Net operating loss (NOL) occurs when a company's allowed tax deductions are larger than its actual income. This results in negative taxable income. When NOL happens, a company can choose to apply for carryback -- a refund of past tax payments resulting in a tax credit -- or a carryover -- applying the credits to reduce future company tax payments. In order to calculate your carryover, use Internal Revenue Service Form 1045.
Download Form 1045, Schedule A, from the IRS website for the prior tax year. You can find the form by typing "1045 application for a tentative refund" into the Search text box at the top of the page and then clicking "Search." Form 1045 will appear in the results list.
Complete Form 1045, Schedule A, line 1, using amounts from your regular tax return, schedule A. Line 1 includes net operating loss from line 25 of Schedule A, unused general business credit and net section 1256 contracts loss. A 1256 contract includes several regulated foreign currency contracts, futures contracts, currency options and non-equity options.
Enter deductions not connected to your trade, business or employment on line 6. Deductions include alimony paid, deductions for contributions to an IRA or a self-employed retirement plan and health savings account deduction. Do not include personal exemptions or business deductions.
Enter any income not related to employment on line 7. For example, if you received bank account interest, enter it on line 7.
Complete the rest of the form, including line17, where you would enter any gain you excluded under Internal Revenue Code section 1202 for the sale or exchange of qualified small business stock.
Add lines 1, 9, 17 and 21 through 24 to calculate your NOL.
- Form 1045 is complex, but the IRS does provide detailed instructions for the form on its website. Click "Form 1045 instructions" from the search results list in Step 1 to view the form instructions.
Items you will need
- Form 1045
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