PDF document

- 1 -

                       Userid: CPM                       Schema: tipx Leadpct: 100% Pt. size: 10    Draft           Ok to Print
AH XSL/XML             Fileid: … tions/p536/2023/a/xml/cycle04/source                            (Init. & Date) _______

Page 1 of 18                                                                                     12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

            Department of the Treasury                   Contents
            Internal Revenue Service
                                                         Future Developments . . . . . . . . . . . . . . . . . . . . . . .           1
                                                         Reminders    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Publication 536
Cat. No. 46569U                                          Introduction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
                                                         NOL Steps    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
                                                         How To Figure an NOL          . . . . . . . . . . . . . . . . . . . . . .   3
Net Operating 
                                                         Worksheet 1. Figuring Your NOL                  . . . . . . . . . . . . .   5
                                                         When To Use an NOL          . . . . . . . . . . . . . . . . . . . . . . .   6
Losses (NOLs) 
                                                         Waiving the Carryback Period                . . . . . . . . . . . . . . .   6
                                                         How To Carry an NOL Back or Forward                       . . . . . . . .   7
for
                                                         How To Claim an NOL Deduction . . . . . . . . . . . . . .                   7
                                                         Deducting a Carryback . . . . . . . . . . . . . . . . . . . .               7
Individuals,                                             Deducting a Carryforward                . . . . . . . . . . . . . . . . . . 8
                                                         Change in Marital Status . . . . . . . . . . . . . . . . . . .              9
                                                         Change in Filing Status . . . . . . . . . . . . . . . . . . . .             9
Estates, and 
                                                         How To Figure an NOL Carryover . . . . . . . . . . . . .                    10
Trusts                                                   NOL Carryover From 2023 to 2024 . . . . . . . . . . . .                     10
                                                         Worksheet 2 Instructions . . . . . . . . . . . . . . . . . .                10
For use in preparing                                     Excess Business Loss . . . . . . . . . . . . . . . . . . . . .              13
                                                         How To Get Tax Help       . . . . . . . . . . . . . . . . . . . . . . .     13
2023 Returns
                                                         Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18

                                                         Future Developments
                                                         For  the  latest  information  about  developments  related  to 
                                                         Pub.  536,  such  as  legislation  enacted  after  it  was 
                                                         published, go to IRS.gov/Pub536.
                                                         Section  references  are  to  the  Internal  Revenue  Code 
                                                         unless otherwise noted.

                                                         Reminders
                                                         NOL  carryback  eliminated.             Generally,  you  can  only 
                                                         carry NOLs arising in tax years ending after 2020 to a later 
                                                         year.  An  exception  applies  to  certain  farming  losses, 
                                                         which  may  be  carried  back  2  years.  See  section  172(b) 
                                                         and Pub. 225, Farmer's Tax Guide.
                                                         NOL deduction limitation.               In general, your NOL deduc-
                                                         tion for tax years beginning after December 31, 2020, can-
                                                         not  exceed  the  sum  of  (1)  the  NOLs  carried  to  the  year 
                                                         from tax years beginning before January 1, 2018; plus, (2) 
                                                         the  lesser  of:  (a)  the  NOLs  carried  to  the  year  from  tax 
                                                         years beginning after December 31, 2017, or (b) 80% of 
                                                         the excess (if any) of taxable income computed without re-
                                                         gard  to  deductions  for  NOLs,  or  Qualified  Business  In-
                                                         come  (QBI),  or  section  250  deductions,  over  the  NOLs 
Get forms and other information faster and easier at:    carried to the year from tax years beginning before Janu-
• IRS.gov (English)    • IRS.gov/Korean (한국어)            ary 1, 2018.
• IRS.gov/Spanish (Español)  • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt) 

Dec 27, 2023

- 2 -

Page 2 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Annual losses limited. The Tax Cuts and Jobs Act Keeping records. You should keep records for any tax
(TCJA), section 11012, as amended by the CARES Act, year that generates an NOL and all years to which the loss
section 2304, and as further amended by the Inflation Re- can be carried for 3 years after you have used the carry-
duction Act, section 13903, revised section 461(l) to limit back/carryforward or 3 years after the carryforward ex-
the amount of losses from the trades or businesses of pires.
noncorporate taxpayers that the taxpayer can claim each
You should attach all required documents to the
year, beginning after 2020 and ending before 2029. You
TIP Form 1045 or Form 1040-X. For details, see the
can't deduct net losses in excess of a threshold amount in
instructions for Form 1045 or Form 1040-X.
the current year. The amount of the excess business loss
is treated as an NOL for the current year for purposes of
determining any NOL carryover for later tax years. Use What is not covered in this publication? The follow-
Form 461 to figure the excess business loss. Also see ing topics are not covered in this publication.
Worksheet 3, later. • Bankruptcies. See Pub. 908, Bankruptcy Tax Guide.
Photographs of missing children. The IRS is a proud • NOLs of corporations. See Pub. 542, Corporations.
partner with the National Center for Missing & Exploited
Children® (NCMEC). Photographs of missing children se- Comments and suggestions. We welcome your com-
lected by the Center may appear in this publication on pa- ments about this publication and suggestions for future
ges that would otherwise be blank. You can help bring editions.
these children home by looking at the photographs and You can send us comments through IRS.gov/
calling 800-THE-LOST (800-843-5678) if you recognize a FormComments. Or, you can write to the Internal Revenue
child. Service, Tax Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each com-
ment received, we do appreciate your feedback and will
Introduction consider your comments and suggestions as we revise
If your deductions for the year are more than your income our tax forms, instructions, and publications. Don’t send
for the year, you may have a net operating loss (NOL). An tax questions, tax returns, or payments to the above ad-
NOL year is the year in which an NOL occurs. You can use dress.
an NOL by deducting it from your income in another year Getting answers to your tax questions. If you have
or years. a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
What this publication covers. This publication dis-
to the IRS Interactive Tax Assistant page at IRS.gov/
cusses NOLs for individuals, estates, and trusts. It covers:
Help/ITA where you can find topics by using the search
• How to figure an NOL, feature or viewing the categories listed.
• When to use an NOL, Getting tax forms, instructions, and publications.
• How to claim an NOL deduction, Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
• How to figure an excess business loss, and
Ordering tax forms, instructions, and publications.
• How to figure an NOL carryover. Go to IRS.gov/OrderForms to order current forms, instruc-
To have an NOL, your loss must generally be caused by tions, and publications; call 800-829-3676 to order
deductions from your: prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
• Trade or business,
Don’t resubmit requests you’ve already sent us. You can
• Work as an employee (although not deductible for get forms and publications faster online.
most taxpayers for 2018 through 2025),
• Casualty and theft losses resulting from a federally de- Useful Items
clared disaster, You may want to see:
• Moving expenses (although not deductible for most
Form (and Instructions)
taxpayers for 2018 through 2025), or
1040-X 1040-X Amended U.S. Individual Income Tax Return
• Rental property.
1045
A loss from operating a business is the most common 1045 Application for Tentative Refund
reason for an NOL. 461 461 Limitation on Business Losses
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 NOL Steps
individual NOLs.
Follow Steps 1 through 5 to figure and use your NOL.

2 Publication 536 (2023)

- 3 -

Page 3 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Step 1. Complete your tax return for the year. You may your trade or business or your employment. Examples of
have an NOL if a negative amount appears in these ca- deductions not related to your trade or business are:
ses.
• Alimony paid,
• Individuals—You subtract your standard deduction or
• Deductions for contributions to an individual retire-
itemized deductions from your adjusted gross income
ment account (IRA) or a self-employed retirement
(AGI).
plan,
• Estates and trusts—You combine taxable income,
• Health savings account deduction,
charitable deductions, income distribution deduction,
and exemption amounts from your Form 1041. • Archer medical savings account deduction,
Step 2. Determine whether you have an NOL and its • Most itemized deductions (except for casualty and
theft losses resulting from a federally declared disas-
amount. See How To Figure an NOL, later. If you do not
ter and state income tax on trade or business income),
have an NOL, stop here.
and
Step 3. If applicable, decide whether to carry the NOL • The standard deduction.
back to a past year, or to waive the carryback period and
Do not enter business deductions on line 6. These are
instead carry the NOL forward to a future year. See When
deductions that are connected to your trade or business.
To Use an NOL, later.
They include the following.
Step 4. Deduct the NOL in the carryback or carryforward • State income tax on income from your trade or busi-
year. See How To Claim an NOL Deduction, later. ness (including wages, salary, and unemployment
compensation).
Step 5. Determine the amount of your unused NOL. See
How To Figure an NOL Carryover, later. Carry the unused • Moving expenses for members of the Armed Forces
NOL to the next carryback or carryforward year and begin on active duty.
again at Step 4. • Educator expenses.
Note. If your NOL deduction includes more than one • The deduction for the deductible part of self-employed
NOL amount, apply Step 5 separately to each NOL health insurance and the deduction for the deductible
amount, starting with the amount from the earliest year. part of self-employment tax.
• Rental losses.
• Loss on the sale or exchange of business real estate
How To Figure an NOL or depreciable property.
If your deductions for the year are more than your income • Your share of a business loss from a partnership or an
for the year, you may have an NOL. S corporation.
• Ordinary loss on the sale or exchange of section 1244
There are rules that limit what you can deduct when fig-
(small business) stock.
uring an NOL. In general, the following items are not al-
lowed when figuring an NOL. • Ordinary loss on the sale or exchange of stock in a
small business corporation or a small business invest-
• Capital losses in excess of capital gains.
ment company.
• The section 1202 exclusion of the gain from the sale
• If you itemize your deductions, casualty and theft los-
or exchange of qualified small business stock.
ses resulting from a federally declared disaster (even
• Nonbusiness deductions in excess of nonbusiness in- if they involve nonbusiness property).
come.
• Loss on the sale of accounts receivable (if you use an
• The NOL deduction. accrual method of accounting).
• The section 199A deduction for qualified business in- • Interest and litigation expenses on state and federal
come. income taxes related to your business.
Worksheet 1. Figuring Your NOL. Use Worksheet 1 to • Unrecovered investment in a pension or annuity
figure your NOL. The following discussion explains Work- claimed on a decedent's final return.
sheet 1. See the Instructions for Form 1045. If line 1 is a • Payment by a federal employee to buy back sick leave
negative amount, you may have an NOL. used in an earlier year.

Nonbusiness capital losses (line 2). Don’t include on Nonbusiness income (line 7). Enter on line 7 only in-
this line any section 1202 exclusion amounts (even if en- come that is not related to your trade or business or your
tered as a loss on Schedule D (Form 1041)). employment. This includes the following.
Nonbusiness deductions (line 6). Enter as a positive • Your taxable IRA distributions.
number on line 6 deductions that are not connected to

Publication 536 (2023) 3

- 4 -

Page 4 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Pension benefits.
• Social security benefits.
• Annuity income.
• Dividends.
• Interest on investments.
• Your share of nonbusiness income from a partnership
or an S corporation.
Do not include on line 7 the income you receive from
your trade or business or your employment. This includes
the following.
• Salaries and wages.
• Self-employment income.
• Unemployment compensation.
• Rental income.
• Ordinary gain from the sale or other disposition of
business real estate or depreciable business property.
• Your share of business income from a partnership or
an S corporation.

Adjustment for section 1202 exclusion (line 17). En-
ter as a positive number on line 17 any gain you excluded
under section 1202 on the sale or exchange of qualified
small business stock.

Adjustments for capital losses (lines 19–22). The
amount deductible for capital losses is limited based on
whether the losses are business capital losses or nonbus-
iness capital losses.
You can deduct your nonbusiness capital losses (line 2)
only up to the amount of your nonbusiness capital gains
without regard to any section 1202 exclusion (line 3). If
your nonbusiness capital losses are more than your non-
business capital gains without regard to any section 1202
exclusion, you cannot deduct the excess.
You can deduct your business capital losses (line 11)
only up to the total of:
• Your nonbusiness capital gains that are more than the
total of your nonbusiness capital losses and excess
nonbusiness deductions (line 10), and
• Your total business capital gains without regard to any
section 1202 exclusion (line 12).

NOLs from other years (line 23). You cannot deduct
any NOL carryovers or carrybacks from other years. Enter
the total amount of your NOL deduction for losses from
other years.

4 Publication 536 (2023)

- 5 -

Page 5 of 18  Fileid: … tions/p536/2023/a/xml/cycle04/source                                                                     12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet 1. Figuring Your NOL                                                                                                   Keep for Your Records
1. For individuals, subtract your standard deduction or itemized deductions from your AGI and enter it 
    here. For estates and trusts, enter taxable income increased by the total of the charitable deduction, 
    income distribution deduction, and exemption amount  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            1.   
2. Nonbusiness capital losses before limitation. Enter as a positive 
    number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2.                               
3. Nonbusiness capital gains (without regard to any section 1202 
    exclusion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3.                               
4. If line 2 is more than line 3, enter the difference. Otherwise, enter -0- . . . . .                                       4.                               
5. If line 3 is more than line 2, enter the difference. 
    Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . .           5.                                      
6. Nonbusiness deductions (see Nonbusiness deductions under How To 
    Figure an NOL, earlier). Enter as a positive number . . . . . . . . . . . . . . . . . . .                                6.                               
7. Nonbusiness income other than capital gains (see 
    Nonbusiness income under How To Figure an 
    NOL, earlier) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      7.                                      
8. Add lines 5 and 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8.                               
9. If line 6 is more than line 8, enter the difference. Otherwise, enter -0-  . . . . . . . . . . . . . . . . . . . . . . . . .                               9.   
10. If line 8 is more than line 6, enter the difference. 
    Otherwise, enter -0-. But don’t enter more than 
    line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.                                     
11. Business capital losses before limitation. Enter as a positive number . . . . .                                          11.                              
12. Business capital gains (without regard to any 
    section 1202 exclusion) . . . . . . . . . . . . . . . . . . . . . .              12.                                     
13. Add lines 10 and 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            13.                              
14. Subtract line 13 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . . . . .                            14.                              
15. Add lines 4 and 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           15.                              
16. Enter the loss, if any, from line 16 of your 2023 Schedule D (Form 1040). 
    Estates and trusts, enter the loss, if any, from line 19, column (3), of 
    Schedule D (Form 1041). Enter as a positive number. If you don’t have a 
    loss on that line (and don’t have a section 1202 exclusion), skip lines 16 
    through 21 and enter on line 22 the amount from line 15 . . . . . . . . . . . . . . .                                    16.                              
17. Section 1202 exclusion. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        17.  
18. Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . .                            18.                              
19. Enter the loss, if any, from line 21 of your 2023 Schedule D (Form 1040). 
    Estates and trusts, enter the loss, if any, from line 20 of Schedule D (Form 
    1041). Enter as a positive number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     19.                              
20. If line 18 is more than line 19, enter the difference. Otherwise, 
    enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20.                              
21. If line 19 is more than line 18, enter the difference. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . .                               21.  
22. Subtract line 20 from line 15. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   22.  
23. NOL deduction for losses from other years. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . .                                     23.  
24. NOL. Combine lines 1, 9, 17, and 21 through 23. If the result is less than zero, enter it here. 
    If the result is zero or more, you don’t have an NOL                             . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24.  

Publication 536 (2023)                                                                                                                                            5

- 6 -

Page 6 of 18               Fileid: … tions/p536/2023/a/xml/cycle04/source                                 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet 1. Figuring Your NOL                                                Farming  business. A  farming  business  is  a  trade  or 
                                                                              business involving cultivation of land or the raising or har-
Example                                                                       vesting  of  any  agricultural  or  horticultural  commodity.  A 
The following example describes how to figure an NOL.                         farming business can include operating a nursery or sod 
                                                                              farm  or  raising  or  harvesting  most  ornamental  trees  or 
  Example.        You  are  in  the  retail  record  business.  You           trees bearing fruit, nuts, or other crops. The raising, shear-
are single and have the following income and deductions                       ing, feeding, caring for, training, and management of ani-
on your Form 1040 for 2023.                                                   mals is also considered a farming business.
                                                                              A farming business does not include contract harvest-
INCOME                                                                        ing of an agricultural or horticultural commodity grown or 
                                                                              raised by someone else. It also does not include a busi-
Wages from part-time job. . . . . . . . . . . . . . . . . . . .       $1,225  ness  in  which  you  merely  buy  or  sell  plants  or  animals 
Interest on savings . . . . . . . . . . . . . . . . . . . . . . . .   425
Net long-term capital gain on sale of real estate used in                     grown or raised entirely by someone else.
business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2,000
                                                                              Farming loss. A farming loss is the smaller of:
Your total income                                                     $3,650
                                                                              • The amount that would be the NOL for the tax year if 
                                                                                only income and deductions from farming businesses 
DEDUCTIONS                                                                      (as defined in section 263A(e)(4)) were taken into ac-
Net loss from business (gross income of $67,000                                 count, or
minus expenses of $72,000). . . . . . . . . . . . . . . . .           $5,000  • The NOL for the tax year.
Net short-term capital loss
on sale of stock. . . . . . . . . . . . . . . . . . . . . . . . .     1,000   Annual  losses  limited  for  2023.   Excess  business  los-
Standard deduction. . . . . . . . . . . . . . . . . . . . . .         13,850  ses  for  noncorporate  taxpayers  are  limited  for  tax  years 
Your total deductions                                                 $19,850 beginning after 2020 and ending before 2029. Generally, 
                                                                              any disallowed loss is treated as an NOL carryover to later 
  Your  deductions  exceed  your  income  by  $16,200                         years.  Also,  excess  business  losses  are  now  computed 
($19,850 − $3,650). However, to figure whether you have                       without  regard  to  any  deduction  allowed  under  IRC  sec-
an  NOL,  certain  deductions  are  not  allowed.  You  use                   tion  172  or  199A  and  without  regard  to  any  deductions, 
Worksheet 1 to figure your NOL.                                               gross  income,  or  gains  attributable  to  any  trade  or  busi-
  The following items are not allowed on Worksheet 1.                         ness of performing services as an employee. You can’t de-
                                                                              duct net losses in excess of a threshold amount in the cur-
Nonbusiness net short-term capital loss       . . . . . . . . . . . . $1,000  rent year.
Nonbusiness deductions                                                        For 2023, excess means total (modified) business de-
(standard deduction, $13,850) minus                                           ductions over the sum of total gross business income plus 
nonbusiness income (interest, $425)       . . . . . . . . . . . . . . 13,425  $289,000 ($578,000 for joint returns). The excess is trea-
Total adjustments to net loss                                         $14,425 ted as an NOL to be carried forward. Further, when carry-
                                                                              forwards can be used, they can only offset 80% of taxable 
                                                                              income in future years. See Excess Business Loss, later.
  Therefore, your NOL for 2023 is figured as follows.
                                                                              Waiving the Carryback Period
Your total 2023 income. . . . . . . . . . . . . . . . . . . .         $3,650
Less:                                                                         You can choose not to carry back your farming NOL. If you 
  Your original 2023 total deductions     . .           $19,850               make this choice, then you can carry your NOL forward in-
  Reduced by the disallowed items. . .                − 14,425        − 5,425 definitely until it is fully absorbed.
Your NOL for 2023                                                     $1,775  To make this choice, attach a statement to your original 
                                                                              return filed by the due date (including extensions) for the 
                                                                              NOL year. This statement must show that you are choos-
                                                                              ing to waive the carryback period under section 172(b).
When To Use an NOL
                                                                              If you filed your original return on time but did not file 
If you have an NOL for a tax year ending in 2023, only the                    the  statement  with  it,  you  can  make  this  choice  on  an 
farming loss portion, if any, can be carried back.                            amended return filed within 6 months of the due date of 
                                                                              the  return  (excluding  extensions).  Attach  a  statement  to 
NOL year.   This is the year in which the NOL occurred.                       your amended return, and write “Filed pursuant to section 
                                                                              301.9100-2” at the top of the statement.
Exception to the No Carryback Rule.                         Farming losses, 
defined  next,  qualify  for  a  2-year  carryback  period.  Only             Once  you  choose  to  waive  the  carryback  period,  it  is 
the farming loss portion of an NOL can be carried back 2                      generally irrevocable. The election must be made by the 
years. The 80% limitation rule does not apply to a carry-                     due date of the return, including extensions.
back period before 2021.

6                                                                                                                   Publication 536 (2023)

- 7 -

Page 7 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If you do not file this statement on time, you can-
! not waive the carryback period. How To Claim
CAUTION

an NOL Deduction
How To Carry an NOL Back or
Forward If you have not already carried the NOL to an earlier year,
your NOL deduction for tax years beginning after Decem-
If you choose to carry back a farming loss, you must first ber 31, 2020, cannot exceed the sum of:
carry the farming loss to the earliest year in the 2-year car-
1. The NOLs carried to the year from tax years begin-
ryback period. If the farming loss is not used up, you can
ning before January 1, 2018; plus
carry the rest to the next earliest carryback year, and then
on to carryover years after the loss year, and so on. 2. The lesser of:
If you waive the carryback period or do not use up all of a. The NOLs carried to the year from tax years begin-
the farming loss in the carryback period, you will have an ning after December 31, 2017, or
NOL that can be carried forward indefinitely until used up. b. 80% of the excess (if any) of taxable income compu-

This NOL will be equal to the sum of what remains of the ted without regard to deductions for NOLs, or Qualified
farming loss, plus any nonfarm NOL, plus any excess Business Income (QBI), or section 250 deductions,
business loss for the NOL year. See Excess Business over the NOLs carried to the year from tax years be-
Loss, later. Start by carrying the NOL to the first tax year ginning before January 1, 2018.
after the NOL year. If you do not use it up, carry the un-
used part to the next year. Continue to carry any unused If you carried the NOL to an earlier year, your NOL de-
part of the NOL forward until the NOL is used up. duction is the carried over NOL minus the NOL amount
you used in the earlier year or years. If you carry more
For nonfarming businesses, since you can’t carry the than one NOL to the same year, your NOL deduction is
NOL to an earlier year, your NOL deduction for tax years the total of these carrybacks and carryovers.
beginning after December 31, 2020, cannot exceed the
sum of: NOL resulting in no taxable income. If your NOL is
1. The NOLs carried to the year from tax years begin- more than the taxable income of the year you carry it to
ning before January 1, 2018; plus (figured before deducting the NOL), you will generally
have an NOL carryover to the next year. See How To Fig-
2. The lesser of: ure an NOL Carryover, later, to determine how much NOL
a. The NOLs carried to the year from tax years begin- you have used and how much you carry to the next year.
ning after December 31, 2017, or
Deducting a Carryback
b. 80% of the excess (if any) of taxable income compu-
ted without regard to deductions for NOLs, or Qualified If you carry back your NOL, you can use either Form 1045
Business Income (QBI), or section 250 deductions, or Form 1040-X. You can get your refund faster by using
over the NOLs carried to the year from tax years be- Form 1045, but you have a shorter time to file it. You can
ginning before January 1, 2018. use Form 1045 to apply an NOL to all carryback years. If
Only NOLs arising after 2017 and carried forward to a you use Form 1040-X, you must use a separate Form
year after 2020 are subject to the 80%-of-taxable-income 1040-X for each carryback year to which you apply the
limit. The total amount of any NOL deduction for 2021 or NOL.
thereafter that is attributable to NOLs from tax years after Estates and trusts that do not file Form 1045 must file
2017 can’t exceed 80% of taxable income without regard an amended Form 1041 (instead of Form 1040-X) for
to the NOL deduction or sections 199A or 250. each carryback year to which NOLs are applied. Use a
copy of the appropriate year's Form 1041, check the “Net
Example. You started your farming business as a sole
operating loss carryback” box, and follow the Form 1041
proprietor in 2023 and had a $42,000 NOL for the year. No
instructions for amended returns. Include the NOL deduc-
part of this NOL is from another business activity. There
tion with other deductions not subject to the 2% limit
are no NOL carryovers or carrybacks to 2021 and 2022
(line 15a). Also, see the special procedures for filing an
other than the 2023 NOL.
amended return due to an NOL carryback, explained un-
der Form 1040-X, later.
Year Carryback/Carryover Unused Loss
Carrying back an NOL to an earlier tax year may
2021. . . . . . . . $42,000 $40,000
create an alternative minimum tax (AMT) liability
2022 . . . . . . . . $40,000 $0 CAUTION! for that earlier year. This may be true even if there
2023 (NOL year) . . . was no AMT liability on the tax return filed for that earlier
year.

Publication 536 (2023) 7

- 8 -

Page 8 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Form 1045. You can apply for a quick refund by filing line 11, using the “After carryback” column, enter your AGI
Form 1045. This form results in a tentative adjustment of refigured after applying the NOL deduction and after refi-
tax in the carryback year. guring any above items.)
If the IRS refunds or credits an amount to you from Next, refigure your taxable income. (On Form 1045, use
Form 1045 and later determines that the refund or credit is lines 12 through 15 and the “After carryback” column.)
too much, the IRS may assess and collect the excess im- Use your refigured AGI (Form 1045, line 11, using the “Af-
mediately. ter carryback” column) to refigure certain deductions and
Generally, you must file Form 1045 on or after the date other items that are based on or limited to a percentage of
you file your tax return for the NOL year, but not later than your AGI. Refigure the following items.
1 year after the end of the NOL year. If the last day of the
• The itemized deduction for medical expenses.
NOL year falls on a Saturday, Sunday, or holiday, the form
will be considered timely filed if postmarked on the next • The itemized deduction for qualified mortgage insur-
business day. For example, if you are a calendar year tax- ance premiums.
payer with a carryback from 2023 to 2021, you must file • The itemized deduction for casualty losses.
Form 1045 on or after the date you file your tax return for
2023, but no later than December 31, 2024. • Miscellaneous itemized deductions subject to the 2%
limit.
If you were affected by a federally declared disas-
• The overall limit on itemized deductions.
! ter, you may have additional time to file your Form
CAUTION 1045. For more information, go to IRS.gov/ The phaseout of the deduction for exemptions.
•
DisasterTaxRelief.
Note. For tax years after 2017, the TCJA eliminated
Form 1040-X. If you do not file Form 1045, you can file the itemized deduction for miscellaneous itemized deduc-
Form 1040-X to get a refund of tax because of an NOL tions subject to the 2% limit, the overall limit on itemized
carryback. Generally, file Form 1040-X for the carryback deductions, and the deduction for exemptions.
year within 3 years after the due date, including exten- Do not refigure the itemized deduction for charita-
sions, for filing the return for the NOL year. For example, if ! ble contributions, even if you refigure your AGI.
you are a calendar year taxpayer, you must generally file a CAUTION Also, since you do not decrease your charitable
claim for refund because of an NOL carryback from 2020 contributions, do not increase your charitable contribu-
by April 15, 2024 (3 years after the due date for the NOL tions carryover.
return).
Finally, use your refigured taxable income (Form 1045,
Filing Form 1040-X does not extend the carry- line 15, using the “After carryback” column) to refigure
! back period. See When To Use an NOL, earlier. your total tax liability. Refigure your income tax, your alter-
CAUTION native minimum tax, and any credits that are based on or
Attach a computation of your NOL using Form 1045, limited by your AGI, modified AGI (MAGI), or tax liability.
Schedule A, and, if it applies, your NOL carryover using (On Form 1045, use lines 16 through 30, and the “After
Form 1045, Schedule B, discussed later. carryback” column.) The earned income credit, for exam-
ple, may be affected by changes to AGI or the amount of
Refiguring your tax. To refigure your total tax liability for tax (or both) and, therefore, must be refigured. If you be-
a carryback year, first refigure your AGI for that year. (On come eligible for a credit because of the carryback, com-
Form 1045, use lines 10 and 11 and the “After carryback” plete the form for that specific credit (such as the EIC
column for the applicable carryback year.) Use your AGI Worksheet) for that year.
after applying the NOL deduction to refigure income or de- While it is necessary to refigure your income tax, alter-
duction items that are based on, or limited to, a percent- native minimum tax, and credits, do not refigure your
age of your AGI. Refigure the following items. self-employment tax and Additional Medicare Tax. For in-
1. The special allowance for passive activity losses from formation about refiguring your net investment income tax
rental real estate activities. and credits, see the Instructions for Form 1045.
2. Taxable social security benefits.
Deducting a Carryforward
3. IRA deductions.
4. Excludable savings bond interest. If you carry forward your NOL to a tax year after the NOL
year, list your NOL deduction as a negative figure on
5. Excludable employer-provided adoption benefits. Schedule 1 (Form 1040), line 8a, for 2023, for the year to
6. The student loan interest deduction. which the NOL is carried. Estates and trusts, include an
NOL deduction on Form 1041, line 15b, for 2023.
7. The tuition and fees deduction.
You must attach a statement that shows all the impor-
If more than one of these items apply, refigure them in tant facts about the NOL. Your statement should include a
the order listed above, using your AGI after applying the computation showing how you figured the NOL deduction.
NOL deduction and any previous item. (If you are using If you deduct more than one NOL in the same year, your
Form 1045, enter your NOL deduction on line 10. On statement must cover each of them.

8 Publication 536 (2023)

- 9 -

Page 9 of 18    Fileid: … tions/p536/2023/a/xml/cycle04/source                                12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Change in Marital Status                                           If you and your spouse were married and filed separate 
                                                                   returns for each year involved in figuring NOL carrybacks 
If you and your spouse were not married to each other in           and  carryovers,  the  spouse  who  sustained  the  loss  may 
all  years  involved  in  figuring  NOL  carrybacks  and  carry-   take the NOL deduction on a separate return.
overs, only the spouse who had the loss can take the NOL           Special rules apply for figuring the NOL carrybacks and 
deduction. If you file a joint return, the NOL deduction is        carryovers of married people whose filing status changes 
limited to the income of that spouse.                              for any tax year involved in figuring an NOL carryback or 
For example, if your marital status changes because of             carryover.
death or divorce, and in a later year you have an NOL, you 
                                                                   Separate to joint return.  If you and your spouse file a 
can carry back that loss only to the part of the income re-
                                                                   joint return for the tax year, and were married but filed sep-
ported on the joint return (filed with your former spouse) 
                                                                   arate returns for any of the tax years involved in figuring 
that was related to your taxable income. After you deduct 
                                                                   the NOL carryback or carryover, treat the separate carry-
the NOL in the carryback year, the joint rates apply to the 
                                                                   back or carryover as a joint carryback or carryover.
resulting taxable income.
                                                                   Joint to separate returns.  If you and your spouse file 
Refund limit.  If you are not married in the NOL year (or 
                                                                   separate returns for a tax year, but filed a joint return for 
are  married  to  a  different  spouse),  and  in  the  carryback 
                                                                   any or all of the tax years involved in figuring the NOL car-
year you were married and filed a joint return, your refund 
                                                                   ryover, figure each of your carryovers separately, by sepa-
for the overpaid joint tax may be limited. You can claim a 
                                                                   rating  the  NOL  portion  for  each  spouse  from  within  the 
refund for the difference between your share of the refig-
                                                                   joint return.
ured tax and your contribution toward the tax paid on the 
                                                                   Because the joint NOL is being carried to a tax year in-
joint return. The refund cannot be more than the joint over-
                                                                   volving  separate  returns,  the  separate  NOL  of  each 
payment.  Attach  a  statement  showing  how  you  figured 
                                                                   spouse must be figured.
your refund.
                                                                   Joint  return  in  NOL  year.   Figure  each  spouse's 
Figuring  your  share  of  a  joint  tax  liability.   There 
                                                                   share of the joint NOL through the following steps.
are five steps for figuring your share of the refigured joint 
tax liability.                                                     1. Figure each spouse's NOL as if he or she filed a sep-
                                                                   arate return. See How To Figure an NOL, earlier. If 
1. Figure your total tax as though you had filed as mar-
                                                                   only one spouse has an NOL, stop here. All of the 
ried filing separately.
                                                                   joint NOL is that spouse's NOL.
2. Figure your spouse's total tax as though your spouse 
                                                                   2. If both spouses have an NOL, multiply the joint NOL 
also had filed as married filing separately.
                                                                   by a fraction, the numerator of which is spouse A's 
3. Add the amounts in (1) and (2).                                 NOL figured in (1) and the denominator of which is the 
                                                                   total of the spouses' NOLs figured in (1). The result is 
4. Divide the amount in (1) by the amount in (3).                  spouse A's share of the joint NOL. The rest of the joint 
5. Multiply the refigured tax on your joint return by the          NOL is spouse B's share.
amount figured in (4). This is your share of the joint 
tax liability.                                                     Example  1.   Mark  and  Nancy  are  married  and  file  a 
                                                                   joint return for 2023. They have an NOL of $5,000 from a 
Figuring your contribution toward tax paid.           Unless       farming  business.  They  carry  the  NOL  back  to  2021,  a 
you have an agreement or clear evidence of each spou-              year in which Mark and Nancy filed separate returns. Fig-
se's contributions toward the payment of the joint tax liabil-     ured separately, Nancy's 2023 deductions were more than 
ity, figure your contribution by adding the tax withheld on        her income, and Mark's income was more than his deduc-
your  wages  and  your  share  of  joint  estimated  tax  pay-     tions. Mark does not have any NOL to carry back. Nancy 
ments or tax paid with the return. If the original return for      can carry back the entire $5,000 NOL to her 2021 sepa-
the  carryback  year  resulted  in  an  overpayment,  reduce       rate return.
your  contribution  by  your  share  of  the  tax  refund.  Figure 
your  share  of  a  joint  payment  or  refund  by  the  same      Example 2.    Assume the same facts as in   Example 1, 
method used in figuring your share of the joint tax liability.     except that both Mark and Nancy had deductions in 2023 
Use your taxable income as originally reported on the joint        that were more than their income. Figured separately, his 
return in steps 1 and 2 above, and substitute the joint pay-       NOL is $1,800 and her NOL is $3,000. The sum of their 
ment or refund for the refigured joint tax in step 5.              separate  NOLs  ($4,800)  is  less  than  their  $5,000  joint 
                                                                   NOL because his deductions included a $200 net capital 
                                                                   loss that is not allowed in figuring his separate NOL. The 
Change in Filing Status
                                                                   loss is allowed in figuring their joint NOL because it was 
If you and your spouse were married and filed a joint re-          offset  by  Nancy's  capital  gains.  Mark's  share  of  their 
turn for each year involved in figuring NOL carrybacks and         $5,000 joint NOL is $1,875 ($5,000 × $1,800/$4,800) and 
carryovers, figure the NOL deduction on a joint return as          Nancy's is $3,125 ($5,000 − $1,875).
you  would  for  an  individual.  However,  treat  the  NOL  de-
duction as a joint NOL.

Publication 536 (2023)                                                                                                    9

- 10 -

Page 10 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

or trust), complete Worksheet 2, later. It will help you fig-
ure your NOL to carry to 2024. Keep the worksheet for
How To Figure an NOL your records.
Carryover For NOL year 2023, complete Worksheet 3 to figure the
carryover from 2023. Keep the worksheet for your records.
If your NOL is more than your taxable income for the year
to which you carry it (figured before deducting the NOL), Worksheet 2 Instructions
you may have an NOL carryover. You must make certain
modifications to your taxable income to determine how Use Worksheet 2 to figure your carryover to 2024 if you
much NOL you will use up in that year and how much you had an NOL deduction from a year before 2018 that resul-
can carry over to the next tax year. Your carryover is the ted in your having taxable income on your 2023 return of
excess of your NOL deduction over your modified taxable zero or less. If your taxable income is still positive after ap-
income for the carryback or carryforward year. If your NOL plication of the NOL deduction, there is no carryover to
deduction includes more than one NOL, apply the NOLs 2024.
against your modified taxable income in the same order in
which you incurred them, starting with the earliest. At the top of the worksheet, enter the NOL year for
which you are figuring the carryover.
Modified taxable income. Your modified taxable income
is your taxable income figured with the following changes. More than one NOL. If your 2023 NOL deduction in-
cludes amounts for more than 1 loss year, complete this
1. You cannot claim an NOL deduction for the NOL car- worksheet only for 1 loss year. To determine which year,
ryover you are figuring or for any later NOL. start with your earliest NOL and subtract each NOL sepa-
2. You cannot claim a deduction for capital losses in ex- rately from your taxable income figured without the NOL
cess of your capital gains. Also, you must increase deduction. Complete this worksheet for the earliest NOL
your taxable income by the amount of any section that results in your having taxable income below zero. Your
1202 exclusion. NOL carryover to 2024 is the total of the amount on line 9
of the worksheet and all later NOL amounts.
3. You cannot claim a deduction for your exemptions for
yourself, your spouse, or your dependents. Line 1. Enter as a positive number the NOL carryover
from the NOL year identified.
4. You must figure any item affected by the amount of
your AGI after making the changes in (1), (2), and (3) Line 2. Enter your taxable income without the NOL de-
above, and certain other changes to your AGI that re- duction for the year listed at the top of Worksheet 2, but
sult from (1), (2), and (3). This includes income and with the NOL deduction from any prior year.
deduction items used to figure AGI (for example, IRA
deductions), as well as certain itemized deductions. Line 6. You must refigure the following income and de-
To figure a charitable contribution deduction, do not ductions based on AGI.
include deductions for NOL carrybacks in the change 1. The special allowance for passive activity losses from
in (1) but do include deductions for NOL carryfor- rental real estate activities.
wards from tax years before the NOL year.
2. Taxable social security benefits.
Your taxable income as modified cannot be less than
zero. 3. IRA deductions.
Form 1045, Schedule B. You can use Form 1045, 4. Excludable savings bond interest.
Schedule B, to figure your modified taxable income for 5. Excludable employer-provided adoption benefits.
carryback years and your carryover from each of those
years. If your 2023 return includes an NOL deduction from 6. The student loan interest deduction.
an NOL year before 2018 that reduced your taxable in- If none of these items apply to you, enter zero on line 6.
come to zero (to less than zero, if an estate or trust), see Otherwise, increase your AGI by the total of lines 3
NOL Carryover From 2023 to 2024 below. through 5 and your NOL deduction for the NOL year en-
tered at the top of the worksheet and later years. Using
this increased AGI, refigure the items that apply, in the or-
NOL Carryover From 2023 to der listed above. Your adjustment for each item is the dif-
ference between the refigured amount and the amount in-
2024 cluded on your return. Combine the adjustments for
previous items with your AGI before refiguring the next
If you had an NOL deduction carried forward from a year item. Keep a record of your computations.
before 2018 that resulted in your having taxable income Enter your total adjustments for the above items on
on your 2023 return of zero (or less than zero, if an estate line 6.

Line 7. Enter zero if you claimed the standard deduction
and the amounts on lines 3 through 5 are zero. Otherwise,

10 Publication 536 (2023)

- 11 -

Page 11 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

use lines 10 through 26 of the worksheet to figure the Line 10. Treat your NOL deduction for the NOL year en-
amount to enter on this line. Complete only those sections tered at the top of the worksheet and for later years as a
that apply to you. positive amount. Add it to your AGI. Enter the result on
line 10.
Estates and trusts. Enter zero on line 7 if you did not
claim a casualty or theft loss. Otherwise, refigure these Lines 19 and 20. You may be entitled to a larger charita-
deductions by substituting MAGI (see below) for AGI. Sub- ble contributions deduction in determining modified taxa-
tract the refigured deductions from those claimed on the ble income for 2023 (line 19) than the charitable contribu-
return. Enter the result on line 7. tion deduction you were allowed in determining 2023
Modified adjusted gross income (MAGI). To refig- taxable income (line 18). Because of this, the amount you
ure the casualty and theft loss deduction of an estate or enter on line 20 may be negative. To the extent that these
trust, MAGI is the total of the following amounts. additional charitable contribution deductions decrease the
amount of NOL that is used in 2023, you must reduce your
• The AGI amount you used to figure the deduction charitable contribution carryover to 2024.
claimed on the return.
• The amounts from lines 3 through 5 of the worksheet.
• The NOL deduction for the NOL year entered at the
top of the worksheet and for later years.

Publication 536 (2023) 11

- 12 -

Page 12 of 18  Fileid: … tions/p536/2023/a/xml/cycle04/source                                                                                             12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet 2. Worksheet To Figure NOL Carryover From 2023 to 2024
(For an NOL Carryforward From a Year Before 2018 (When 2018 Through 2020 Are 
Intervening Years))
Caution: Don’t use this worksheet for NOL carryforwards from 2018, 2019, or 2020.
For Use by Individuals, Estates, and Trusts (Keep for your records.)
See the Worksheet 2 Instructions, earlier.

    NOL Year __________
    USE YOUR 2023 FORM 1040, 1040-SR, 1040-NR, OR 1041 TO COMPLETE THIS WORKSHEET:
1.  Enter as a positive number your NOL deduction for the NOL year entered above from Schedule 1 (Form 
    1040), line 8a; or Form 1041, line 15b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          __________
2.  Enter your taxable income without the NOL deduction for 2023. See instructions . . . . . . . . . . . . . . . .                                        __________
3.  Enter as a positive number any net capital loss deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           __________
4.  Enter as a positive number any gain excluded on the sale or exchange of qualified small business 
    stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________
5.  Enter as a positive number any qualified business income deduction . . . . . . . . . . . . . . . . . . . . . . . . .                                  __________
6.  Enter any adjustments to your adjusted gross income. See instructions . . . . . . . . . . . . . . . . . . . . . . .                                   __________
7.  Enter any adjustments to your itemized deductions from line 26 below. See instructions . . . . . . . . . . .                                          __________
8.  Modified taxable income. Combine lines 2 through 7. Enter the result (but not less than zero) . . . . . .                                                       __________
9.  NOL carryover to 2024. Subtract line 8 from line 1. Enter the result (but not less than zero) here and 
    on Schedule 1 (Form 1040), line 8a (or line 15a on Form 1041 for other deductions) for 2024 . . . . . . .                                                       __________
    ADJUSTMENTS TO ITEMIZED DEDUCTIONS (INDIVIDUALS ONLY):
10. Enter your adjusted gross income without the NOL deduction for the NOL year entered above or later 
    years. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         __________
11. Combine lines 3, 4, and 6 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               __________
12. Modified adjusted gross income. Combine lines 10 and 11 above . . . . . . . . . . . . . . . . . . . . . . . . .                                                 __________
    ADJUSTMENT TO MEDICAL EXPENSES:
13. Enter your medical expenses from Schedule A (Form 1040), line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 __________
14. Enter your medical expenses from Schedule A (Form 1040), line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 __________
15. Multiply line 12 above by 7.5% (0.075) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  __________
16. Subtract line 15 from line 14. Enter the result (but not less than zero) . . . . . . . . . . . . . . . . . . . . . . . . .                            __________
17. Subtract line 16 from line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       __________
    ADJUSTMENT TO CHARITABLE CONTRIBUTIONS:
18. Enter your charitable contributions deduction from Schedule A (Form 1040), line 14; or Schedule A 
    (Form 1040-NR), line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          __________
19. Refigure your charitable contributions deduction using line 12 above as your adjusted gross income. 
    See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      __________
20. Subtract line 19 from line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     __________
    ADJUSTMENT TO CASUALTY AND THEFT LOSSES:
21. Enter your casualty and theft losses from Form 4684, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            __________
22. Enter your casualty and theft losses from Form 4684, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            __________
23. Multiply line 12 above by 10% (0.10)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 __________
24. Subtract line 23 from line 22. Enter the result (but not less than zero) . . . . . . . . . . . . . . . . . . . . . . . . .                            __________
25. Subtract line 24 from line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     __________
26. Combine lines 17, 20, and 25, and enter the result here and on line 7 . . . . . . . . . . . . . . . . . . . . . . . . .                                         __________

12                                                                                                                                                        Publication 536 (2023)

- 13 -

Page 13 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet 3. Worksheet for NOL Carryover For 2023 to 2024 (For NOL Year 2023)
For Use by Individuals, Estates, and Trusts (Keep for you records.)
See the Worksheet 3 Instructions below.

Note. Use Worksheet 2 to figure your NOL carryover(s) for NOL years before 2018.
1. Enter the amount from Worksheet 1, line 24, if less than zero. Enter as a negative number. . . . . . . . . 1.
2. Portion of line 1 above that is a loss that was carried back and used. Enter as a positive
number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Enter the Excess business loss from Form 461, line 16. Enter as a negative number . . . . . . . . . . . . . 3.
4. Combine lines 1 through 3. This is your NOL to carry over to 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

Excess Business Loss How To Get Tax Help

Noncorporate taxpayers may be subject to excess busi- If you have questions about a tax issue; need help prepar-
ness loss limitations. The at-risk limits and the passive ac- ing your tax return; or want to download free publications,
tivity limits are applied before figuring the amount of any forms, or instructions, go to IRS.gov to find resources that
excess business loss. An excess business loss is the can help you right away.
amount by which the total deductions attributable to all of
your trades or businesses exceed your total gross income Preparing and filing your tax return. After receiving all
and gains attributable to those trades or businesses plus your wage and earnings statements (Forms W-2, W-2G,
$289,000 (or $578,000 in the case of a joint return). A 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
trade or business includes, but is not limited to, Sched- compensation statements (by mail or in a digital format) or
ule C and Schedule F activities, and certain activities re- other government payment statements (Form 1099-G);
ported on Schedule E. (In the case of a partnership or S and interest, dividend, and retirement statements from
corporation, although the limitation is applied at the part- banks and investment firms (Forms 1099), you have sev-
ner or shareholder level, the trade or business determina- eral options to choose from to prepare and file your tax re-
tion is made at the entity’s level.) Business gains and los- turn. You can prepare the tax return yourself, see if you
ses reported on Schedule D and Form 4797 are included qualify for free tax preparation, or hire a tax professional to
in the excess business loss calculation. Excess business prepare your return.
losses that are disallowed are treated as an NOL carry-
Free options for tax preparation. Your options for pre-
over to the following tax year. See Form 461 and its in-
paring and filing your return online or in your local com-
structions for details. For application of these rules to
munity, if you qualify, include the following.
farmers, see also Pub. 225 and the Instructions for Sched-
ule F (Form 1040 or 1040-SR). • Free File. This program lets you prepare and file your
federal individual income tax return for free using soft-
Example. For the year 2023, an unmarried taxpayer op- ware or Free File Fillable Forms. However, state tax
erates a Schedule C business and incurs a loss of $1 mil- preparation may not be available through Free File. Go
lion. The taxpayer completes Form 461 and determines to IRS.gov/FreeFile to see if you qualify for free online
that he has incurred an excess business loss of $738,000. federal tax preparation, e-filing, and direct deposit or
The taxpayer reports the excess business loss as a posi- payment options.
tive number on Schedule 1 (Form 1040 or 1040-SR),
line 8p – effectively offsetting part of the loss claimed on • VITA. The Volunteer Income Tax Assistance (VITA)
Schedule C. This excess business loss of $738,000 will program offers free tax help to people with
be treated as an NOL carryover to 2024. The taxpayer low-to-moderate incomes, persons with disabilities,
must then complete Worksheet 3 above to figure the total and limited-English-speaking taxpayers who need
NOL carryover from 2023 to 2024. help preparing their own tax returns. Go to IRS.gov/
VITA, download the free IRS2Go app, or call
800-906-9887 for information on free tax return prepa-
Worksheet 3 Instructions ration.
Use Worksheet 3 to figure your carryover to 2024 if you • TCE. The Tax Counseling for the Elderly (TCE) pro-
had an NOL deduction in 2023. gram offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volun-
Line 1. Enter your NOL amount from Worksheet 1, teers specialize in answering questions about pen-
line 24. sions and retirement-related issues unique to seniors.
Go to IRS.gov/TCE or download the free IRS2Go app
for information on free tax return preparation.

Publication 536 (2023) 13

- 14 -

Page 14 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• MilTax. Members of the U.S. Armed Forces and quali- Although the tax preparer always signs the return,
fied veterans may use MilTax, a free tax service of- ! you're ultimately responsible for providing all the
fered by the Department of Defense through Military CAUTION information required for the preparer to accurately
OneSource. For more information, go to prepare your return and for the accuracy of every item re-
MilitaryOneSource MilitaryOneSource.mil/MilTax ( ). ported on the return. Anyone paid to prepare tax returns
Also, the IRS offers Free Fillable Forms, which can for others should have a thorough understanding of tax
be completed online and then e-filed regardless of in- matters. For more information on how to choose a tax pre-
come. parer, go to Tips for Choosing a Tax Preparer on IRS.gov.

Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following. Employers can register to use Business Services On-
line. The Social Security Administration (SSA) offers on-
• The Earned Income Tax Credit Assistant IRS.gov/ (
line service at SSA.gov/employer for fast, free, and secure
EITCAssistant) determines if you’re eligible for the
W-2 filing options to CPAs, accountants, enrolled agents,
earned income credit (EIC).
and individuals who process Form W-2, Wage and Tax
• The Online EIN Application IRS.gov/EIN ( ) helps you Statement, and Form W-2c, Corrected Wage and Tax
get an employer identification number (EIN) at no Statement.
cost.
IRS social media. Go to IRS.gov/SocialMedia to see the
• The Tax Withholding Estimator IRS.gov/W4App ( )
various social media tools the IRS uses to share the latest
makes it easier for you to estimate the federal income
information on tax changes, scam alerts, initiatives, prod-
tax you want your employer to withhold from your pay-
ucts, and services. At the IRS, privacy and security are our
check. This is tax withholding. See how your withhold-
highest priority. We use these tools to share public infor-
ing affects your refund, take-home pay, or tax due.
mation with you. Don’t post your social security number
• The First-Time Homebuyer Credit Account Look-up (SSN) or other confidential information on social media
(IRS.gov/HomeBuyer) tool provides information on sites. Always protect your identity when using any social
your repayments and account balance. networking site.
The following IRS YouTube channels provide short, in-
• The Sales Tax Deduction Calculator IRS.gov/ (
formative videos on various tax-related topics in English,
SalesTax) figures the amount you can claim if you
Spanish, and ASL.
itemize deductions on Schedule A (Form 1040).
Getting answers to your tax questions. On • Youtube.com/irsvideos.
IRS.gov, you can get up-to-date information on • Youtube.com/irsvideosmultilingua.
current events and changes in tax law.
• Youtube.com/irsvideosASL.
• IRS.gov/Help: A variety of tools to help you get an-
swers to some of the most common tax questions. Watching IRS videos. The IRS Video portal
(IRSVideos.gov) contains video and audio presentations
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that for individuals, small businesses, and tax professionals.
will ask you questions and, based on your input, pro-
vide answers on a number of tax topics. Online tax information in other languages. You can
• IRS.gov/Forms: Find forms, instructions, and publica- find information on IRS.gov/MyLanguage if English isn’t
tions. You will find details on the most recent tax your native language.
changes and interactive links to help you find answers
Free Over-the-Phone Interpreter (OPI) Service. The
to your questions.
IRS is committed to serving taxpayers with limited-English
• You may also be able to access tax information in your proficiency (LEP) by offering OPI services. The OPI Serv-
e-filing software. ice is a federally funded program and is available at Tax-
payer Assistance Centers (TACs), most IRS offices, and
every VITA/TCE tax return site. The OPI Service is acces-
Need someone to prepare your tax return? There are
sible in more than 350 languages.
various types of tax return preparers, including enrolled
agents, certified public accountants (CPAs), accountants, Accessibility Helpline available for taxpayers with
and many others who don’t have professional credentials. disabilities. Taxpayers who need information about ac-
If you choose to have someone prepare your tax return, cessibility services can call 833-690-0598. The Accessi-
choose that preparer wisely. A paid tax preparer is: bility Helpline can answer questions related to current and
• Primarily responsible for the overall substantive accu- future accessibility products and services available in al-
racy of your return, ternative media formats (for example, braille, large print,
audio, etc.). The Accessibility Helpline does not have ac-
• Required to sign the return, and cess to your IRS account. For help with tax law, refunds, or
• Required to include their preparer tax identification account-related issues, go to IRS.gov/LetUsHelp.
number (PTIN).

14 Publication 536 (2023)

- 15 -

Page 15 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Note. Form 9000, Alternative Media Preference, or which securely and electronically transfers your refund di-
Form 9000(SP) allows you to elect to receive certain types rectly into your financial account. Direct deposit also
of written correspondence in the following formats. avoids the possibility that your check could be lost, stolen,
• Standard Print. destroyed, or returned undeliverable to the IRS. Eight in
10 taxpayers use direct deposit to receive their refunds. If
• Large Print. you don’t have a bank account, go to IRS.gov/
• Braille. DirectDeposit for more information on where to find a bank
or credit union that can open an account online.
• Audio (MP3).
• Plain Text File (TXT). Reporting and resolving your tax-related identity
theft issues.
• Braille Ready File (BRF).
• Tax-related identity theft happens when someone
Disasters. Go to IRS.gov/DisasterRelief to review the steals your personal information to commit tax fraud.
available disaster tax relief. Your taxes can be affected if your SSN is used to file a
fraudulent return or to claim a refund or credit.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all the forms, instruc- • The IRS doesn’t initiate contact with taxpayers by
tions, and publications you may need. Or, you can go to email, text messages (including shortened links), tele-
IRS.gov/OrderForms to place an order. phone calls, or social media channels to request or
verify personal or financial information. This includes
Getting tax publications and instructions in eBook requests for personal identification numbers (PINs),
format. Download and view most tax publications and passwords, or similar information for credit cards,
instructions (including the Instructions for Form 1040) on banks, or other financial accounts.
mobile devices as eBooks at IRS.gov/eBooks. Go to IRS.gov/IdentityTheft, the IRS Identity Theft
•
IRS eBooks have been tested using Apple's iBooks for Central webpage, for information on identity theft and
iPad. Our eBooks haven’t been tested on other dedicated data security protection for taxpayers, tax professio-
eBook readers, and eBook functionality may not operate nals, and businesses. If your SSN has been lost or
as intended. stolen or you suspect you’re a victim of tax-related
Access your online account (individual taxpayers identity theft, you can learn what steps you should
only). Go to IRS.gov/Account to securely access infor- take.
mation about your federal tax account. • Get an Identity Protection PIN (IP PIN). IP PINs are
• View the amount you owe and a breakdown by tax six-digit numbers assigned to taxpayers to help pre-
year. vent the misuse of their SSNs on fraudulent federal in-
come tax returns. When you have an IP PIN, it pre-
• See payment plan details or apply for a new payment vents someone else from filing a tax return with your
plan. SSN. To learn more, go to IRS.gov/IPPIN.
• Make a payment or view 5 years of payment history
and any pending or scheduled payments. Ways to check on the status of your refund.
• Access your tax records, including key data from your • Go to IRS.gov/Refunds.
most recent tax return, and transcripts. • Download the official IRS2Go app to your mobile de-
• View digital copies of select notices from the IRS. vice to check your refund status.
• Approve or reject authorization requests from tax pro- • Call the automated refund hotline at 800-829-1954.
fessionals. The IRS can’t issue refunds before mid-February
• View your address on file or manage your communica- ! for returns that claimed the EIC or the additional
tion preferences. CAUTION child tax credit (ACTC). This applies to the entire
refund, not just the portion associated with these credits.
Get a transcript of your return. With an online ac-
count, you can access a variety of information to help you Making a tax payment. Payments of U.S. tax must be
during the filing season. You can get a transcript, review remitted to the IRS in U.S. dollars. Digital assets are not
your most recently filed tax return, and get your adjusted accepted. Go to IRS.gov/Payments for information on how
gross income. Create or access your online account at to make a payment using any of the following options.
IRS.gov/Account.
• IRS Direct Pay: Pay your individual tax bill or estimated
Tax Pro Account. This tool lets your tax professional tax payment directly from your checking or savings ac-
submit an authorization request to access your individual count at no cost to you.
taxpayer IRS online account. For more information, go to • Debit Card, Credit Card, or Digital Wallet: Choose an
IRS.gov/TaxProAccount. approved payment processor to pay online or by
phone.
Using direct deposit. The safest and easiest way to re-
ceive a tax refund is to e-file and choose direct deposit,

Publication 536 (2023) 15

- 16 -

Page 16 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Electronic Funds Withdrawal: Schedule a payment taxpayers is part of a multi-year timeline that began pro-
when filing your federal taxes using tax return prepara- viding translations in 2023. You will continue to receive
tion software or through a tax professional. communications, including notices and letters, in English
until they are translated to your preferred language.
• Electronic Federal Tax Payment System: Best option
for businesses. Enrollment is required. Contacting your local TAC. Keep in mind, many ques-
• Check or Money Order: Mail your payment to the ad- tions can be answered on IRS.gov without visiting a TAC.
dress listed on the notice or instructions. Go to IRS.gov/LetUsHelp for the topics people ask about
most. If you still need help, TACs provide tax help when a
• Cash: You may be able to pay your taxes with cash at
tax issue can’t be handled online or by phone. All TACs
a participating retail store.
now provide service by appointment, so you’ll know in ad-
• Same-Day Wire: You may be able to do same-day vance that you can get the service you need without long
wire from your financial institution. Contact your finan- wait times. Before you visit, go to IRS.gov/TACLocator to
cial institution for availability, cost, and time frames. find the nearest TAC and to check hours, available serv-
ices, and appointment options. Or, on the IRS2Go app,
Note. The IRS uses the latest encryption technology under the Stay Connected tab, choose the Contact Us op-
to ensure that the electronic payments you make online, tion and click on “Local Offices.”
by phone, or from a mobile device using the IRS2Go app
are safe and secure. Paying electronically is quick, easy,
and faster than mailing in a check or money order. The Taxpayer Advocate Service (TAS)
Is Here To Help You
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options. What Is TAS?

• Apply for an online payment agreement IRS.gov/ ( TAS is an independent organization within the IRS that
OPA) to meet your tax obligation in monthly install- helps taxpayers and protects taxpayer rights. TAS strives
ments if you can’t pay your taxes in full today. Once to ensure that every taxpayer is treated fairly and that you
you complete the online process, you will receive im- know and understand your rights under the Taxpayer Bill
mediate notification of whether your agreement has of Rights.
been approved.
• Use the Offer in Compromise Pre-Qualifier to see if How Can You Learn About Your Taxpayer
you can settle your tax debt for less than the full Rights?
amount you owe. For more information on the Offer in
Compromise program, go to IRS.gov/OIC. The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Go to
Filing an amended return. Go to IRS.gov/Form1040X
TaxpayerAdvocate.IRS.gov to help you understand what
for information and updates.
these rights mean to you and how they apply. These are
Checking the status of your amended return. Go to your rights. Know them. Use them.
IRS.gov/WMAR to track the status of Form 1040-X amen-
ded returns. What Can TAS Do for You?
It can take up to 3 weeks from the date you filed
TAS can help you resolve problems that you can’t resolve
! your amended return for it to show up in our sys- with the IRS. And their service is free. If you qualify for
CAUTION tem, and processing it can take up to 16 weeks.
their assistance, you will be assigned to one advocate
who will work with you throughout the process and will do
Understanding an IRS notice or letter you’ve re- everything possible to resolve your issue. TAS can help
ceived. Go to IRS.gov/Notices to find additional informa- you if:
tion about responding to an IRS notice or letter.
• Your problem is causing financial difficulty for you,
Responding to an IRS notice or letter. You can now your family, or your business;
upload responses to all notices and letters using the • You face (or your business is facing) an immediate
Document Upload Tool. For notices that require additional threat of adverse action; or
action, taxpayers will be redirected appropriately on
IRS.gov to take further action. To learn more about the • You’ve tried repeatedly to contact the IRS but no one
tool, go to IRS.gov/Upload. has responded, or the IRS hasn’t responded by the
date promised.
Note. You can use Schedule LEP (Form 1040), Re-
quest for Change in Language Preference, to state a pref- How Can You Reach TAS?
erence to receive notices, letters, or other written commu-
nications from the IRS in an alternative language. You may TAS has offices in every state, the District of Columbia,
not immediately receive written communications in the re- and Puerto Rico. To find your advocate’s number:
quested language. The IRS’s commitment to LEP
• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;

16 Publication 536 (2023)

- 17 -

Page 17 of 18 Fileid: … tions/p536/2023/a/xml/cycle04/source 12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Download Pub. 1546, The Taxpayer Advocate Service Low Income Taxpayer Clinics (LITCs)
Is Your Voice at the IRS, available at IRS.gov/pub/irs-
pdf/p1546.pdf; LITCs are independent from the IRS and TAS. LITCs rep-
• Call the IRS toll free at 800-TAX-FORM resent individuals whose income is below a certain level
(800-829-3676) to order a copy of Pub. 1546; and who need to resolve tax problems with the IRS. LITCs
can represent taxpayers in audits, appeals, and tax collec-
• Check your local directory; or
tion disputes before the IRS and in court. In addition,
• Call TAS toll free at 877-777-4778. LITCs can provide information about taxpayer rights and
responsibilities in different languages for individuals who
How Else Does TAS Help Taxpayers? speak English as a second language. Services are offered
for free or a small fee. For more information or to find an
TAS works to resolve large-scale problems that affect LITC near you, go to the LITC page at
many taxpayers. If you know of one of these broad issues, TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134,
report it to TAS at IRS.gov/SAMS. Be sure to not include Low Income Taxpayer Clinic List, at IRS.gov/pub/irs-pdf/
any personal taxpayer information. p4134.pdf.

Publication 536 (2023) 17

- 18 -

Page 18 of 18         Fileid: … tions/p536/2023/a/xml/cycle04/source            12:11 - 27-Dec-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                   To help us develop a more useful index, please let us know if you have ideas for index entries.
Index              See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                              Nonbusiness deductions   3               NOL in 2023, Carryover to 2024:
A                             Nonbusiness income  3                     Worksheet 3 Instructions                         13
Assistance (See Tax help)     Worksheet 1. Figuring Your NOL         3 NOL year 2 6, 
                             Filing status, change in 9
C                            Form 1045, Schedule B    10               P
Carryback period   6         Forms and schedules:                      Publications (See Tax help)
Carryback, waiving   6        Form 1040X 8
Carryforward period  6        Form 1045 8                              R
Carryover from 2023 to 2024:  Form 1045, Schedule B   10               Refiguring tax 8
  Estates and trusts 11      Future developments  1                    Reminders  1
Claiming an NOL deduction   7
                             H                                         S
D                            How to carry an NOL back or               Steps in figuring NOL          2
Deducting a carryback   7     forward 7
Deducting a carryforward  8  How to figure an NOL 3                    T
                                                                       Tax help 13
E                            M
Excess business loss   13    Marital status, change in 9               W
                             Missing children, photographs of        2 Waiving the carryback period                        6
F                            Modified taxable income   10              When to use an NOL 6
Figuring an NOL:                                                       Worksheet 2:
  Capital losses 4           N                                          Carryover from 2023 to 2024 for 
  Carryover 10               NOL Before 2018, Carryover to              NOL Year Before 2018                             12
  NOLs from other years 4     2024:
                              Worksheet 2 instructions 10

18                                                                                 Publication 536 (2023)

PDF file checksum: 3780832716

(Plugin #1/9.12/13.0)