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Publication 536

Net Operating Losses (NOLs) for 
Individuals, Estates, and Trusts

For Use in Tax Year 2014

Future Developments(p1)

For the latest information about developments related to Publication 536, such as legislation enacted after it was published, go to


Photographs of missing children.(p1)
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.

What this publication covers.(p1)

For Use in Tax Year 2014
This publication discusses NOLs for individuals, estates, and trusts. It covers:
To have an NOL, your loss must generally be caused by deductions from your:
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.

Keeping records.(p2)

For Use in Tax Year 2014
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.

What is not covered in this publication?(p2)

For Use in Tax Year 2014
The following topics are not covered in this publication.

Section references.(p2)

For Use in Tax Year 2014
Section references are to the Internal Revenue Code unless otherwise noted.

Comments and suggestions.(p2)

For Use in Tax Year 2014
We welcome your comments about this publication and your suggestions for future editions.
You can send comments from Click on "More Information" and then on "Give us feedback."
Or you can write to:

Internal Revenue Service
Tax Forms and Publications
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.
Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.
Ordering forms and publications.(p2)
Visit to download forms and publications. Otherwise, you can go to to order forms or call 1–800–829–3676 to order current and prior-year forms and instructions. Your order should arrive within 10 business days.
Tax questions.(p2)
If you have a tax question, check the information available on or call 1-800-829-1040. We cannot answer tax questions sent to the above address.


Useful items

You may want to see:

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 forms.

NOL Steps(p2)

For Use in Tax Year 2014
Follow Steps 1 through 5 to figure and use your NOL.

Step 1.(p2)

For Use in Tax Year 2014
Complete your tax return for the year. You may have an NOL if a negative amount appears on the line below:

Step 2.(p2)

For Use in Tax Year 2014
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.

Step 3.(p2)

For Use in Tax Year 2014
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, later.

Step 4.(p2)

For Use in Tax Year 2014
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.

Step 5.(p2)

For Use in Tax Year 2014
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.


For Use in Tax Year 2014
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.