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Net operating loss

by on
in Small Business Tax

Gain fast tax relief from a NOL. You can carry back your corporation's net operating loss (NOL) two years to offset taxable income from those years. Or you can carry forward the loss for up to 20 years. Strategy: Request an expedited refund for a NOL carry-back. Just file Form 1139, Corporation Application for Tentative Refund. That provides a faster refund than filing amended tax returns for the prior two years. Note: That expedited-refund request can't be filed prior to the date you file your company's 2003 tax return.


Pay no tax instead of low tax. Normally, your company can't postpone the tax due for 2003. But an exception exists for a corporation that expects to incur a NOL in 2004. Strategy: File Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carry-Back. In effect, the tax for the prior year is never paid. So you can file Form 1138 by March 15, 2004, to avoid paying tax for the 2003 tax year. Tip: If your company files Form 1138 by March 15 with an extension of the corporate tax return, you don't have to pay tax with the extension.

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