Would you Hire this Guy to Help you with your Back Tax Debt?

Man, I just got $6000 from this couple after telling them I would reduce their tax debt for pennies on the dollar, holla! 

When you hire one of these various tax resolution companies that solicited you after a tax lien has been filed you are throwing good money on bad and making telemarketing thugs rich.

The majority of the sales openers and closers in this industry are thugs who may sound good on the phone but will tell you whatever it is you want to hear in order to take, take your money.

The government is not going to help you after you been scammed so consider this is your warning.  If you want tax help contact me now or end up being another victim to sales thugs.  I will work your case form start to finish!  No sales people, No Middle-Management, I work hard and EARN the money my clients give me, they MANIPULATE, LIE and don't do a whole lot after their clients pay them and you take that to the bank!

Phoenix Group calling about a Tax Lien? | Ambulance Chaser Alert!

I just had a call from a potential client out of Texas who said she was being solicited by Phoenix Group, a tax debt company out of Colorado by a sales guy who claimed to work with the IRS. 

Again, be very careful when someone calls you about a tax lien and tries to pressure you into buying their product.  Companies who employ telemarketers posing as tax professionals (sometimes even as the IRS themselves!) are your first sign to run away.  If you think the high pressure sales stops with the sale department, think again. 

Get a call from a tax lien ambulance chaser?
Read my post about Colorado tax relief/tax resolution companies here: Tax Companies Calling Me Re: Tax Lien

If you want honest tax representation that you can rely on call me at 866-947-7209 or 720.340.4065 or Send me an email I look forward to helping you with your tax matters.


Berkshire Financial Calling You? Beware

Just received a call from a call from a taxpayer who owed $45,000 in IRS personal income tax debt.  He said Berkshire Financial has been calling him and saying that for $3000 they could resolve his debt for .12 cents on the dollar and have it done in 45 days.   This is the type of lies that I have to compete against in my industry and is a shame that government refuses to do anything about this (with the popular anti-government rhetoric going on now I honestly don't expect any legislation to get done in this industry).

The truth is that an Offer in Compromise takes months before the case is even assigned to an Offer Investigator let alone approved (or most likely denied).   Going over this taxpayers financial statements I told him that there is no way the IRS will accept an Offer in Compromise and I understand that what Berkshire Financial is telling him sounds real enticing but in the long run he is definitely throwing good money on bad.

Of course I lose out on deals by being honest, while other companies like Berkshire and the host of other ambulance chasers out there make out like bandits.


IRS to start assessing the Trust Fund Recovery Penalty Against Payroll Services

Internal Revenue Service will Start Going After Payroll Services in addition to the Willful and Responsible Parties of Businesses for the Trust Fund Recovery Penalty 

A recent IRS memorandum emphasizes that third party payroll services, or their officers or employees, can be liable for the 100% penalty of section 6672 if the payroll service, or an employee of the payroll service, is responsible for failing to withhold and deposit payroll taxes.  However, a client company of such a service cannot avoid the penalty by outsourcing payroll services if the client company, or a responsible employee of the client company, either intentionally or through failure to provide oversight, itself causes or condones the failure of the third party payroll service.  Both third party payroll services and their clients must be careful to know and follow the rules in order to avoid these substantial penalties.

Avoiding that tired feeling by failing to withhold, however, may be very costly, even where withholding is supposed to be accomplished by a third party payroll service on behalf of the employer.
In a recent memorandum prepared by the director of collection policy for the IRS Small Business/Self-Employed Division, the IRS revealed a new focus on withholding tax enforcement aimed at third party payers of payroll, including payroll service providers (PSP’s) hired by companies to perform payroll and tax accounting duties.  The memo says that this does not represent a change in policy, but is a clarification that such entities can and should be held liable for penalties if they fail to properly withhold and deposit payroll taxes.  

Under section 6672 of the Internal Revenue Code, any person who willfully fails to collect, account for, and pay over taxes withheld from employees (so-called “trust fund taxes”) is liable for a penalty of 100% of the taxes that should have been withheld and deposited.  The penalty is most commonly asserted against officers or employees of the business that is the actual employer of the employees from whom the taxes should have been withheld and deposited.  It is a strong deterrent to the temptation that a business may face to pay other creditors with withheld trust fund taxes rather than turning them over to the government for credit to the employees from whom they were withheld.  

The Internal Revenue Manual lists as potential “responsible persons” against whom the penalty may be assessed persons such as corporate officers, directors or shareholders, employees responsible for the withholding function if they made the decision not to pay the taxes, partners in partnerships, and Professional Employer Organizations (PEO’s) (otherwise sometimes called employee leasing organizations) who have responsibility for the payroll taxes.  The new memorandum reminds IRS personnel that PSP’s may also be responsible persons, as well as officers or employees of the PSP.  

However, the fact that an employer hires a third party to perform payroll functions does not relieve the employer itself, or its employees, of the responsibility to make sure that trust fund taxes are withheld and paid over to the IRS.  Nor does the requirement that the failure to withhold and pay over be “willful” imply that there must be any evil intent or bad motive; it is enough that the failure is knowing, intentional, and voluntary.  The IRS memorandum lays out a number of factors to be considered when determining “willfulness” on the part of the client company or its employees in the event that a third party payroll service fails to withhold or deposit trust fund taxes:
  • Whether the responsible person had knowledge of a pattern of noncompliance by the third party payer;
  • Whether the third party payer used fraud or deception to conceal the noncompliance from detection by the client;
  • Whether the client company had received prior IRS notices indicating that employment tax returns had not been filed, were inaccurate, or that employment taxes had not been paid;
  • The length of time the delinquency went on;
  • Whether the client simply turned a “blind eye” to the fact that the third party payer was not complying with payroll requirements;
  • What actions the client has taken to ensure that its federal employment tax obligations have been met.
Consequently, either the PSP, or the client company, or employees of either or both, may be held liable for the 100% trust fund penalty.   In each case, an IRS Revenue Officer will attempt to sort out who had responsibility for ensuring that the taxes were withheld and paid over, and significant control over payment of the taxes.  IRS will look at factors such as duties of officers under the company bylaws, who had the authority to sign checks, who had control of the financial affairs of the business, who had the authority to determine which creditors would be paid, and who controlled payroll disbursements.
Although the IRS cannot collect more than 100% of the taxes by asserting the trust fund penalty, it is very common for the Revenue Officer to assert the penalty against multiple individuals or companies, each of whom must defend against the penalty and may be held liable for a portion of it. 
In the case of PSP’s, it can be expected that the IRS will closely examine the relationship between the PSP and its client, both contractual and otherwise, to determine whether the PSP had independent authority to collect and pay over the taxes, or whether it could act only at the direction and under the control of the client company.  

The section 6672 penalty has been a part of the tax code for a very long time, and it is a key enforcement tool that IRS has always used vigorously.  However, the new focus on third party payroll services promises to lead to additional fights over who ultimately was responsible for collecting and paying over payroll taxes.  It is an area that companies in the mobility industry who provide payroll accounting services for their clients should understand completely, and manage their services accordingly.  It is important not only that such companies perform their duties responsibly, but that they organize the services provided so that it is clear that it is the client company that controls the ultimate decision whether or not to pay over withheld taxes.  Failure to do so can lead to some very expensive penalties.

In addition, the companies that hire such services must remain vigilant to ensure that the third party is properly performing its duties.  If it does not do so, the client company itself, or its officers or employees responsible for accounting and payroll, may also face stiff penalties.

Credit Card Companies Coming After You? Usually if you have Tax Debt you Also Have Credit Card Debt.

Tips (not to be substituted for the advice of an attorney, but you may be able to tackle this on your own instead of paying for one) to those of you who may owe credit card debt (and if you have back taxes chances are you also have back credit card debt) and if your credit card debt has been sold to a third party and they are taking you to court here is what you need to do:

1) Respond in your answer to their court petition that you are you not sure or do not believe that you owe the amount of debt and will have to conduct further research.  '

2) When you go to court tell the plaintiff's attorney that you want them to prove that you owe the debt, i.e. do you have camera's of me using the credit card?  Do you have proof of my signature (may not be your signature as someone else was using the card), etc.

The burden of proof that you owe the debt is on the creditor.  Most credit card companies (Discover seems more persistent and better prepared for these arguments) expect people to either not provide an answer to the courts after their initial petition or to show up to court and negotiate a payment plan before the case goes to trial. Most companies are not prepared to spend all day in court trying to prove that you owe the debt, it is a numbers game for them.

If you owe taxes as well this is a different game and you should strongly consider hiring a tax professional such as myself!  Call me at 720.340.4065 or shoot me an email at nick@patriotresolution.com.


Why You Should Not Hire a Former IRS Agent!

I know you have heard all the commercials or radio ads from these fly by night companies that employ "former IRS Agents".  As if they have the secrets of the IRS at their disposal like they are some kind of modern day high-priest hoarding all the knowledge for themselves.  The truth is former IRS agents do not know as much as these companies would lead you to believe.

I have worked with former IRS Agents (former Internal Revenue Service Collection Agents working at ACS as well as former IRS Revenue Officers) and I wasn't impressed with their representation skills at all.  In fact, they advocate more on the side of the IRS than they do their clients.  And why wouldn't they?  After years of brainwashing by the Federal Government they all of sudden have some sort of revelation and now ready to serve the very people they oppressed?  Give me a break.

Most of these former IRS Agents get out of working from the IRS either after they get fired for being maverick revenue officers (i.e. harassing taxpayers so they can collect)  or they finish their 20 years and are now looking to make some extra money by touting their IRS experience (i.e. being the bullies for the IRS).

In my humble opinion it takes a certain individual (for example see the movie Dinner for Schmucks where both Schmucks were IRS Auditors and you'll get my drift) to work for the IRS, especially years of working for the IRS.  I'll leave it at that.

If you want someone who is (and has always been) on your side give me a call, 720-340-4065.


Jesus and the Tax Collectors | IRS Tax Collectors Modern Days Equivalent to Roman Tax Collectors

I am just finishing up a New Testament class I took at Regis University this summer and thought it was interesting to find that tax collectors were even more despised 2000 years ago (which is hard for me to imagine being that I hear from taxpayers everyday about how bad the IRS is).  I wonder how the contemporaries of Jesus would fell paying today's rates of 25% late filing and 25% late payment plus daily compounded interest of over 7%! 

Jesus had a special relationship with tax collectors. Matthew was one. So was Levi. Many others ate and drank with him. I can tell you from first hand experience that many of the people working at the IRS need Jesus (more notably the ones who work at the collection call center-ACS).  So let's start with the calling of Matthew:

Matthew 9:9-13 (NIV)

As Jesus went on from there, he saw a man named Matthew sitting at the tax collector's booth.

"Follow me," he told him, and Matthew got up and followed him.

While Jesus was having dinner at Matthew's house, many tax collectors and "sinners" came and ate with him and his disciples. When the Pharisees saw this, they asked his disciples, "Why does your teacher eat with tax collectors and 'sinners'?"

On hearing this, Jesus said, "It is not the healthy who need a doctor, but the sick. But go and learn what this means: 'I desire mercy, not sacrifice.'For I have not come to call the righteous, but sinners."

So why were the tax collectors so despised?

The New Testament quotes John the Baptist saying:

Luke 3:12-13 (NIV)

Tax collectors also came to be baptized. "Teacher," they asked, "what should we do?"

"Don't collect any more than you are required to," he told them.

So that implies it was common for tax collectors to collect more than people owed and pocket the extra money. This is substantiated by Jewishencylopedia which says this:

The Romans left to the governors or procurators the collection of the regular taxes, such as the land-tax and poll-tax, but leased the customs duties, the market tolls, and similar special imposts. The lessees were generally Roman knights; but there were among them Jews also. The fact that they were helping the Romans in the exaction of the heavy taxes imposed upon the Jews, combined with the rapacity of some tax-collectors who, taking advantage of the indefiniteness of the tariffs, overcharged the taxpayer, rendered this class of officials hateful to the people. Hence the stringent Jewish legislation which classified the tax-collectors with robbers. Thus, for instance, it was forbidden to take payment in coin from the treasury of the tax-gatherer or to receive alms from it, because the money had been gained by robbery. The tax-gatherer was ineligible to serve as judge or even as a witness. If one member of a family was a tax-gatherer, all its members were liable to be considered as such for the purposes of testimony, because they would be likely to shield him.

And this:

Local tax-farmer; the office existed among the Jews under the Roman dominion. The Romans were accustomed to farm out, generally for five years, the customs dues on exports. These taxes were mainly ad valorem, and therefore, as the value placed upon goods varied, lent themselves to extortion; hence the unpopularity of the publicans, especially when, as under the Romans, they were Jews exploiting their fellow Jews. Echoes of this ill repute are found in the New Testament, where publicans are coupled with sinners (Matt. ix. 10; Luke v. 30, vii. 34), and even with the most degraded persons (Matt. Xxi. 31).

That wasn't the only reason they were hated though. Jewishencyclopedia also says the had a reputation for cruelty. This is born out by the writings of Philo of Alexandria. He was a Jewish scholar who lived in the time of Jesus. He said this about tax collectors in THE SPECIAL LAWS II: 92-95:

Moreover let the governors of cities cease to oppress them with continual and excessive taxes and tributes, filling their own stores with money, and in preserving as a treasure the illiberal vices which defile their whole lives; for they do, on purpose, select as collectors of their revenues the most pitiless of men, persons full of all kinds of inhumanity, giving them abundant opportunity for the exercise of their covetousness; and they, in addition to their own innate severity of temper, receiving free license from the commands of their masters, and having determined to do everything so as to please them, practice all the harshest measures which they can imagine, having no notion of gentleness or humanity, not even in their dreams; therefore they throw everything into disorder and confusion, levying their exactions, not only on the possessions of the citizens, but also on their persons, with insults and violence, and the invention of new and unprecedented torture. And before now I have heard of some persons who, in their ferocity and unequalled fury, have not spared even the dead; but have been so brutal as even to venture to beat the dead corpses with goads; and when some one blamed their brutality, in that not even death, that relief and real end of all miseries, could prevent their victims from being insulted by them, but that, instead of a grave and the customary funeral rites, they were exposed to continued insult, they made a defence worse even than the accusation brought against them, saying that they were insulting the dead, not for the sake of abusing the dumb and senseless dust, for there was no advantage in that, but for the sake of making those who through ties of blood or of friendship were nearly connected with them feel compassion for them, and so inducing them to pay a ransom for their bodies, thus doing them the last service in their power.

Yet Jesus would party with them:

Luke 7:34 (NIV)

The Son of Man came eating and drinking, and you say, 'Here is a glutton and a drunkard, a friend of tax collectors and "sinners."

But Jesus didn't think they were a lost cause:

Luke 18:9-14 (NIV)

To some who were confident of their own righteousness and looked down on everybody else, Jesus told this parable: "Two men went up to the temple to pray, one a Pharisee and the other a tax collector. The Pharisee stood up and prayed about himself: 'God, I thank you that I am not like other men—robbers, evildoers, adulterers—or even like this tax collector. I fast twice a week and give a tenth of all I get.'

"But the tax collector stood at a distance. He would not even look up to heaven, but beat his breast and said, 'God, have mercy on me, a sinner.'

"I tell you that this man, rather than the other, went home justified before God. For everyone who exalts himself will be humbled, and he who humbles himself will be exalted."

Jesus even said:

Matthew 21:32 (NIV)

Jesus said to them, "I tell you the truth, the tax collectors and the prostitutes are entering the kingdom of God ahead of you. For John came to you to show you the way of righteousness, and you did not believe him, but the tax collectors and the prostitutes did. And even after you saw this, you did not repent and believe him.

which nicely ties up with his original mission:

Matthew 15:24 (NIV)

He answered, "I was sent only to the lost sheep of Israel."


Luke 15:3-7 (NIV)

Then Jesus told them this parable: "Suppose one of you has a hundred sheep and loses one of them. Does he not leave the ninety-nine in the open country and go after the lost sheep until he finds it? And when he finds it, he joyfully puts it on his shoulders and goes home. Then he calls his friends and neighbors together and says, 'Rejoice with me; I have found my lost sheep.' I tell you that in the same way there will be more rejoicing in heaven over one sinner who repents than over ninety-nine righteous persons who do not need to repent.

So Jesus was offering salvation to Matthew and Levi and Zacchaeus and all the other tax collectors who listened to him. And if they could repent and be saved then so could everyone else. People in Congress need to read this! 


My Experience Colonial Tax Consultants Denver Colorado

Colonial Tax Consultants or ctctax as of this posting has 3 complaints posted with the Better Business Bureau as follows; I originally had posted the graphic from the BBB until I was called after "someone" complained that I was using their graphic.  The lady at the BBB had suggested that I not show others BBB complaints as it may make me look bad (ah yes, irony at its finest).  I agreed to take down their graphic but I see nothing wrong with pointing out the fact that my company has 0 complaints and others in my industry have several complaints.  That is a competitive advantage for me so why wouldn't I show it?  I would think that consumers (ethical ones anyway) would appreciate that I am trying to provide them with the information to make a well informed and thus better decision before they hire but I also understand that the squeaky wheel gets the grease so I have decided to take down the BBB s graphic showcasing their complaints against Colonial Tax Consultants out of Denver, Colorado and replace it with my first hand experience of the firm.

The Truth Is, I Founded Colonial Tax Consultants Back in 2005 and When I Was There We Never Had a BBB Complaint!

Back in 2004 I worked with John Claudell and Josh Hartley at Omni-Financial.  We all three agreed the work environment was horrible, a boiler-room to sum it up as it was all about rewriting your clients to hit your monthly quota, John and myself decided to go with Clear Creek Consulting in hopes that they would be better as we worked with their two owners at Omni-Financial.  Turns out it was the same song and dance as Omni.  Josh went to work at Quantum-Financial, now Berkshire Capital Partners (among one of their DBA names) to work as a "closer" in their sales department.  Josh and myself still kept in touch and I decided to ask him if he would be interested in starting our own business and that I could bring John along as the attorney we needed at the time (both Josh and myself did not earn our licenses at this point and needed someone to sign on the power of attorney forms).  We all three decided to start Colonial Tax Consultants as three equal partners.  

Josh was to be our sales guy as he had the experience from Quantum, John would handle all negotiations with the IRS and I would be the customer contact person/sales/provide work on tax returns, deal with the IRS as needed, etc. 

It turns out that Josh did not like to cold call (and I do not blame him one bit, it is the white collar equivalent of digging ditches) so I was stuck being the main sales person, generating over 95% of our revenue!  I thought there had to be a better way to obtain clients than cold calling all day so I went to my friend Josh Wills, a professional website and graphic arts designer to build us a website.  John was against the idea as he didn't want to spend the money and thought of it as a waste of time.  Josh and myself did manage to talk him into it and a really nice website was created.

Josh somehow convinced us to give him time away from sales to look at other marketing opportunities. To his credit he stumbled onto Google Adwords and business started booming.  My wife had just given birth to our second child, a son and within a few months her post-postpartum depression would eventually lead to her moving out of the house and a messy divorce was in the process. Court dates and meetings with our attorneys would ensue for the next several months which caused me understandably (to a reasonable person) to miss regular business hours. 

While I was dealing with the divorce,  John and Josh collaborated and found that it would be nice to split the profits two ways instead of three and with Google Adwords generating easy to close leads I became expendable.  One day John (Josh must have decided it was more important to eat lunch) came into my office and said he could no longer work with me.  I was forced out of the business I had started.  But in my heart of hearts working with these guys everyday, I knew one day I would eventually start my own company and do things my way. 

I started Colonial Tax Consultants in November 2004 and was pushed out of my own company in February of 2006.  After agreeing to the buy out (which they offered me a whole whopping $10,000 which I had to take due to attorney costs for the divorce) I went to work for 20/20 Consulting while I worked on my Enrolled Agent license.  As soon as I received my license by the IRS I got out of there faster than Martha Stewart sold her stocks in ImClone.

And here I am today, with my own business, doing things myself and shaking up the industry-all by myself.  Life is good .

Once upon a time...


Prision Time if you Owe Back Taxes to the IRS?

Will the police or sheriff come knocking on my door if I owe back taxes to the IRS?  This is a question I am frequently asked by clients and potential clients who owe back taxes to the IRS and/or State Tax Collection Agencies.  Fortunately, just by owing taxes or failing to file your tax returns will not land you in jail (unless you are taken to court and found guilty of fraud or in contempt of court).

The theory behind jailing debtors was that the threat of incarceration might persuade them to reveal hidden assets.  Or their families might take pity and pay their ransom.  But if the debtor was truly penniless, he could be sentenced to what amounted to life in prison.  Unlike murders, rapists, and thieves, the debtors were also responsible for paying their own upkeep, thus putting them even further into debt...

The colonies gradually developed more forgiving laws on debt, recognizing that owing money could be the result of bad luck rather than evidence of fraud or indolence.  "crops fail, prices fall, ships sink, warehouses burn, owners die, partners steal, pirates pillage, wars ravage, and people simply make mistakes," wrote Bruce Mann in his 2002 book Republic of Debtors.  "Failure was the down side of entrepreneurial risk.  This made failure the potential common fate of all merchants."...

Colonial lawmakers began taking a more charitable view toward debtors, but they were likelier to excuse a rich defaulter than a poor one ...Indeed, when some large speculative financial schemes collapsed after the Revolutionary War, many wealthy men were suddenly bankrupt.  One of them, Robert Morris who had signed the Declaration of Independence and provided critical financing for the war, lost his fortune speculating on land.  Sentenced to debtors' prison in Philadelphia, Morris rented a best room in the jail and outfitted it with a settee, writing desks, and bed, an trunk of clothes and other comforts of home.

However lavishly they could outfit their prison cells, though, rich and poor faced the same dim future.  There was no way an insolvent could get a fresh start-the "holy grail of debt relief," as Mr. Mann put it.  In prison or out, debtors were expected to repay every penny they owned their creditors, even if it took them the rest of their lives...

Congress passed a bankruptcy law in 1800 but then repealed it three years later.  Not until 1831 did New York abolish prison for most debtors; Pennsylvania kept its debtors' prisons open until 1842.

If you have tax debt issues call me and I will work with you to resolve them!


Preparing IRS Form 1045 Tentative Carryback Application or Carryback Claim Net Operation Loss (NOL)

Preparing Form 1045 to apply a tentative carry-back loss is ridiculously complicated for most people.  Even seasoned tax prepares have difficulties preparing this form. 

If after you filed an amendment to your tax return (Form 1040X) and the IRS sends you a notice requesting that you now file Form 1045 you should consider calling someone for help!  I filed one of these forms back in June for a client of mine and just received notice that it was approved, lowering the taxpayer's liability down from $8492 to $2900.

If you wanted to try to tackle the 1045 yourself here are the instructions:

Department of the Treasury
Internal Revenue Service 2010
Instructions for Form 1045
Application for Tentative Refund
Section references are to the Internal Definitions connection with gambling, the racing
Revenue Code unless otherwise noted. of animals, or the on-site viewing of
Eligible loss. For an individual, an such racing, and the portion of any
eligible loss is any loss of property real property (determined by square
What’s New arising from fire, storm, shipwreck, footage) that is dedicated to
other casualty, or theft. gambling, the racing of animals, or
Carryback of eligible small For a small business (as defined in the on-site viewing of such racing,
business credits. Eligible small section 172(b)(1)(F)(iii)) or a farming unless this portion is less than 100
business credits determined in your business (as defined in section square feet.
first tax year beginning in 2010 are 263A(e)(4)), an eligible loss is any Qualified GO Zone loss. For 2010, carried back to each of the 5 loss attributable to a federally a qualified GO Zone loss is the preceding tax years, beginning with declared disaster (as defined in smaller of: the earliest year. See Line section 165(h)(3)(C)(i)). 1. The excess of the NOL for the 1b–Unused General Business Credit An eligible loss does not include a year over the specified liability loss on page 2. farming loss, a qualified disaster loss, for the year to which a 10-year
a qualified GO Zone loss, or a carryback applies, or
General Instructions qualified disaster recovery assistance 2. The total of any special GO loss. Zone depreciation or amortization
Farming loss. A farming loss is the allowable for specified GO Zone
Purpose of Form smaller of: extension property for the tax year
Form 1045 is used by an individual, · The amount that would be the NOL such property is placed in service
estate, or trust to apply for a quick tax for the tax year if only income and (even if you elected not to claim the
refund resulting from: deductions attributable to farming special GO Zone depreciation
· The carryback of an NOL, businesses (as defined in section allowance for such property).
· The carryback of an unused 263A(e)(4)) were taken into account, For more information on the special
general business credit, or GO Zone depreciation allowance, and · The carryback of a net section · The NOL for the tax year. the definition of specified GO Zone
1256 contracts loss, or A farming loss does not include a extension property, see Publication
· An overpayment of tax due to a qualified disaster loss. 536, Net Operating Losses (NOLs)
claim of right adjustment under Qualified disaster loss. A qualified for Individuals, Estates, and Trusts.
section 1341(b)(1). disaster loss is the smaller of: Qualified disaster recovery
When carrying back an NOL 1. The sum of: assistance loss. For the definition
to an earlier tax year, an a. Any losses occurring in a of qualified disaster recovery
CAUTION alternative minimum tax disaster area (as defined in section assistance loss, see page 5 of Pub.
(AMT) liability may be created for that 165(h)(3)(C)) and attributable to a 4492-B, Information for Affected
earlier year. This may be true even if federally declared disaster occurring Taxpayers in the Midwestern Disaster
there was no AMT liability when the before January 1, 2010, plus Areas.
tax return for that earlier year was b. Any qualified disaster expenses Specified liability loss. Generally,
filed. allowable under section 198A (even if a specified liability loss is a loss
Waiving the carryback period. You you did not elect to treat such arising from:
can elect to carry an NOL forward expenses as qualified disaster · Product liability, or
only, instead of first carrying it back. expenses), or · An act (or failure to act) that
To make this election for an NOL 2. The NOL for the tax year. occurred at least 3 years before the
incurred in your 2010 tax year, attach beginning of the loss year and
to your 2010 tax return filed on or Excluded losses. A qualified resulted in a liability under a federal
before the due date (including disaster loss does not include any or state law requiring:
extensions) a statement that you are losses from property used in 1. Reclamation of land, electing under section 172(b)(3) to connection with any private or 2. Dismantling of a drilling relinquish the entire carryback period commercial golf course, country club, platform, for any 2010 NOL. If you filed your massage parlor, hot tub facility, 3. Remediation of environmental return on time without making the suntan facility, or any store for which contamination, or election, you can still make the the principal business is the sale of 4. Payment under any workers election on an amended return filed alcoholic beverages for consumption compensation act. within 6 months of the due date of the off premises.
return (excluding extensions). Attach A qualified disaster loss also does Any loss from a liability arising
the election to the amended return, not include any losses from any from (1) through (4) above can be
and write “Filed pursuant to section gambling or animal racing property. taken into account as a specified
301.9100-2” on the election Gambling or animal racing property is liability loss only if you used an
statement. Once made, the election is any equipment, furniture, software, or accrual method of accounting
irrevocable. other property used directly in throughout the period in which the act
Cat. No. 13666W
(or failure to act) occurred. For Minimum Tax–Individuals; and Excessive Allowances
details, see section 172(f). related alternative tax net operating loss deduction calculations. Any amount applied, credited, or When To File · Any applicable election statement. refunded based on this application that the IRS later determines to be
You must file Form 1045 within 1 year Also attach to Form 1045 copies of excessive may be billed as if it were
after the end of the year in which an all forms or schedules for items due to a math or clerical error on the
NOL, unused credit, net section 1256 refigured in the carryback years, such return.
contracts loss, or claim of right as Form 3800; Form 6251; or Form
adjustment arose. 6781. Form 1040X or Other
Be sure to file your 2010 You must attach copies of all Amended Return
income tax return no later required forms listed above Individuals can get a refund by filing CAUTION than the date you file Form and complete all lines on
1045. Form 1040X, Amended U.S. Form 1045 that apply to you. Individual Income Tax Return, instead
If you carry back any portion of an Otherwise, your application may be of Form 1045. An estate or trust can
NOL or an unused general business disallowed. file an amended Form 1041, U.S.
credit to tax years before the 3 years Processing the Income Tax Return for Estates and preceding the 2010 tax year, you may Trusts. In most cases, you must file
need to use additional Forms 1045. Application an amended return no later than 3 Complete lines 1 through 9 and years after the due date of the return Schedule A on only one Form 1045. The IRS will process your application for the applicable tax year. Use this Form 1045 for the earliest within 90 days from the later of: preceding tax years. You must sign · The date you file the complete If you use Form 1040X or other this Form 1045, but do not need to application, or amended return, follow the sign the other Forms 1045. · The last day of the month that instructions for that return. Attach to includes the due date (including the amended return a copy of
Where To File extensions) for filing your 2010 Schedule A of Form 1045 showing income tax return (or, for a claim of the computation of the NOL and, if
File Form 1045 with the Internal right adjustment, the date of the applicable, a copy of Schedule B of
Revenue Service Center for the place overpayment under section Form 1045 showing the computation
where you live as shown in the 1341(b)(1)). of the NOL carryover. Complete a
instructions for your 2010 income tax separate Form 1040X or other
return. The processing of Form 1045 and amended return for each year for
the payment of the requested refund which you request an adjustment. Do not include Form 1045 in does not mean the IRS has accepted
the same envelope as your your application as correct. If the IRS The procedures for Form 1040X
CAUTION 2010 income tax return. and Form 1045 are different. The IRS
later determines that the claimed
deductions or credits are due to an is not required to process your Form
What To Attach overstatement of the value of 1040X within 90 days. However, if we
property, negligence, disregard of do not process it within 6 months Attach copies of the following, if from the date you file it, you can file applicable, to Form 1045 for the year rules, or substantial understatement of income tax, you may have to pay suit in court. If the IRS disallows your of the loss or credit. claim on Form 1040X and you · If you are an individual, pages 1 penalties. Any additional tax also will generate interest compounded daily. disagree with that determination, you and 2 of your 2010 Form 1040 and must file suit no later than 2 years
Schedules A, D, and J (Form 1040), if The IRS may need to contact you after the date we disallow it.
applicable. or your authorized representative (for
· Any Form 4952, Investment example, your accountant or tax Additional Information Interest Expense Deduction, attached return preparer) for more information
to your 2010 income tax return. so we can process your application. If For more details on NOLs, see Pub.
· All Schedules K-1 you received you want to designate a 536.
from partnerships, S corporations, representative for us to contact,
estates, or trusts that contribute to the attach a copy of your authorization to
carryback. Form 1045. For this purpose, you can Specific Instructions
· Any application for extension of use Form 2848, Power of Attorney
time to file your 2010 income tax and Declaration of Representative. Address return.
· All Forms 8886, Reportable Disallowance of the P.O. box. Enter your box number
Transaction Disclosure Statement, only if your post office does not attached to your 2010 income tax Application deliver mail to your street address.
return. Your application is not treated as a Foreign address. Enter the · Forms 8302, Electronic Deposit of claim for credit or refund. It may be information in the following order:
Tax Refund of $1 Million or More. disallowed if it has material omissions City, province or state, and country. · All other forms and schedules from or math errors that are not corrected Follow the country’s practice for
which a carryback results, such as within the 90-day period. If the entering the postal code. Do not
Schedule C or F (Form 1040); Form application is disallowed in whole or abbreviate the country name.
3800, General Business Credit; Form in part, no suit challenging the
6478, Alcohol and Cellulosic Biofuel disallowance can be brought in any Line 1b—Unused
Fuels Credit (for years before 2008, court. But you can file a regular claim Credit for Alcohol Used as Fuel); for credit or refund before the General Business Credit
Form 6781, Gains and Losses From limitation period expires, as explained If you claim a tentative refund based
Section 1256 Contracts and later under Form 1040X or Other on the carryback of an unused
Straddles; or Form 6251, Alternative Amended Return. general business credit, attach a
-2- Instructions for Form 1045 (2010)
detailed computation showing how cannot exceed the net section 1256 Line 10—NOL Deduction
you figured the credit carryback and a contract gain in that year and cannot recomputation of the credit after you increase or create an NOL for that After Carryback
apply the carryback. An unused year. Reflect the carryback as a Use the following rules to figure the
eligible small business credit (ESBC) reduction to your adjusted gross tax years to which you must carry an
must be carried back 5 years. income in the “After carryback” NOL shown on Schedule A, line 25. If
Generally, an unused general column on line 11. Attach to Form an NOL is not fully absorbed in a year
business credit that is not an ESBC 1045 a copy of Form 6781 and to which it is carried, complete
must be carried back 1 year. Schedule D (Form 1040) for the year Schedule B to figure the amount to
However, the new hire retention of the net section 1256 contracts loss carry to the next carryback year.
credit (Form 5884- cannot be and an amended Form 6781 and an Note. You may need to use
carried back before 2010 and the amended Schedule D (Form 1040) additional Forms 1045 to carry back
credit for small employer health for each carryback year. For more an NOL. Complete lines 1 through 9
insurance premiums (Form 8941) details, see section 1212(c). and Schedule A on only one Form
cannot be carried back before 2010 1045. Use this Form 1045 for the
unless it is an ESBC. Line 9 earliest preceding tax years. You
For an ESBC, make the If an NOL or net section 1256 must sign this Form 1045 but do not
recomputation by including the contracts loss carryback eliminates or need to sign the other Forms 1045.
carryback first in line 9 of the 2005 reduces a prior year foreign tax General rule. You generally must
Form 6478, Credit for Alcohol Used credit, you cannot use Form 1045 to carry back the entire NOL to the 2nd
as a Fuel. Any such credit not used in carry the released foreign tax credits tax year before the loss year. Any
2005 must be carried to 2006 (the to earlier years. Also, if the released loss not used in the 2nd preceding
next earliest carryback year), and so foreign tax credits result in the year is then carried to the 1st
on, by including any remaining release of general business credits, preceding year. Any loss not applied
unused ESBC on the following forms. you cannot use Form 1045 to carry in the 2 preceding years can be
1. 2006 Form 6478, line 10. the released general business credits carried forward up to 20 years. The
2. 2007 Form 6478, line 10. to earlier years. Instead, you must file 2-year carryback period does not
3. 2008 Form 6478, line 14. Form 1040X or other amended return apply to the portion of an NOL
4. 2009 Form 6478, line 13. to claim refunds for those years. For attributable to an eligible loss; a
details, see Rev. Rul. 82-154, 1982-2 farming loss; a qualified disaster, GO For any general business credit other C.B. 394. Zone, or disaster recovery assistance than an ESBC, make the loss; or a specified liability loss. recomputation on the 2009 Form Lines 10 Through 3800. Eligible losses. To the extent the
27—Computation of NOL is an eligible loss (defined on ESBCs are the total of the general page 1), it is carried back to the 3rd
business credits (other than the new Decrease in Tax tax year before the loss. Any such
hire retention credit and the employer Use one pair of columns to enter loss not used in that year is carried to
housing credit) determined in 2010 amounts before and after carryback the 2nd and then the 1st preceding
for an eligible small business. An for each year to which the loss or year. Any such loss that is not applied
eligible small business is a credit is being carried. Start with the in the 3 preceding years can be
corporation the stock of which is not earliest carryback year. A net section carried forward up to 20 years.
publicly traded, a partnership, or a 1256 contracts loss can be carried Only the eligible loss portion of the sole proprietorship, if its average back 3 years. See the instructions for NOL can be carried back 3 years. annual gross receipts for the line 10 that begin on this page to
3-tax-year period before 2010 is not figure the tax years to which you can Example. You have a $20,000
more than $50,000,000. For carry an NOL. Use the remaining NOL of which only $5,000 is an
additional rules and details, see the pairs of columns for each consecutive eligible loss. The $5,000 eligible loss
Instructions for Form 3800. preceding tax year until the loss is is carried back 3 years, but the
Note. If you are carrying back an fully absorbed. Enter the ordinal remaining $15,000 loss is carried
ESBC, write “SBJA 2012” at the top number of years the loss is being back only 2 years, even if you had
of page 1 of Form 1045 for the carried back and the date the modified taxable income of more than
earliest preceding tax year. carryback year ends in the spaces $5,000 in the 3rd preceding year.
provided in the headings above line Farming losses. To the extent the
If you filed a joint return (or 10 for each pair of columns. NOL is a farming loss (defined on
separate return) for some but not all page 1), that part of the loss is of the tax years involved in figuring Example. Your tax year is the 2010 calendar year and you are carried back to the 5th tax year the unused credit carryback, special before the loss. Any such loss not rules apply to figuring the carryback. carrying an NOL back 2 years. You enter “2nd” and “12/31/08” in the left used in that year is carried to the 4th See the instructions for Form 3800. preceding year and then applied column heading in the spaces
Line 1c—Net Section provided. The column heading now consecutively forward through the 1st reads “2nd preceding tax year ended preceding year. Any such loss not
1256 Contracts Loss 12/31/08.” applied in the 5 preceding years can be carried forward up to 20 years.
An individual can elect to carry back a For each carryback year, enter in
net section 1256 contracts loss to the column labeled “Before Only the farming loss portion of the
each of the 3 tax years preceding the carryback” the amounts for the NOL can be carried back 5 years.
loss year. An estate or trust is not carryback year as shown on your Example. You operate a farming
eligible to make this election. To original or amended return. If the business and incur an NOL of
make the election, check box D at the amounts were previously adjusted by $50,000 for 2010. $25,000 of the
top of Form 6781. The amount which you or the IRS, enter the amounts NOL is attributable to income and
can be used in any prior tax year after adjustment. deductions of your farming business;
Instructions for Form 1045 (2010) -3-
$10,000 is attributable to a fire in your rule. If you filed your original return on · The special allowance for passive
personal residence (an eligible loss); time, you can make the election on activity losses from rental real estate
and the remaining $15,000 is an amended return filed within 6 activities,
attributable to your spouse’s work as months after the due date of the · Taxable social security benefits,
an employee. The $25,000 farming return (excluding extensions). Attach · IRA deductions,
loss is carried back 5 years; the the election to the amended return · The student loan interest
$10,000 eligible loss is carried back 3 and write “Filed pursuant to section deduction,
years; and the remaining $15,000 301.9100-2” on the election · The tuition and fees deduction,
loss is carried back 2 years. Any statement. Once made, the election is · Excludable savings bond interest,
unused portion of this NOL can be irrevocable. and
carried forward up to 20 years. Specified liability losses. To the · The exclusion of amounts received
You can make an election to figure extent an NOL is a specified liability under an employer’s adoption
the carryback period for a farming loss (defined on page 1), that part of assistance program.
loss without regard to the special the loss is carried back to the 10th
5-year carryback rule. To make this tax year before the loss. Any such Line 12—Deductions
election for 2010, attach to your 2010 loss not used in that year is carried to Individuals. Enter in the column income tax return filed by the due the 9th preceding year and then labeled “Before carryback” for each date (including extensions) a applied consecutively forward through applicable carryback year the amount statement that you are electing to the 1st preceding year. Any such loss shown (or as previously adjusted) on treat any 2010 farming losses without that is not applied in the 10 preceding Form 1040: regard to the special 5-year carryback years can be carried forward up to 20 · Line 40a for 2009, rule. If you filed your original return on years. · Line 40 for 2005 – 2008, time, you can make the election on
an amended return filed within 6 Only the specified liability loss · Line 39 for 2004,
months after the due date of the portion of the NOL can be carried · Line 37 for 2003,
return (excluding extensions). Attach back 10 years. · Line 38 for 2002, or
the election to the amended return You can make an election to figure · Line 36 for 2000 – 2001.
and write “Filed pursuant to section the carryback period for a specified If you filed Form 1040NR, enter 301.9100-2” on the election liability loss without regard to the the amount shown (or as previously statement. Once made, the election is special 10-year carryback rule. To adjusted) on: irrevocable. make this election for 2010, attach to · Line 37 for 2005 – 2009,
Qualified disaster, GO Zone, and your 2010 income tax return filed by · Line 36 for 2004,
disaster recovery assistance the due date (including extensions) a · Line 35 for 2003,
losses. To the extent the NOL is a statement that you are electing to · Line 36 for 2002, or qualified disaster, GO Zone, or treat any 2010 specified liability · Line 35 for 2000 – 2001. disaster recovery assistance loss losses without regard to the special
(defined on page 1), that part of the 10-year carryback rule. If you filed If you filed Form 1040A, enter the
loss is carried back to the 5th tax year your original return on time, you can amount shown (or as previously
before the loss. Any such loss not make the election on an amended adjusted) on:
used in that year is carried to the 4th return filed within 6 months after the · Line 24a for 2009,
preceding year and then applied due date of the return (excluding · Line 24 for 2002 – 2008, or
consecutively forward through the 1st extensions). Attach the election to the · Line 22 for 2000 – 2001.
preceding year. Any such loss not amended return and write “Filed
applied in the 5 preceding years can pursuant to section 301.9100-2” on If you filed Form 1040EZ and
be carried forward up to 20 years. the election statement. Once made, checked any box on Form 1040EZ,
Only the qualified disaster, GO the election is irrevocable. line 5 (the “Yes” box on line 5 for Zone, or disaster recovery assistance 2000 – 2004), enter the amount Special rules. Special rules apply if shown (or as previously adjusted) on loss portions of the NOL can be you filed a joint return (or a separate line E (line D for 2005) of the carried back 5 years. return) for some but not all of the tax worksheet on the back of Form
Example. You have a $40,000 years involved in figuring an NOL 1040EZ (for 2009, Worksheet for Line
NOL of which $15,000 is a qualified carryback. For details, see Pub. 536. 5–Dependents who checked one or
disaster loss. The $15,000 qualified Attach a computation showing how both boxes). If you did not check any
disaster loss is carried back 5 years, you figured the carryback. box (or you checked the “No” box for
but the remaining $25,000 loss is 2000 – 2004), enter: carried back only 2 years. Any Line 11—Adjusted · $5,700 for 2009 ($11,400 if
unused portion of this NOL can be Gross Income married), carried forward up to 20 years. · $5,450 for 2008 ($10,900 if
You can make an election to figure Enter in the column labeled “Before married), the carryback period for a qualified carryback” your adjusted gross · $5,350 for 2007 ($10,700 if disaster, GO Zone, or disaster income (AGI) for the carryback year married), recovery assistance loss without as shown on your original or · $5,150 for 2006 ($10,300 if regard to the special 5-year carryback amended return. married),
rule. To make this election for 2010, Enter in the column labeled “After · $5,000 for 2005 ($10,000 if
attach to your 2010 income tax return carryback” your AGI refigured after married),
filed by the due date (including you apply the NOL or net section · $4,850 for 2004 ($9,700 if married),
extensions) a statement that you are 1256 contracts loss carryback and · $4,750 for 2003 ($9,500 if married),
electing to treat any 2010 qualified after you refigure any items of income · $4,700 for 2002 ($7,850 if married),
disaster, GO Zone, or disaster and deductions that are based on or · $4,550 for 2001 ($7,600 if married),
recovery assistance losses without limited to a percentage of your AGI. or
regard to the special 5-year carryback Amounts to refigure include: · $4,400 for 2000 ($7,350 if married).
-4- Instructions for Form 1045 (2010)
If you used TeleFile for your If you filed Form 1040EZ and Line 17—Alternative
original return and someone else checked the “You” box on Form could claim you as a dependent on 1040EZ, line 5 (the “Yes” box on line Minimum Tax
their return, see Form 1040EZ for the 5 for 2000 – 2004), enter zero (or the The carryback of an NOL or net
year in question and complete the amount from line F (line E for 2005) section 1256 contracts loss may
worksheet on the back of that form of the 1040EZ worksheet if married). affect or cause you to owe alternative
(for 2009, Worksheet for Line If you did not check any box (or you minimum tax. Individuals use Form
5–Dependents who checked one or checked the “No” box for 2000 – 6251 to figure this tax. Estates and
both boxes). Next, enter the amount 2004), enter: trusts use Schedule I (Form 1041).
from line E of that worksheet (line D · $3,650 for 2009 ($7,300 if married), The 90% limit on the alternative for 2005) on Form 1045, line 12, in · $3,500 for 2008 ($7,000 if married), tax net operating loss deduction the column labeled “Before · $3,400 for 2007 ($6,800 if married), (ATNOLD) does not apply to the carryback” for the applicable year. If · $3,300 for 2006 ($6,600 if married), portion of an ATNOLD attributable to no one could claim you as a · $3,200 for 2005 ($6,400 if married), qualified disaster losses, qualified GO dependent, enter the amount listed · $3,100 for 2004 ($6,200 if married), Zone losses, or qualified disaster above for that year. · $3,050 for 2003 ($6,100 if married), recovery assistance losses. Instead, After carryback. If you itemized · $3,000 for 2002 ($6,000 if married), the ATNOLD for the tax year is deductions in the carryback year, · $2,900 for 2001 ($5,800 if married), limited to the sum of: enter in the column labeled “After or · $2,800 for 2000 ($5,600 if married). 1. The smaller of: carryback” the total of your a. The sum of the ATNOL
deductions after refiguring any that If you used TeleFile for your carrybacks and carryforwards to the
are based on, or limited to a original return and someone else tax year attributable to NOLs other
percentage of, your adjusted gross could claim you as a dependent on than qualified disaster losses,
income. To refigure your deductions, their return, enter zero if you were qualified GO Zone losses, or qualified
use your refigured adjusted gross single. If you were married, see Form disaster recovery assistance losses,
income (Form 1045, line 11, using the 1040EZ for the year in question and or
“After carryback” column). Amounts complete the worksheet on the back b. 90% of AMTI for the tax year
you may have to refigure include: of that form. Next, enter the amount (figured without regard to the · Medical expenses, from line F of that worksheet on Form ATNOLD and any domestic · Mortgage insurance premiums, 1045, line 14, in the column labeled production activities deduction), plus · Personal casualty and theft losses, “Before carryback” for the applicable 2. The smaller of: · Miscellaneous deductions subject year. If no one could claim you as a a. The sum of the ATNOL to the 2% limit, and dependent, enter the amount listed carrybacks to the tax year attributable · Itemized deductions subject to the above for that year. to qualified disaster losses, qualified overall limit of section 68. After carryback. If your GO Zone losses, or qualified disaster
Do not refigure your charitable deduction for personal exemptions in recovery assistance losses, or
contributions deduction. the carryback year was limited based b. AMTI for the tax year (figured
CAUTION on your adjusted gross income, enter without regard to the ATNOLD and
in the column labeled “After any domestic production activities If you have an NOL, see Pub. 536 carryback” the deduction for personal deduction) reduced by the amount for more information and examples. exemptions refigured using your determined under (1), above.
If you did not itemize deductions in refigured adjusted gross income
the carryback year, enter your (Form 1045, line 11, using the “After Line 19—General standard deduction for that year. carryback” column).
Estates and trusts. Enter in the Business Credit Line 14—Exemptions columns labeled “Before carryback” Enter in the column labeled “After
Individuals. Enter in the column and “After carryback” for each carryback” for each affected
labeled “Before carryback” for each applicable carryback year the amount carryback year the total of the
applicable carryback year, the shown (or as previously adjusted) on recomputed general business credits,
amount shown (or as previously Form 1041, line 20. using Form 3800 (or using Forms
adjusted) on Form 1040: 3800, 5884, 6478, 8586, 8835
· Line 42 for 2005 – 2009, Line 16—Income Tax (Section , 8844, 8846, or 8884, if
· Line 41 for 2004, Use your refigured taxable income applicable, to recompute the general
· Line 39 for 2003, (Form 1045, line 15, using the “After business credits for years before
· Line 40 for 2002, or carryback” column) to refigure your 2008). · Line 38 for 2000 – 2001. tax for each carryback year. Include If an NOL or net section 1256
If you filed Form 1040NR, enter any tax from Form 4970, Tax on contracts loss carryback eliminates or
the amount shown (or as previously Accumulation Distribution of Trusts, reduces a general business credit in
adjusted) on: and Form 4972, Tax on Lump-Sum an earlier year, you may be able to
· Line 39 for 2005 – 2009, Distributions. Attach any schedule carry back the released credit 1 year.
· Line 38 for 2004, used to figure your tax or an See section 39 and the instructions
· Line 37 for 2003, explanation of the method used to for Form 3800 for more details on
· Line 38 for 2002, or figure the tax and, if necessary, a general business credit carrybacks.
· Line 37 for 2000 – 2001. detailed computation.
If you filed Form 1040A, enter the For example, write “Tax Line 20—Other Credits
amount shown (or as previously Computation Worksheet–2008” if this See your tax return for the carryback
adjusted) on: is the method used for that year. You year for any additional credits such as
· Line 26 for 2002 – 2009, or do not need to attach a detailed the earned income credit, credit for
· Line 24 for 2000 – 2001. computation of the tax in this case. child and dependent care expenses,
Instructions for Form 1045 (2010) -5-
child tax credit, education credits, with a trade or business. They Do not enter business income on
foreign tax credit, retirement savings include: line 7. This is income from a trade or
contributions credit, etc., that will · IRA deductions, business and includes:
apply in that year. If you make an · Health savings account deduction, · Salaries and wages,
entry on this line, identify the credit(s) · Archer MSA deduction, · Rental income,
claimed. · Deductions for payments on behalf · Gain on the sale or exchange of
After carryback. Refigure any of a self-employed individual to a business real estate or depreciable
credits included on this line that are SEP, SIMPLE, or qualified plan, property, and based on or limited by your tax · Alimony paid, · Your share of business income liability. Use your refigured tax liability · Most itemized deductions (except from a partnership or an S
to refigure your credits for each for state income tax on business corporation.
carryback year. profits, casualty and theft losses, and For more details on business and any employee business expenses), nonbusiness income and deductions, Line 23— and see Pub. 536. · The standard deduction (minus the
Self-Employment Tax amount of any net disaster loss from Line 17—Section 1202
Do not adjust self-employment tax Schedule L (Form 1040A or 1040), Exclusion because of any carryback. line 6). Enter as a positive number any gain
Do not include on line 6 the excluded under section 1202 on the
Line 24—Other Taxes deduction for personal exemptions for sale or exchange of qualified small
See your tax return for the carryback you, your spouse, or your business stock.
year for any other taxes not dependents.
mentioned above, such as recapture Do not include on line 6 any Schedule B—NOL
taxes, tax on an IRA, etc., that will business deductions. These are Carryover apply in that year. If you make an deductions that are connected with a
entry on this line, identify the taxes trade or business. They include: Complete and file this schedule to
that apply. · State income tax on business determine the NOL deduction for
profits, each carryback year and the amount
Line 28—Overpayment · Educator expenses, to be carried forward, if not fully
of Tax Under Section · Moving expenses, absorbed. Make the same entries in · The deduction for one-half of each column heading as on page 1 of
1341(b)(1) self-employment tax, Form 1045 (see the instructions for
If you apply for a tentative refund · Domestic production activities Lines 10 Through 27 on page 3).
based on an overpayment of tax deduction, In most cases, if an NOL is more under section 1341(b)(1), enter it on · Rental losses, than the modified taxable income for this line. Also, attach a computation · Loss on the sale or exchange of the earliest year to which it is carried,
showing the information required by business real estate or depreciable you must file Schedule B to figure the
Regulations section 5.6411-1(d). property, amount of the NOL to be carried to · Your share of a business loss from the next tax year. The amount of the
Signature a partnership or an S corporation, carryback is in most cases the · Ordinary loss on the sale or excess, if any, of the NOL carryback
Individuals. Sign and date Form exchange of section 1244 (small over the modified taxable income for
1045. If Form 1045 is filed jointly, business) stock, that earlier year. Modified taxable
both spouses must sign. · Ordinary loss on the sale or income is the amount figured on line
Estates. All executors or exchange of stock in a small business 9 of Schedule B.
administrators must sign and date investment company operating under
Form 1045. the Small Business Investment Act of If you carry two or more NOLs
1958, to a tax year, figure your Trusts. The fiduciary or an · Loss from the sale of accounts CAUTION modified taxable income by
authorized representative must sign receivable if such accounts arose deducting the NOLs in the order in
and date Form 1045. under the accrual method of which they were incurred. First,
Schedule A—NOL accounting, deduct the NOL from the earliest · If you itemized your deductions, year, then the NOL from the next
Complete and file this schedule to casualty and theft losses (even if they earliest year, etc. After you deduct
determine the amount of the NOL that involve nonbusiness property) and each NOL, there will be a new,
is available for carryback or employee business expenses (such smaller, modified taxable income to
carryforward. as union dues, uniforms, tools, and compare to any remaining NOL.
educational expenses), and
Line 2—Nonbusiness Capital · Any net disaster loss from Line 2
Losses Schedule L (Form 1040A or 1040), Do not take into account on this line
Do not include on this line any section line 6, you included in your standard any NOL carryback from 2010 or
1202 exclusion amounts (even if deduction. later. However, do take into account
entered as losses on Schedule D Line 7—Nonbusiness NOLs that occurred in tax years (Form 1040) or Schedule D (Form before 2010 and are otherwise 1041)). Income Other Than Capital allowable as carrybacks or
Gains carryforwards.
Line 6—Nonbusiness Enter income that is not from a trade Note. If your taxable income is Deductions or business. Examples are ordinary shown as zero on your tax return (or
Enter as a positive number dividends, annuities, and interest on as previously adjusted) for any
deductions that are not connected investments. carryback year, refigure it without
-6- Instructions for Form 1045 (2010)
limiting the result to zero, and enter it · Taxable social security benefits, · You did not itemize deductions, or
on line 2 as a negative number. · IRA deductions, · The amounts on Schedule B, lines
· Excludable savings bond interest, 3 through 5, are zero. Line 3—Net Capital Loss · The exclusion of amounts received Otherwise, complete lines 11 through
Deduction under an employer’s adoption 38 and enter on line 7 the amount
Individuals. assistance program, from line 38 (or, if applicable, line 14 Enter as a positive · The student loan interest of the worksheet on page 9). number the amount, if any, shown (or deduction, and
as previously adjusted) on Schedule · The tuition and fees deduction. Estates and trusts. Recompute the
D (Form 1040), line 21 (line 18 for miscellaneous itemized deductions
2000 – 2003). For purposes of figuring the shown (or as previously adjusted) on
Estates and trusts. Enter as a adjustment to each of these items, Form 1041, line 15b, and any positive number the amount, if any, your adjusted gross income is casualty or theft losses shown (or as shown (or as previously adjusted) on increased by the total of the amounts previously adjusted) on Form 4684, Schedule D (Form 1041), line 16 (line on line 3 and line 4. Do not take into Casualties and Thefts, line 18 (line 20 17 for 2000 – 2003). account any NOL carryback from for 2005 and 2006; line 23 for 2008; 2010 or later. line 21 for 2009) by substituting Line 4—Section 1202 In most cases, figure the modified adjusted gross income (see
Exclusion adjustment to each item of income or below) for the adjusted gross income
Enter as a positive number any gain deduction in the order listed above of the estate or trust. Subtract the
excluded under section 1202 on the and, when figuring the adjustment to recomputed deductions and losses
sale or exchange of qualified small each subsequent item, increase or from the deductions and losses
business stock. decrease adjusted gross income by previously shown, and enter the
the total adjustments you figured for difference on line 7.
Line 5—Domestic the previous items. However, a
Production Activities special rule applies if you received Modified adjusted gross income social security benefits and deducted for estates and trusts. For Deduction IRA contributions. Use the purposes of figuring miscellaneous
Enter as a positive number the worksheets in Pub. 590, Individual itemized deductions subject to the 2%
amount of any domestic production Retirement Arrangements (IRAs), to limit, figure modified adjusted gross
activities deduction claimed on your refigure your taxable social security income by adding the following
return. benefits and IRA deductions under amounts to the adjusted gross
the special rule. income previously used to figure Line 6—Adjustments to these deductions.
Adjusted Gross Income Enter on line 6 the total · The total of the amounts from lines
If you entered an amount on line 3 or adjustments made to the listed items. 3 through 6 of Form 1045, line 4, you must refigure certain Attach a computation showing how Schedule B. income and deductions based on you figured the adjustments. · The exemption amount shown (or
adjusted gross income. These Line 7—Adjustment to as previously adjusted) on Form
include: Itemized Deductions 1041, line 20. · The special allowance for passive · The income distribution deduction
activity losses from rental real estate Individuals. Skip this line if, for the shown (or as previously adjusted) on
activities, applicable carryback year: Form 1041, line 18.
Mortgage Insurance Premiums Deduction Worksheet—Line 20 Keep for Your Records
Before you begin: u See the instructions for line 20 on page 8 to see if you must use this worksheet to refigure your
1. Enter the total premiums you paid in the carryback year for mortgage insurance for a contract issued
after December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Enter the amount from Form 1045, Schedule B, line 13 . . . . . . . . . . . . . . . . . . . . 2.
3. Enter $100,000 ($50,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . 3.
4. Is the amount on line 2 more than the amount on line 3?
M No. Your deduction is not limited. Enter the amount from line 19 on line 20 of
Form 1045, Schedule B, and enter -0- on line 21. Do not complete the
rest of this worksheet.
M Yes. Subtract line 3 from line 2. If the result is not a multiple of $1,000 ($500 if
married filing separately), increase it to the next multiple of $1,000 ($500
if married filing separately). For example, increase $425 to $1,000,
increase $2,025 to $3,000; or if married filing separately, increase $425 to
$500, increase $2,025 to $2,500, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Divide line 4 by $10,000 ($5,000 if married filing separately). Enter the result as a decimal. If the result is
1.0 or more, enter 1.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Multiply line 1 by line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
7. Refigured mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here
and on Form 1045, Schedule B, line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Instructions for Form 1045 (2010) -7-
For purposes of figuring casualty M Yes. Your deduction is limited. income, figure your adjusted gross
or theft losses, figure modified Refigure your deduction using the income as follows.
adjusted gross income by adding the Mortgage Insurance Premiums 1. Figure the adjustment to each
total of the amounts from lines 3 Deduction Worksheet on page 7. item of income or deduction in the
through 6 of Form 1045, Schedule B, M No. Your deduction is not same manner as explained in the
to the adjusted gross income limited. Enter the amount from line 19 instructions for line 6 of Schedule B
previously used to figure these on line 20 and enter -0- on line 21. on page 7, except do not take into
losses. account any NOL carrybacks when
Line 10—NOL Carryover Line 26—Refigured figuring adjusted gross income. Charitable Contributions Attach a computation showing how Generally, subtract line 9 from line 1. you figured the adjustments. If zero or less, enter -0-. After Refigure your charitable contributions using line 24 as your adjusted gross 2. Add lines 3, 4, 5, 11, and 23 of completing all applicable columns, Schedule B to the total adjustments carry forward to 2011 the amount, if income unless, for any preceding tax year: you figured in (1) above. Use the any, on line 10 of the column for the · result as your adjusted gross income 1st preceding tax year. You entered an amount other than zero on line 23, and to refigure charitable contributions.
Line 20—Refigured · You had any items of income or For NOL carryover purposes, you
Mortgage Insurance deductions based on adjusted gross must reduce any charitable
Premiums income which are listed in the contributions carryover to the extent instructions for line 6 of Schedule B that the NOL carryover on line 10 is Is your modified adjusted gross on page 7. increased by any adjustment to income from Form 1045, Schedule B,
line 13, more than $100,000 ($50,000 If you cannot use the amount from charitable contributions.
if married filing separately)? line 24 as your adjusted gross
-8- Instructions for Form 1045 (2010)
Add the amounts from Form 1045, Schedule
B, lines 17, 20, 26, 31, and 36; plus the
amounts from Schedule A (Form 1040), lines
9, 14, and 27 (lines 9, 10, 11, 12, 14, and 28
for 2007, 2008, and 2009), or the amounts
from Schedule A (Form 1040NR), lines 3 and
16 (or as previously adjusted)
Add the amounts from Form 1045, Schedule
B, lines 17 and 31; plus the amounts from
Schedule A (Form 1040), line 13 (line 14 for
2007, 2008, and 2009), line 15b for 2005, and
any gambling and casualty or theft losses
included on line 27 (line 28 for 2007, 2008, and
2009), or the amounts from Schedule A (Form
1040NR), line 4b for 2005 and any casualty or
theft losses included on line 16 (or as
previously adjusted). Also include in the total
any amount included on Form 1045, Schedule
B, line 26, that you elected to treat as qualified
contributions for relief efforts in a Midwestern
disaster area
Subtract line 2 from line 1. If the result is zero
or less, stop here; combine the amounts from
Form 1045, Schedule B, lines 18, 21, 27, 32,
and 37, and enter the result on line 38 and line
7 of Form 1045, Schedule B
Multiply line 3 by 80% (.80)
Enter the amount from Form 1045, Schedule
B, line 22
Subtract line 6 from line 5
Multiply line 7 by 3% (.03)
Enter the smaller of line 4 or line 8
Enter the amount for your carryback year as
Total itemized deductions from Schedule A
(Form 1040), line 28 (line 29 for 2007, 2008,
and 2009), or Schedule A (Form 1040NR), line
17 (or as previously adjusted)
Subtract line 13 from line 12. Enter the
difference here and on line 7 of Form 1045,
Schedule B
Itemized Deductions Limitation Worksheet—See the instructions for line 38 on page 10 (keep for your records)
● $150,500 for 2006 ($75,250 if married
filing separately);
Enter applicable carryback year
● $128,950 for 2000 ($64,475 if married
filing separately);
● $132,950 for 2001 ($66,475 if married
filing separately);
● $137,300 for 2002 ($68,650 if married
filing separately);
● $139,500 for 2003 ($69,750 if married
filing separately);
● $142,700 for 2004 ($71,350 if married
filing separately);
● $145,950 for 2005 ($72,975 if married
filing separately);
● For 2008 and 2009, divide line 9 by 1.5;
● For 2006 and 2007, divide line 9 by 3.0; or
11. Subtract line 10 from line 9

● $156,400 for 2007 ($78,200 if married
filing separately);
● For all other carryback years, enter -0-.
Subtract line 11 from line 1
● $159,950 for 2008 ($79,975 if married
filing separately);
● $166,800 for 2009 ($83,400 if married
filing separately).
Instructions for Form 1045 (2010) -9-
Line 38 process this application. Providing federal agencies for the purposes of
Complete the worksheet on page 9 if false or fraudulent information may determining entitlement for benefits or line 22, Schedule B, is more than: subject you to penalties. the eligibility for and the repayment of · $128,950 for 2000 ($64,475 if You are not required to provide the loans. We may also disclose this married filing separately), information requested on a form that information to other countries under a · $132,950 for 2001 ($66,475 if is subject to the Paperwork Reduction tax treaty, to federal and state married filing separately), Act unless the form displays a valid agencies to enforce federal nontax · $137,300 for 2002 ($68,650 if OMB control number. Books or criminal laws, or to federal law married filing separately), records relating to a form or its enforcement and intelligence · $139,500 for 2003 ($69,750 if instructions must be retained as long agencies to combat terrorism.
married filing separately), as their contents may become The time needed to complete and
· $142,700 for 2004 ($71,350 if material in the administration of any file this form will vary depending on
married filing separately), Internal Revenue law. individual circumstances. The
· $145,950 for 2005 ($72,975 if Generally, tax returns and return estimated burden for individual
married filing separately), information are confidential, as stated taxpayers filing this form is approved
· $150,500 for 2006 ($75,250 if in section 6103. However, section under OMB control number
married filing separately), 6103 allows or requires the Internal 1545–0074 and is included in the
· $156,400 for 2007 ($78,200 if Revenue Service to disclose or give estimates shown in the instructions
married filing separately), the information shown on your tax for their individual income tax return.
· $159,950 for 2008 ($79,975 if return to others as described in the The estimated burden for all other
married filing separately), or Internal Revenue Code. For example, taxpayers who file this form is shown
· $166,800 for 2009 ($83,400 if we may disclose your tax information below.
married filing separately). to the Department of Justice, to
Only complete a column for each enforce the tax laws, both civil and Recordkeeping . . . . . . . 9 hr., 18 min. year that meets the above criminal, and to cities, states, the Learning about the law District of Columbia, U.S. or the form . . . . . . . . . . 9 hr., 7 min. requirements. Preparing the form . . . . 9 hr., 57 min. commonwealths or possessions, and Disclosure, Privacy Act, and certain foreign governments to carry Copying, assembling, Paperwork Reduction Act Notice. out their tax laws. We may disclose and sending the form to We ask for the information on this your tax information to the the IRS . . . . . . . . . . . . . 1 hr., 3 min.
form to carry out the Internal Department of Treasury and If you have comments concerning
Revenue laws of the United States. contractors for tax administration the accuracy of these time estimates
You may use Form 1045 to apply purposes; and to other persons as or suggestions for making this form
under section 6411 for a quick refund necessary to obtain information which simpler, we would be happy to hear
of tax for a prior year affected by we cannot get in any other way in from you. You can write to the
certain carrybacks. If you file Form order to determine the amount of or Internal Revenue Service, Tax
1045, you are required to give us the to collect the tax you owe. We may Products Coordinating Committee,
requested information. We need it to disclose your tax information to the SE:W:CAR:MP:T:T:SP, 1111
ensure that you are complying with Comptroller General of the United Constitution Ave., NW, IR-6526,
these laws and to allow us to figure States to permit the Comptroller Washington, DC 20224.
and collect the right amount of tax. General to review the Internal Do not send the form to this Section 6109 requires that you Revenue Service. We may disclose address. Instead, see Where To File disclose your taxpayer identification your tax information to Committees of on page 2. number (SSN, ITIN, or EIN). If you do Congress; federal, state, and local
not provide the information child support agencies; and to other
requested, we may be unable to
-10- Instructions for Form 1045 (2010)