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This topic provides guidelines for preparing Form 1139.

Completing Screen 1139

UltraTax CS does not have the ability to recalculate the corporation's prior-year tax returns. Therefore, complete the following steps before completing Screen 1139.

1. Obtain copies of the corporation's original returns for years to which you are carrying information back.
2. Recalculate the prior year's tax returns that are affected by the carryback. In other words, if the corporation sustained an NOL in the current year and you are carrying the NOL back to preceding tax years, recalculate these prior-year returns, taking into consideration the carryback.
3. Using the corporation's original returns and the recalculated returns, complete the information requested in Screen 1139.

Example - Preparing Form 1139

On the 2018 1120 tax return, Corporation X has a net operating loss (NOL) of $10,000. On its 2017 1120 tax return, there is taxable income of $1,000, which allows the corporation to carryback $1,000 of the $10,000 NOL to 2016. Corporation X would like to file Form 1139 for a quick refund of taxes due to the carryback of the NOL. Complete the following steps to process Form 1139 for Corporation X.

1. If Corporation X's tax information was not proforma'd, you need to obtain copies of the corporation's original returns for 2017, the year to which you are carrying information back to, and enter the required Form 1139 information in Screen 1139 (in the Carryover folder) in the Before Carryback column for the first preceding tax year. Corporation X's 2015 1120 original tax return shows a taxable income of $1,000 and an income tax of $150. In addition, the 2017 taxable income of $1,000 should be entered in Screen NOL in the Income / (Loss) column for the first preceding tax year. The Screen 1139 fields should appear as indicated in the table that follows in step 3.
2. Recalculate Corporation X's 2017 tax return that is affected by the carryback of $1,000 by entering the NOL carryback information in Screen Amend-2 in the 2017 UltraTax/1120 client's return. Enter $1,000 in the Regular net operating loss field in the Net Operating Loss and Capital Loss Carryback section. Print the Corporation X's 2017 1120 recalculated tax return to use when completing Form 1139 in 2016 UltraTax/1120 by entering the recalculated amounts in Screen 1139 in the After Carryback column for the first preceding tax year. Corporation X's 2015 1120 recalculated tax return shows a taxable income of $0, an NOL deduction of $1,000, and an income tax of $0. The Screen 1139 fields should appear as indicated in the table that follows in step 3.

   Note: UltraTax/1120 cannot recalculate the corporation's prior-year tax returns; therefore, this step is necessary in recalculating prior-year tax returns.

3. Using Corporation X's 2017 1120 original and recalculated tax return, complete the information requested in Screen 1139 for the 1st preceding tax year (12/31/17) as follows:

   Field name	Before carryback	After carryback
   Taxable income	$1,000	N/A
   Capital loss carryback
   Net operating loss		$1,000
   Income tax	$150	$0
   AMT
   Gen business credits
   Other credits
   Personal holding company tax
   Other taxes

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