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General Instructions

Table of Contents

Section references are to the Internal Revenue Code unless otherwise noted.

Purpose of Form

Form 1045 is used by an individual, estate, or trust to apply for a quick tax refund resulting from:

  • The carryback of an NOL,

  • The carryback of an unused general business credit,

  • The carryback of a net section 1256 contracts loss, or

  • An overpayment of tax due to a claim of right adjustment under section 1341(b)(1).

When carrying back an NOL to an earlier tax year, an alternative minimum tax (AMT) liability may be created for that earlier year. This may be true even if there was no AMT liability when the tax return for that earlier year was filed.

Waiving the carryback period.   You can elect to carry an NOL forward only, instead of first carrying it back. To make this election for an NOL incurred in your 2008 tax year, attach to your 2008 tax return filed on or before the due date (including extensions) a statement that you are electing under section 172(b)(3) to relinquish the entire carryback period for any 2008 NOL. If you filed your return on time without making the election, you can still make the election on an amended return filed within 6 months of the due date of the return (excluding extensions). Attach the election to the amended return, and write “Filed pursuant to section 301.9100-2” on the election statement. Once made, the election is irrevocable, except as explained in the next paragraph.

Revoking an election to waive the carryback period.

If you previously made an election under section 172(b)(3) to waive the carryback period for your 2008 NOL arising in a tax year ending before February 17, 2009, and you now want to elect to use a 3, 4, or 5-year carryback period for an eligible small business loss, you can revoke your election by filing Form 1045 or an amended return (using Form 1040X or Form 1041) for the earliest tax year to which you are carrying back your 2008 NOL . The Form 1045 or amended return must be filed by April 17, 2009. Enter “2008 NOL Carryback Election and Revocation of NOL Carryback Waiver Pursuant to Rev. Proc. 2009-19” across the top of the Form 1045 or amended return. If you choose to file an amended return using Form 1040X or Form 1041, see Form 1040X or Other Amended Return on page 3.

Definitions

Eligible loss.   For an individual, an eligible loss is any loss of property arising from fire, storm, shipwreck, other casualty, or theft.

  For a small business (as defined in section 172(b)(1)(F)(iii)) or a farming business (as defined in section 263A(e)(4)), an eligible loss is any loss attributable to a federally declared disaster (as defined in section 165(h)(3)(C)(i)).

  An eligible loss does not include a farming loss, a qualified disaster loss, a qualified GO Zone loss, a qualified recovery assistance loss, or a qualified disaster recovery assistance loss.

  An eligible loss also does not include an eligible small business loss for which you elect a 3, 4, or 5-year carryback period under Section 172(b)(1)(H).

Farming loss.   A farming loss is the smaller of:

  • The amount that would be the NOL for the tax year if only income and deductions attributable to farming businesses (as defined in section 263A(e)(4)) were taken into account, or

  • The NOL for the tax year.

Qualified disaster loss.   A qualified disaster loss is the smaller of:

  1. The sum of:

    1. Any losses occurring in a disaster area and attributable to a federally declared disaster (as defined in section 165(h)(3)(C)), plus

    2. Any qualified disaster expenses allowable under section 198A (even if you did not elect to treat such expenses as qualified disaster expenses), or

  2. The NOL for the tax year.

Excluded losses.

A qualified disaster loss does not include any losses from property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store for which the principal business is the sale of alcoholic beverages for consumption off premises.

A qualified disaster loss also does not include any losses from any gambling or animal racing property. Gambling or animal racing property is any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing, and the portion of any real property (determined by square footage) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing, unless this portion is less than 100 square feet.

Qualified GO Zone loss.   For tax years beginning in 2008, a qualified GO Zone loss is the smaller of:

  1. The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or

  2. The total of any depreciation allowable for qualified GO Zone nonresidential real property and residential rental property placed in service in 2008 and specified GO Zone extension property placed in service in 2009 during the tax year (even if you elected not to claim the special GO Zone depreciation allowance for such property).

  See Pub. 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma, for a list of counties and parishes included in the GO Zone.

Qualified recovery assistance loss.   For the definition of qualified recovery assistance loss, see page 2 of Pub. 4492-A.

Qualified disaster recovery assistance loss.   For the definition of qualified disaster recovery assistance loss, see page 5 of Pub. 4492-B.

Eligible small business (ESB) loss.   An ESB loss is the smaller of:

  1. The amount that would be the 2008 NOL if only income, gains, losses, and deductions attributable to ESBs were taken into account, or

  2. The 2008 NOL.

  An ESB is a small business as defined in section 172(b)(1)(F)(iii), except that the business' 3-year average annual gross receipts can be up to $15 million (instead of $5 million). The gross receipts test is applied at the partnership, corporate, or sole proprietorship level, and the aggregation rules of section 448(c)(2) apply.

  A 2008 NOL is any NOL for a tax year ending in 2008. For a fiscal year taxpayer with a tax year beginning in 2007 and ending in 2008, follow these instructions, except use a 2007 Form 1045 to claim an NOL attributable to an ESB loss. However, a fiscal year taxpayer can elect to treat an NOL for a tax year beginning in 2008 as a 2008 NOL. To make this election, attach to the tax return for the tax year beginning in 2008, a statement that you are electing under section 172(b)(1)(H) to treat the NOL as a 2008 NOL. The return must be filed by the later of its due date (including extensions) or April 17, 2009. If you filed your return on time without making the election, you can still make the election on an amended return filed within 6 months of the due date of the return (excluding extensions). Attach the election to the amended return, and write “Filed pursuant to section 301.9100-2” on the election statement. Once made, the election is irrevocable.

  If you make this election, be sure to also indicate the carryback period you are electing (3, 4, or 5-years). See Eligible small business (ESB) losses on page 5.

Fiscal year taxpayers only.

If you previously elected a 3, 4, or 5-year carryback period for an NOL for a tax year ending in 2008, you cannot make this election (to treat an NOL for a tax year beginning in 2008 as a 2008 NOL). Also, if you elect to treat an NOL for a tax year beginning in 2008 as a 2008 NOL, any NOL for a tax year ending in 2008 is not a 2008 NOL.

Specified liability loss.   Generally, a specified liability loss is a loss arising from:

  • Product liability, or

  • An act (or failure to act) that occurred at least 3 years before the beginning of the loss year and resulted in a liability under a federal or state law requiring:

  1. Reclamation of land,

  2. Dismantling of a drilling platform,

  3. Remediation of environmental contamination, or

  4. Payment under any workers compensation act.

  Any loss from a liability arising from (1) through (4) above can be taken into account as a specified liability loss only if you used an accrual method of accounting throughout the period in which the act (or failure to act) occurred. For details, see section 172(f).

When To File

You must file Form 1045 within 1 year after the end of the year in which an NOL, unused credit, a net section 1256 contracts loss, or claim of right adjustment arose.

Exception.   If you have an eligible small business loss arising in a tax year ending before February 17, 2009, and you are filing Form 1045 to elect a 3, 4, or 5-year carryback period, you must file Form 1045 by the later of the regular due date (discussed above) or April 17, 2009.

Be sure to file your 2008 income tax return no later than the date you file Form 1045.

If you carry back any portion of an NOL or an unused general business credit to tax years before the 3 years preceding the 2008 tax year, you may need to use additional Forms 1045. Complete lines 1 through 9 and Schedule A on only one Form 1045. Use this Form 1045 for the earliest preceding tax years. You must sign this Form 1045, but do not need to sign the other Forms 1045.

Where To File

File Form 1045 with the Internal Revenue Service Center for the place where you live as shown in the instructions for your 2008 income tax return.

Do not include Form 1045 in the same envelope as your 2008 income tax return.

What To Attach

Attach copies of the following, if applicable, to Form 1045 for the year of the loss or credit:

  • If you are an individual, pages 1 and 2 of your 2008 Form 1040 and Schedules A, D, and J (Form 1040), if applicable,

  • Any Form 4952, Investment Interest Expense Deduction, attached to your 2008 income tax return,

  • All Schedules K-1 you received from partnerships, S corporations, estates, or trusts that contribute to the carryback,

  • Any application for extension of time to file your 2008 income tax return,

  • All Forms 8886, Reportable Transaction Disclosure Statement, attached to your 2008 income tax return,

  • Forms 8302, Electronic Deposit of Tax Refund of $1 Million or More,

  • All other forms and schedules from which a carryback results, such as Schedule C or F (Form 1040); Form 3800, General Business Credit; or Form 6781, Gains and Losses From Section 1256 Contracts and Straddles, and

  • All forms or schedules for items refigured in the carryback years, such as Form 3800; Form 5884, Work Opportunity Credit; Form 6251, Alternative Minimum Tax—Individuals; Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit; Form 6781; Form 8586, Low-Income Housing Credit; Form 8844, Empowerment Zone and Renewal Community Employment Credit; Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit; Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips; or Form 8884, New York Liberty Zone Business Employee Credit.

You must attach copies of all required forms listed above, and complete all lines on Form 1045 that apply to you. Otherwise, your application may be disallowed.

Processing the Application

The IRS will process your application within 90 days from the later of:

  • The date you file the complete application, or

  • The last day of the month that includes the due date (including extensions) for filing your 2008 income tax return (or, for a claim of right adjustment, the date of the overpayment under section 1341(b)(1)).

The processing of Form 1045 and the payment of the requested refund does not mean the IRS has accepted your application as correct. If the IRS later determines that the claimed deductions or credits are due to an overstatement of the value of property, negligence, disregard of rules, or substantial understatement of income tax, you may have to pay penalties. Any additional tax also will generate interest compounded daily.

The IRS may need to contact you or your authorized representative (for example, your accountant or tax return preparer) for more information so we can process your application. If you want to designate a representative for us to contact, attach a copy of your authorization to Form 1045. For this purpose, you can use Form 2848, Power of Attorney and Declaration of Representative.

Disallowance of the Application

Your application is not treated as a claim for credit or refund. It may be disallowed if it has material omissions or math errors that are not corrected within the 90-day period. If the application is disallowed in whole or in part, no suit challenging the disallowance can be brought in any court. But you can file a regular claim for credit or refund before the limitation period expires, as explained later under Form 1040X or Other Amended Return.

Excessive Allowances

Any amount applied, credited, or refunded based on this application that the IRS later determines to be excessive may be billed as if it were due to a math or clerical error on the return.

Form 1040X or Other Amended Return

Individuals can get a refund by filing Form 1040X, Amended U.S. Individual Income Tax Return, instead of Form 1045. An estate or trust can file an amended Form 1041, U.S. Income Tax Return for Estates and Trusts. Generally, you must file an amended return no later than 3 years after the due date of the return for the applicable tax year. However, a shorter period may apply. See Changing your carryback period on page 5 and Revoking an election to waive the carryback period on
page 1.

If you use Form 1040X or other amended return, follow the instructions for that return. Attach to the amended return a copy of Schedule A of Form 1045 showing the computation of the NOL and, if applicable, a copy of Schedule B of Form 1045 showing the computation of the NOL carryover. Complete a separate Form 1040X or other amended return for each year for which you request an adjustment.

The procedures for Form 1040X and Form 1045 are different. The IRS is not required to process your Form 1040X within 90 days. However, if we do not process it within 6 months from the date you file it, you can file suit in court. If the IRS disallows your claim on Form 1040X and you disagree with that determination, you must file suit no later than 2 years after the date we disallow it.

Additional Information

For more details on NOLs, see Pub. 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.

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