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Publication 536 - Introductory Material

Table of Contents

What's New

5-year carryback of 2008 NOLs for eligible small businesses. 

For 2008, you can choose a 3, 4, or 5-year carryback period for the part of your 2008 NOL that is an eligible small business loss. See Eligible small business (ESB) loss , later.

Tax relief for federally declared disaster areas. A 5-year carryback period applies to the portion of an NOL that is a qualified disaster loss. See Qualified disaster loss , later.

Tax relief for the Kansas disaster area. A 5-year carryback period applies to the portion of an NOL that is a qualified recovery assistance loss. See Qualified recovery assistance loss , later.

Tax relief for the Midwestern disaster areas. A 5-year carryback period applies to the portion of an NOL that is a qualified disaster recovery assistance loss. See Qualified disaster recovery assistance loss , later.

Qualified GO Zone loss. The definition of qualified GO Zone loss no longer includes certain deductions that expired before 2008. See Qualified GO Zone loss , later. For a list of the deductions that have expired, see page 6 of Publication 4492. (See Publication 4492, pages 12 and 13, for the special depreciation allowance.

Reminder

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.

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.

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.

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 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. (The asterisk must be included in the address.) Please put “Publications Comment” on the subject line. Although we cannot respond individually to each email, 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 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.


Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613

Tax questions.   If you have a tax question, check the information available on www.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:

Publication

  • 4492 Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma

  • 4492-A Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes

  • 4492-B Information for Affected Taxpayers in the Midwestern Disaster Areas

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 publications and forms.

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