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Publication 536 2003 Tax Year

Publication 536
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Important Change

Change in carryback period for NOLs. The temporary 5-year carryback period for net operating losses (NOLs) incurred in 2001 and 2002 no longer applies. NOLs incurred in 2003 are carried back 2 or, if eligible, 3 tax years. For more information, see When To Use an NOL, later.

Important 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.

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.
  • Specified liability losses. See the instructions for Form 1045, Application for Tentative Refund.

Comments and suggestions.

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

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Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW
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.

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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