Publication 536 - Introductory Material

Future Developments

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Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.


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.

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Ordering forms and publications.   Visit to download forms and publications. Otherwise, you can go to to order forms or call 1–800–829–3676 to order current and prior-year forms and instructions. Your order should arrive within 10 business days.

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

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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