Publication 536 - Introductory Material

Table of Contents

Reminders

Future developments. For the latest information about developments related to Publication 536 (such as legislation enacted after we release it), go to www.irs.gov/pub536.

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Introduction

If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). An NOL year is the year in which an NOL occurs. You can use an NOL by deducting it from your income in another year or years.

What this publication covers.   This publication discusses NOLs for individuals, estates, and trusts. It covers:

  • How to figure an NOL,

  • When to use an NOL,

  • How to claim an NOL deduction, and

  • How to figure an NOL carryover.

To have an NOL, your loss must generally be caused by deductions from your:

  • Trade or business,

  • Work as an employee,

  • Casualty and theft losses,

  • Moving expenses, or

  • Rental property.

A loss from operating a business is the most common reason for an NOL.

Partnerships and S corporations generally cannot use an NOL. However, partners or shareholders can use their separate shares of the partnership's or S corporation's business income and business deductions to figure their individual NOLs.

Keeping records.   You should keep records for any tax year that generates an NOL for 3 years after you have used the carryback/carryforward or 3 years after the carryforward expires.

  
You should attach all required documents to the Form 1045 or Form 1040X. For details, see the instructions for Form 1045 or Form 1040X.

What is not covered in this publication?   The following topics are not covered in this publication.

  • Bankruptcies. See Publication 908, Bankruptcy Tax Guide.

  • NOLs of corporations. See Publication 542, Corporations.

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

Comments and suggestions.   We welcome your comments about this publication and your suggestions for future editions.

  You can write to us at the following address:

Internal Revenue Service 
Individual and Specialty Forms and Publications Branch 
SE:W:CAR:MP:T:I 
1111 Constitution Ave. NW, IR-6526 
Washington, DC 20224

  We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

  You can email us at taxforms@irs.gov. Please put “Publications Comment” on the subject line. You can also send us comments from www.irs.gov/formspubs/. Select “Comment on Tax Forms and Publications” under “More Information.”

  Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications.   Visit www.irs.gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received.

Internal Revenue Service 
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Bloomington, IL 61705-6613

Tax questions.   If you have a tax question, check the information available on IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

Useful Items - You may want to see:

Form (and Instructions)

  • 1040X Amended U.S. Individual Income Tax Return

  • 1045 Application for Tentative Refund

 

See How To Get Tax Help near the end of this publication for information about getting these forms.

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