Carry back a net operating loss (NOL)

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Net Operating Losses (NOL) from farming operations must be carried back using either Form 1045 or Form 1040X, unless you mark the Elect to relinquish carryback of farm NOL incurred during the current tax year field on the 1045 screen, in the 1045 & NOL folder.

This article covers NOL carrybacks on Form 1045. See how to use Form 1040X.

New clients

  1. Go to the 1045 screen in the 1045 & NOL folder.
  2. Mark the Farm loss carryback on Form 1045 field. This is required to calculate Form 1045.
  3. Go to the 1045-2 screen.
  4. Enter the before and after carryback amounts. The "before" amounts will come from prior year returns as they were originally filed. The "after" carryback amounts have to be manually calculated, or you can create prior year returns in UltraTax CS and follow the steps for "Proforma'd clients" below.

Proforma'd clients

  1. Go to the 1045 screen in the 1045 & NOL folder.
  2. Mark the Farm loss carryback on Form 1045 field. This is required to calculate Form 1045.
  3. Go to the 1045-2 screen.
  4. Review the "before" amounts and correct any wrong amounts. Leave the "after" amounts blank for now.
  5. Close the client in the current year and open the for the first carryback year that the loss is allowed to be carried back.
  6. Go to the NOLCO screen, located under the 1045 & NOL folder.
  7. In the NOL carryback section, 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) as positive values. See calculation notes below for limitation on carryback amount.
  8. Enter the total AMT NOL amount from the AMT Net Operating Loss Calculation Worksheet 2 in the appropriate AMT fields.
  9. You'll need to enter amounts from this return in the current year return. Print the return so you can reference the amounts.
  10. Close the prior year client return.
  11. Open the current year client.
  12. Go to the 1045-2 screen in the 1045 & NOL folder.
  13. Enter the refigured prior year amounts in the "after" fields.

Calculation notes 

  • 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.
  • Form 1045, Schedule B, line 9 may be limited to 80% of taxable income figured without any NOL deduction. See 1045 instructions.
  • If the NOL is not fully utilized within the carryback period, the remaining amount will show on the Net Operating Loss Carryover Calculation Worksheet 3 as a carryover to the next year.
  • An NOL carryback from years after 2017 is limited to 80% of taxable income computed without the net operating loss deduction. You may need to adjust the amount carried back to conform with this limitation.
  • 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.

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