Instructions for Form 1045 - Notices


Schedule A—NOL

Complete and file this schedule to determine the amount of the NOL that is available for carryback or carryforward.

Line 2—Nonbusiness Capital Losses

Do not include on this line any section 1202 exclusion amounts (even if entered as a loss on Schedule D (Form 1041)).

Line 6—Nonbusiness Deductions

Enter as a positive number deductions that are not connected with a trade or business. They include:

  • IRA deductions,

  • Health savings account deduction,

  • Archer MSA deduction,

  • Deductions for payments on behalf of a self-employed individual to a SEP, SIMPLE, or qualified plan,

  • Alimony paid,

  • Most itemized deductions (except for casualty and theft losses, any employee business expenses, and state income tax on trade or business income), and

  • Standard deduction.

Do not include on line 6 the deduction for personal exemptions for you, your spouse, or your dependents.

Do not include on line 6 any business deductions. These are deductions that are connected with a trade or business. They include:

  • State income tax on income attributable to trade or business (including wages, salary, and unemployment compensation),

  • Educator expenses,

  • Moving expenses,

  • The deduction for the deductible part of self-employment tax,

  • Domestic production activities deduction,

  • Rental losses,

  • Loss on the sale or exchange of business real estate or depreciable property,

  • Your share of a business loss from a partnership or an S corporation,

  • Ordinary loss on the sale or exchange of section 1244 (small business) stock,

  • Ordinary loss on the sale or exchange of stock in a small business investment company operating under the Small Business Investment Act of 1958,

  • Loss from the sale of accounts receivable if such accounts arose under the accrual method of accounting, and

  • If you itemized your deductions, casualty and theft losses (even if they involve nonbusiness property) and employee business expenses (such as union dues, uniforms, tools, and educational expenses).

Line 7—Nonbusiness Income Other Than Capital Gains

Enter income that is not from a trade or business. Examples are ordinary dividends, annuities, and interest on investments.

Do not enter business income on line 7. This is income from a trade or business and includes:

  • Salaries and wages,

  • Self-employment income,

  • Unemployment compensation,

  • Rental income,

  • Gain on the sale or exchange of business real estate or depreciable property, and

  • Your share of business income from a partnership or an S corporation.

For more details on business and nonbusiness income and deductions, see Pub. 536.

Line 17—Section 1202 Exclusion

Enter as a positive number any gain excluded under section 1202 on the sale or exchange of qualified small business stock.

Schedule B—NOL Carryover

Complete and file this schedule to determine the NOL deduction for each carryback year and the amount to be carried forward, if not fully absorbed. Make the same entries in each column heading as on page 1 of Form 1045 (see the instructions for Lines 10 Through 27 earlier).

In most cases, if an NOL is more than the modified taxable income for the earliest year to which it is carried, you must file Schedule B to figure the amount of the NOL to be carried to the next tax year. The amount of the carryback is in most cases the excess, if any, of the NOL carryback over the modified taxable income for that earlier year. Modified taxable income is the amount figured on line 9 of Schedule B.

If you carry two or more NOLs to a tax year, figure your modified taxable income by deducting the NOLs in the order in which they were incurred. First, deduct the NOL from the earliest year, then the NOL from the next earliest year, etc. After you deduct each NOL, there will be a new, smaller, modified taxable income to compare to any remaining NOL.

Line 2

Do not take into account on this line any NOL carryback from 2013 or later. However, do take into account NOLs that occurred in tax years before 2013 and are otherwise allowable as carrybacks or carryforwards.

Note.

If your taxable income is shown as zero on your tax return (or as previously adjusted) for any carryback year, refigure it without limiting the result to zero, and enter it on line 2 as a negative number.

Line 3—Net Capital Loss Deduction

Individuals.    Enter as a positive number the amount, if any, shown (or as previously adjusted) on Schedule D (Form 1040), line 21 (line 18 for 2003).

Estates and trusts.    Enter as a positive number the amount, if any, shown (or as previously adjusted) on Schedule D (Form 1041), line 16(line 17 for 2003).

Line 4—Section 1202 Exclusion

Enter as a positive number any gain excluded under section 1202 on the sale or exchange of qualified small business stock.

Line 5—Domestic Production Activities Deduction

Enter as a positive number the amount of any domestic production activities deduction claimed on your return.

Line 6—Adjustments to Adjusted Gross Income

If you entered an amount on line 3 or line 4, you must refigure certain income and deductions based on adjusted gross income. These include:

  • The special allowance for passive activity losses from rental real estate activities,

  • Taxable social security benefits,

  • IRA deductions,

  • Excludable savings bond interest,

  • The exclusion of amounts received under an employer's adoption assistance program,

  • The student loan interest deduction, and

  • The tuition and fees deduction.

For purposes of figuring the adjustment to each of these items, your adjusted gross income is increased by the total of the amounts on line 3 and line 4. Do not take into account any NOL carryback from 2013 or later.

In most cases, figure the adjustment to each item of income or deduction in the order listed above and, when figuring the adjustment to each subsequent item, increase or decrease adjusted gross income by the total adjustments you figured for the previous items. However, a special rule applies if you received social security benefits and deducted IRA contributions. Use the worksheets in Pub. 590, Individual Retirement Arrangements (IRAs), to refigure your taxable social security benefits and IRA deductions under the special rule.

Enter on line 6 the total adjustments made to the listed items. Attach a computation showing how you figured the adjustments.

Line 7—Adjustment to Itemized Deductions

Individuals.   Skip this line if, for the applicable carryback year:
  • You did not itemize deductions, or

  • The amounts on Schedule B, lines 3 through 5, are zero.

Otherwise, complete lines 11 through 38 and enter on line 7 the amount from line 38 (or, if applicable, line 14 of the worksheet).

Estates and trusts.   Recompute the miscellaneous itemized deductions shown (or as previously adjusted) on Form 1041, line 15b, and any casualty or theft losses shown (or as previously adjusted) on Form 4684, Casualties and Thefts, line 18 (line 20 for 2005 and 2006; line 23 for 2008; line 21 for 2009) by substituting modified adjusted gross income (see below) for the adjusted gross income of the estate or trust. Subtract the recomputed deductions and losses from the deductions and losses previously shown, and enter the difference on line 7.

Modified adjusted gross income for estates and trusts.

For purposes of figuring miscellaneous itemized deductions subject to the 2% limit, figure modified adjusted gross income by adding the following amounts to the adjusted gross income previously used to figure these deductions.

  • The total of the amounts from lines 3 through 6 of Form 1045,  
    Schedule B.

  • The exemption amount shown (or as previously adjusted) on Form 1041, line 20.

  • The income distribution deduction shown (or as previously adjusted) on Form 1041, line 18.

For purposes of figuring casualty or theft losses, figure modified adjusted gross income by adding the total of the amounts from lines 3 through 6 of Form 1045, Schedule B, to the adjusted gross income previously used to figure these losses.

Line 10—NOL Carryover

Generally, subtract line 9 from line 1. If zero or less, enter -0-. After completing all applicable columns, carry forward to 2014 the amount, if any, on line 10 of the column for the 1st preceding tax year.

Line 20—Refigured Mortgage Insurance Premiums

Is your modified adjusted gross income from Form 1045, Schedule B, line 13, more than $100,000 ($50,000 if married filing separately)?

Yes. Your deduction is limited. Refigure your deduction using the Mortgage Insurance Premiums Deduction Worksheet.

No. Your deduction is not limited. Enter the amount from line 19 on line 20 and enter -0- on line 21.

Mortgage Insurance Premiums Deduction Worksheet—Line 20

Before you begin:

  • See the instructions for line 20 to see if you must use this worksheet to refigure your deduction.

1. Enter the total premiums you paid in the carryback year for mortgage insurance for a contract issued after December 31, 2006 1.  
2. Enter the amount from Form 1045, Schedule B, line 13 2.      
3. Enter $100,000 ($50,000 if married filing separately) 3.      
4. Is the amount on line 2 more than the amount on line 3?        
  No. Your deduction is not limited. Enter the amount from line 19 on line 20 of Form 1045, Schedule B, and enter -0- on line 21. Do not complete the rest of this worksheet.        
  Yes. Subtract line 3 from line 2. If the result is not a multiple of $1,000 ($500 if married filing separately), increase it to the next multiple of $1,000 ($500 if married filing separately). For example, increase $425 to $1,000, increase $2,025 to $3,000; or if married filing separately, increase $425 to $500, increase $2,025 to $2,500, etc. 4.      
5. Divide line 4 by $10,000 ($5,000 if married filing separately). Enter the result as a decimal. If the result is 1.0 or more, enter 1.0 5.  
6. Multiply line 1 by line 5 6.  
7. Refigured mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here and on Form 1045, Schedule B, line 20 7.  

Line 26—Refigured Charitable Contributions

Refigure your charitable contributions using line 24 as your adjusted gross income unless, for any preceding tax year:

  • You entered an amount other than zero on line 23, and

  • You had any items of income or deductions based on adjusted gross income which are listed in the instructions for line 6 of Schedule B.

If you cannot use the amount from line 24 as your adjusted gross income, figure your adjusted gross income as follows.

  1. Figure the adjustment to each item of income or deduction in the same manner as explained in the instructions for line 6 of Schedule B, except do not take into account any NOL carrybacks when figuring adjusted gross income. Attach a computation showing how you figured the adjustments.

  2. Add lines 3, 4, 5, 11, and 23 of Schedule B to the total adjustments you figured in (1) above. Use the result as your adjusted gross income to refigure charitable contributions.

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Itemized Deductions Limitation Worksheet

For NOL carryover purposes, you must reduce any charitable contributions carryover to the extent that the NOL carryover on line 10 is increased by any adjustment to charitable contributions.

Line 38

Complete the worksheet on the previous page if line 22, Schedule B for any carryback year before 2010, is more than:

  • $139,500 for 2003 ($69,750 if married filing separately),

  • $142,700 for 2004 ($71,350 if married filing separately),

  • $145,950 for 2005 ($72,975 if married filing separately),

  • $150,500 for 2006 ($75,250 if married filing separately),

  • $156,400 for 2007 ($78,200 if married filing separately),

  • $159,950 for 2008 ($79,975 if married filing separately), or

  • $166,800 for 2009 ($83,400 if married filing separately).

Only complete a column for each year that meets the above requirements.

Note.

The itemized deduction limitation applies only to years before 2010.


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