Review these important details about Form 1045 and NOL (Net Operating Loss).
- The IRS provides Form 1045 so that taxpayers may file for a quick refund of previous years' tax resulting from an NOL that was generated on a later year return. This option is provided as an alternative to filing amended returns for those previous years. For more information on determining whether a 1045 or amended returns should be filed, see the Instructions for Form 1045.
- Starting in Drake16: enter all pertinent information on the 1045 screen in order to populate the 1045 form.
- The left side of the screen will generate pages 1 and 2 -- the tax year to which the NOL should be carried back to and the AGI from that year are required to be entered. Enter any additional information necessary.
- The right side of this screen will populate the Schedule B, pages 4 and 5, of the 1045. Enter any pertinent information in this section.
- To enter information for an additional carryback year, press Page Down to generate an additional 1045 screen.
- If you want to produce pages 1-5, do not mark the option on the NOL screen that indicates that the 20YY NOL is being carried back later or outside of the software.
- Never enter current year losses on the LOSS screen. The software automatically carries a current year NOL forward for you, so no additional entry is necessary. This carryforward is displayed on the Wks CARRY worksheet (WK_CARRY in Drake15 and prior) in view mode. (Note: The Carryover worksheet must be enabled on the Setup > Options > Form & Schedule Options tab.)
- The actual result is displayed on line 41, even if it is negative.
- In Drake Tax, Form 1045 is only able to be generated for carryback of a NOL. If you need to carry back a general business credit or Section 1256 loss on Form 1045, you will have to manually complete the form outside the software. A fillable PDF is available from the IRS.
- E-Filing: You can e-file the return in which you generate Form 1045, but Form 1045 does not e-file with the return, nor may it be e-filed separately. Preparers should paper file Form 1045 the same way as they would paper file Form 1040 for the same taxpayer. The IRS list of filing addresses is here: Tax Professionals - Where to File Individual Returns for Your Clients. See the IRS FAQ for procedure changes for filing Form 1139 during the COVID-19 pandemic.
Form 1045 will generally not produce if there is no current year net operating loss to carry back. The software produces Form 1045 Schedule A - NOL if either:
- there is an NOL, or
- there is not an NOL, but
- You have selected the PRNT screen option Print Form 1045 page 3 (Schedule A - NOL) (page 2 in Drake14), and
- The amount on Form 1040 for AGI minus standard or itemized deductions is negative (Form 1040, line 7 less line 8 starting in Drake18, Form 1040, line 41 in Drake17 and prior).
To eliminate form 1045 Schedule A from view, uncheck the PRNT screen option.
Note: Drake13 and earlier software produces Form 1045 Schedule A - NOL if either:
- You have selected Calculate 1045 page 2 ONLY on screen NOL.
- Or you have selected Prepare as needed in the Form 1045 page 2 (NOL) field at Setup > Options > Form & Schedule Options and Line 41 of the 1040 is negative.
In any event, Form 1045 is not transmitted with the return.