What IRS Form 1139 (2024) Is For
IRS Form 1139 is a corporation application for a tentative refund that allows corporations to claim quick refunds resulting from a net operating loss, net capital loss, or unused general business credit. The Internal Revenue Service processes this application to help taxpayers offset prior taxable income when losses are incurred or credits arise after the original return is filed. It is designed for C corporations and life insurance companies, not S corporations, and must include complete computation and supporting schedules to ensure timely approval.
When You’d Use IRS Form 1139 (2024)
Corporations use this tax form when a loss or credit adjustment arises during the taxable year. Form 1139 must be filed within twelve months after the end of the tax year in which the net operating loss, net capital loss, or unused credit occurred. The corporation’s income tax return for that year must already be filed or submitted together with the refund application. Filing this form separately at the proper Internal Revenue Service center ensures the request is processed correctly and avoids delays.
Key Rules or Details for 2024
- Net operating loss: Corporations can no longer carry back NOLs for tax years beginning after 2020, except for farming and insurance companies, which can apply a two-year carryback.
- Net capital loss: Capital losses can be carried back three years and forward five years, but are treated as short-term losses in those years.
- Unused general business credit: Credits may be carried back one year and forward up to twenty years, depending on eligibility under Section 39.
- Filing deadline: The application for a tentative refund must be filed within twelve months after the end of the loss year.
- Required attachments: Include recomputed schedules, supporting calculations, and any forms showing how the loss or credit affects prior years.
- Separate filing rule: The corporation must mail the form separately to the Internal Revenue Service center where it normally files returns.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step Filing Process (High Level)
Step 1: Gather documentation
Collect the corporation’s income tax return for the loss year and all schedules showing losses or credits carried back. Ensure that all required information is accurate before completing the form.
Step 2: Complete the heading section
Enter information such as the corporation’s name, address, employer identification number, and date of incorporation. Accuracy in these details prevents processing errors at the Internal Revenue Service center.
Step 3: Identify the refund type
Check the box for net operating loss, net capital loss, unused credit, or a claim of right adjustment. Enter the tax year for which the loss or adjustment arose and specify the amount of refund claimed.
Step 4: Answer eligibility questions
Provide information about consolidated returns, pending Tax Court cases, or dissolution. This section helps the Internal Revenue Service confirm the corporation’s eligibility for the quick refund.
Step 5: Calculate the tax decrease
Recalculate prior year taxable income and determine how the carryback affects each applicable year. The computation should include before-and-after comparisons for income, deductions, and credits.
Step 6: Attach documentation and sign
Attach all schedules, recomputed forms, and statements supporting your calculation. The officer must sign the form under penalty of perjury and mail it to the address listed on the IRS website for the appropriate service center.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Filing before completing the income tax return: Always file the corporation’s income tax return for the loss year before submitting Form 1139 to avoid automatic rejection.
- Missing the twelve-month deadline: Apply before the deadline to qualify for a quick refund; otherwise, you must use the slower Form 1120-X instead.
- Incomplete or missing schedules: Provide all recomputed schedules for each carryback year to show how the deduction or credit was applied. Missing attachments delay processing.
- Calculation errors: Recalculate each year carefully and verify computations to avoid math errors that could lead to disallowance. A second review can help prevent mistakes.
- Ignoring NOL carryback rules: Apply the correct carryback period for your business type and loss year to comply with current tax rules.
- Mailing to the wrong address: Always confirm the Internal Revenue Service center address on the IRS website before mailing to ensure proper routing.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After the corporation files the completed application, the Internal Revenue Service generally processes the tentative refund within ninety days of receipt. The IRS reviews the computation and verifies the information required to confirm accuracy. A refund payment may be sent by check or electronic deposit. If errors or missing information are found, the IRS may issue a partial refund or request additional information to correct the issue. Any excessive refund or overpayment identified later will be treated as a math error and may result in penalties or repayment.
FAQs
Can an S corporation file IRS Form 1139 (2024)?
No, this form applies only to C corporations and life insurance companies. S corporations must handle losses through the individual returns of their shareholders, utilizing separate carryback or credit procedures.
How do the NOL carryback rules apply to IRS Form 1139 (2024)?
The NOL carryback rules allow only specific corporations, such as farming or insurance businesses, to carry losses back two years. Other corporations may carry losses forward indefinitely.
What is a claim for the right adjustment on Form 1139?
A claim of right adjustment occurs when income previously reported is repaid in a later year. The corporation may apply this adjustment under Section 1341 for a tentative refund.
How does a corporation's application for a tentative refund differ from Form 1120-X?
Form 1139 provides a quick refund, which is processed in about ninety days, while Form 1120-X is a full amended return that takes longer but allows for appeals if the IRS disagrees.
How should corporations handle a net capital loss when completing Form 1139?
A net capital loss can be carried back three years and carried forward five years. It must be treated as a short-term capital loss in those carryback years.
What details should be attached to the corporation application for a tentative refund?
Attach recomputed schedules, supporting forms, and calculations that show how each carryback affects taxable income and tax liability. All information must match prior returns.
Where should a corporation file its Form 1139 application?
Mail the completed IRS form, including all attachments, to the Internal Revenue Service center where the corporation files its regular tax return. Always verify the address on the IRS website for accuracy.
