Rev. Proc. 2009-52, 2009-49 I.R.B. 744.
Carryback of 2008 NOLs for eligible small businesses (ESBs).(p1)
If you made an election to carry back a 2008 NOL that was attributable to an ESB for a period of 3, 4, or 5 years under Rev. Proc. 2009-26, 2009-19 I.R.B. 935, you can now elect to carry back, under the rules described above, any remaining 2008 or 2009 NOL that was not subject to the election under Rev. Proc. 2009-26.taxmap/pubs/p536-000.htm#en_us_publink1000245903
Alternative Tax Net Operating Loss(p1)
The 90 percent limit on the alternative tax net operating loss deduction does not apply to the portion of the ATNOLD attributable to any 2008 or 2009 NOL you elect to carry back more than 2 years. taxmap/pubs/p536-000.htm#en_us_publink1000245904
Qualified Gulf Opportunity (GO) Zone loss.(p2)
Beginning in 2009, the portion of any NOL attributable to a qualified GO Zone loss is now limited to the amount of any qualified GO Zone casualty loss and any special GO Zone depreciation or amortization allowable for any specified GO Zone extension property placed in service during the tax year.taxmap/pubs/p536-000.htm#en_us_publink1000177310
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_publink1000177311
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_publink1000177312
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.
You should attach all required documents to the Form 1045 or Form 1040X. For details, see the instructions for Form 1045 or Form 1040X.
The following topics are not covered in this publication.
- Bankruptcies. See Publication 908, Bankruptcy Tax Guide.
- NOLs of corporations. See Publication 542, Corporations.
Section references are to the Internal Revenue Code unless otherwise noted.taxmap/pubs/p536-000.htm#en_us_publink1000177314
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
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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.
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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
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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_publink1000177319
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_publink1000177320
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.