What Form 1139 (2012) Is For
IRS Form 1139 (2012) is a corporation application for a tentative refund that allows eligible corporations to recover overpaid corporate income tax from prior years. It applies when a corporation has a net operating loss, net capital loss, or unused general business credit that can be used to offset taxable income from earlier tax years. By filing this form, corporations can receive a quick refund rather than waiting to apply losses or credits in future years.
C corporations use this form, as do certain insurance companies subject to United States taxes. Partnerships or exempt entities cannot file it. The main benefit of using Form 1139 is the 90-day processing period, which provides faster access to federal revenue refunds compared to the longer timeline for amended tax returns.
When You’d Use Form 1139
Corporations use Form 1139 when they want to claim a quick refund for taxes previously paid after experiencing a loss or unused credit in the current tax year. It applies to situations involving a net operating loss, net capital loss, unused general business credit, or a claim of proper adjustment that reduces taxable income. The form must be filed within twelve months after the end of the loss year, and the corporation must have already filed its income tax return for that year.
Form 1139 is handy for corporations seeking faster access to federal revenue without waiting for an amended return to be processed. If a business misses the filing deadline, it can instead use Form 1120X, which allows for a formal refund claim but requires additional time. This makes Form 1139 a preferred option for corporations and small businesses that need immediate cash flow relief through a tentative refund.
Key Rules or Details for 2012
For the 2012 tax year, corporations were allowed to carry back a net operating loss for two years and carry any remaining amount forward for up to twenty years. Special provisions extended the carryback period to five years for farming losses and qualified disaster losses, and up to ten years for specified liability losses. Net capital losses could be carried back three years and treated as short-term capital losses when recalculating taxable income in prior years.
Unused general business credits can be carried back one year or carried forward up to twenty years, although eligible small businesses may apply a five-year carryback. Corporations had the option to waive the carryback period entirely by making an election on a timely filed tax return. Different rates and limits are applied based on the type of loss, the industry, and whether the corporation filed as part of a consolidated group.
Step-by-Step (High Level)
Corporations can follow these steps to complete Form 1139 correctly:
- File the corporation’s tax return for the loss year or prepare it for submission.
- Identify the tax years eligible for the carryback of losses or credits.
- Gather documentation, such as prior-year returns, schedules, and any statements showing elections or adjustments.
- Recalculate taxable income for each carryback year, including deductions, credits, and adjustments for alternative minimum tax.
- Complete the Form 1139 entries showing the loss or credit amounts carried back and the resulting decrease in tax liability.
- Mail Form 1139 separately to the IRS Service Center that processes the corporation’s regular return.
- Retain copies of all forms, worksheets, and supporting records in case of IRS review.
Following these steps ensures accuracy and reduces the likelihood of disallowance due to errors or missing documentation.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
Corporations often make simple filing errors on Form 1139 that delay or disqualify refund claims, but these can be avoided with careful preparation.
- Filing before the corporate return: Always file Form 1120 for the same tax year before submitting Form 1139.
- Omitting required attachments: Include all necessary schedules, worksheets, and supporting statements to prevent processing delays.
- Using the wrong carryback period: Verify the correct carryback years for each type of loss or credit before filing.
- Failing to include AMT adjustments: Review and apply all alternative minimum tax adjustments to ensure accurate calculations.
- Miscalculating or entering inconsistent figures: Double-check totals to ensure they match those from prior-year returns.
- Neglecting the proper order for net capital losses: Apply losses starting with the earliest year to comply with IRS rules.
- Ignoring special adjustments: Reflect changes such as the claim of right or depreciation adjustments before submitting the form.
Thorough review, accurate entries, and complete documentation help corporations avoid delays and ensure prompt IRS processing.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
Once Form 1139 is submitted, the IRS reviews the application and generally issues a tentative refund within 90 days. The refund represents the difference between the corporation’s previous tax payments and the recalculated tax liability after applying carrybacks or adjustments.
The refund is considered temporary until the IRS verifies all calculations and supporting documentation. If errors or excess claims are found, additional taxes, interest, or penalties may apply. Corporations that disagree with a disallowance cannot appeal through Form 1139 but may file Form 1120X to make a formal claim and preserve their rights under federal tax law.
FAQs
What is IRS Form 1139 (2012) used for?
IRS Form 1139 (2012) allows corporations to apply for a tentative refund when losses or unused credits reduce taxable income for a specific tax year. This corporation application helps recover overpaid corporate tax and improve business cash flow.
Who can file Form 1139 for corporate income tax purposes?
Resident corporations, including C corporations and insurance companies, can file Form 1139 to claim refunds related to income tax overpayments. Partnerships and exempt entities are not eligible because their profits are passed through to owners under U.S. tax law.
How does a net capital loss affect taxable income?
A net capital loss occurs when a corporation’s capital losses exceed capital gains for the tax year. This loss can be carried back or forward to offset ordinary income, thereby lowering the corporate tax rate and reducing the overall federal revenue liability.
What is the difference between short-term and long-term capital gains?
Short-term capital gains apply to assets held for one year or less, while long-term capital gains apply to investments held for more than one year. Different rates may apply, depending on the corporation’s taxable income and applicable corporate income tax law.
Can a corporation apply for a quick refund through Form 1139?
Yes, a corporation may file Form 1139 to receive a quick refund, which is typically processed within 90 days. This option offers a faster benefit than an amended tax return and provides short-term financing advantages for companies facing revenue losses.
Where can corporations find additional information about Form 1139?
Corporations can access detailed guidance and applicable instructions for Form 1139 on the official IRS website. The site includes examples, explanations of deductions and adjustments, as well as information on payments, depreciation, and other items subject to taxation.
For more resources on filing or understanding other IRS forms, visit our Form Summaries and Guides Library.
