Using UltraTax CS to carry back a net operating loss

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UltraTax CS calculates the current year net operating loss on Net Operating Loss Worksheet 1. Unless an election is made to relinquish the carryback of the net operating loss, the NOL must be carried back using either Form 1045 or Form 1040X.

Follow these steps to complete Form 1045, Application for Tentative Refund.

  1. Determine and enter the appropriate carryback period in the NOL Carryback period to use on Form 1045 field on Screen 1045 (1045 & NOL folder) in order to have UltraTax CS calculate Form 1045.
  2. Obtain copies of the original tax returns — or, if applicable, the amended tax returns — for the tax years in the carryback period you determined on Screen 1045.
  3. On Screen 1045-2, enter the information from the original returns in the Before carryback fields for each respective year being carried back. Clients that have been proforma'd will already have this information completed. Verify the proforma'd information with the original tax returns.
  4. To determine the after carryback amounts using UltraTax CS, close the client in the current year and open the return in the prior version of UltraTax CS for the first carryback year that the loss is allowed to be carried back.

    Note: If the prior year returns were not completed in UltraTax CS, you must either recreate the returns in the prior version of UltraTax CS and continue with Step 5 or manually calculate the after carryback amounts and skip to step 8.

  5. In the prior year return, enter the amount of the current year net operating loss that was calculated on the Net Operating Loss Worksheet 1 (or portion of the loss applicable to the year carried back) in the following fields.
    1. Open Screen CO, located under the Other folder.
    2. Open the Net operating loss carryback statement.
    3. Select the year from which the NOL is carried back and enter the applicable amounts as positive values.
    1. Access Screen CO, located under the Carryovers & NOL folder.
    2. Open the Net operating loss carryback statement.
    3. Select the year from which the NOL is carried back and enter the applicable amounts as positive values.
    1. Access Screen NOLCO, located under the 1045 & NOL folder.
    2. In the NOL carryback section, enter the applicable amounts as positive values.

    Notes

    • Examine prior returns for charitable contributions. You should not reduce the adjusted gross income used to limit charitable contributions by the carryback amount. Force Schedule A to keep the original amount of the Schedule A charitable deduction.
    • To determine the Net Investment Income Applicable Percent of NOL, refer to Form 8960, Worksheet 4 in the current year of UltraTax CS.
  6. Enter the total AMT NOL amount from the Net Operating Loss Worksheet 4 in the appropriate AMT fields noted in step 5.
  7. At this point, it may be helpful to print the "refigured" prior year return information.
  8. Close the prior year client return and then open UltraTax CS for the current year and enter the refigured prior year amounts in the After carryback column for the earliest carryback period for all fields.
  9. If the NOL is more than the modified taxable income for the earliest year to which it is carried back, Form 1045 Schedule B (in Forms view, in the 1045 folder, P4 tab) in the current year is used to figure the amount of the NOL to be carried to the next year in the carryback period. The carryforward amount is calculated on Form 1045, Schedule B, line 10 and is based on amounts entered on Screen 1045-4. Verify for accuracy any proforma’d information present on the screen.
  10. If the earliest period calculates an NOL carryover on Form 1045 Schedule B, repeat the steps 4 to 9 above in the next preceding year using the NOL carryover figured on Form 1045, Schedule B. Repeat until no more NOL carryover is computed on Form 1045, Schedule B, or the last period is reached. To compute any NOL that may be carried forward, be sure to complete Schedule B for the last period.

    Note: If the NOL is not fully utilized within the carryback period, the remaining amount will show on the Net Operating Loss Worksheet 3 as a carryover to the next year.

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