What Form 1139 (2015) Is For
IRS Form 1139 (2015) is a corporation application used by businesses to request a tentative refund when they have overpaid taxes for a prior tax year. This form enables corporations to apply a net operating loss, net capital loss, or unused general business credit to earlier tax returns, thereby reducing the previously reported taxable income. It provides a quicker way for taxpayers to receive refunds than filing an amended return and helps companies improve cash flow and manage financing costs more efficiently. Corporations generally benefit from this quick refund option when they pay taxes and later discover deductions or credits that lower their overall liability.
The IRS requires that Form 1139 be filed appropriately, accompanied by all relevant schedules, computations, and supporting forms, to ensure the correct adjustment is made. Each company must follow applicable tax law and accurately compute any adjustment or overpayment before submission. Businesses can visit the IRS website, marked with the locked padlock icon, to access official instructions, review the last reviewed dates of each page, and find additional information. Completing the form correctly helps protect corporations from penalties, facilitates accurate account reconciliation, and ensures that refunds and deductions are processed in compliance with current law.
When You’d Use Form 1139
Corporations use Form 1139 when they need a quick refund after experiencing a net operating loss, net capital loss, or unused general business credit. It allows them to carry losses or credits back to prior tax years and reduce previously paid taxes. The form must be filed within 12 months after the end of the loss year, once the original tax return has been filed. If the deadline is missed, corporations can still claim refunds by filing an amended return using Form 1120X.
Key Rules or Details for 2015
For the 2015 tax year, corporations could carry back a net operating loss for two years and carry it forward for up to 20 years under existing tax law. A net capital loss can be taken back three years and forward five years, but only to the extent that it does not increase a net operating loss. Companies could also elect to waive the carryback period by making the election on Form 1120, Schedule K, line 11, which was irrevocable once filed. When computing losses, corporations had to follow special deduction limits and use IRS worksheets to ensure each adjustment and refund claim was correctly computed.
Step-by-Step (High Level)
Step 1: File the Current Year’s Return
Before completing Form 1139, the corporation must file its tax return for the year in which the loss occurred. The IRS will not process a tentative refund without the return on file.
Step 2: Colin's Prior Year Returns
The company should gather the original returns for the carryback years to verify income and make any necessary adjustments.
Step 3: Recalculate Taxes for Prior Years
Refigure tax by applying necessary losses or credits to earlier years. Use the appropriate schedules, such as Schedule D for capital losses or Form 3800 for business credits.
Step 4: Complete Form 1139
Enter the loss or credit amounts, show before-and-after tax calculations, and identify the carryback years correctly.
Step 5: Attach Required Documents
Include copies of the following:
- The first two pages of the current tax return
- All schedules that produced the loss or credit
- Recomputed forms for the carryback years
- Any election statements or Form 8886 (if applicable)
Step 6: File Separately
Mail Form 1139 to the IRS Service Center where the corporation files its regular return. Do not attach it to another filing.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
Corporations frequently make filing errors on Form 1139, which can delay refunds or result in the disallowance of deductions. Paying attention to these details can help ensure faster and smoother processing by the IRS.
- Filing before the return is processed: The IRS cannot act on Form 1139 until the loss-year corporate return has been filed and recorded.
- Calculation errors: Incomplete schedules or incorrect math can void the request entirely. Always verify computations against IRS worksheets before submission.
- Using incorrect carryback years: Losses must be applied to the earliest eligible year first. For example, a 2015 loss should offset 2013 income before 2014.
- Overlooking released credits: Reducing prior-year income may free up previously used credits. These must be properly carried back or forward using Form 1120X.
- Missing the 12-month deadline: Form 1139 must be filed within 12 months of the end of the tax year in which the loss occurred; late claims require Form 1120X instead.
Careful preparation, timely filing, and accurate calculations help corporations avoid refund delays, disallowance, and potential IRS penalties.
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 filing Form 1139, the IRS begins reviewing the corporation’s claim within 90 days. The agency verifies that the loss or credit was correctly computed and that all schedules and supporting forms were properly filed. If approved, the IRS issues a quick refund by check or direct deposit based on the overpayment. However, the refund is tentative, meaning the IRS may later audit the claim and adjust the amount if errors, omissions, or incorrect deductions are found.
FAQs
What is IRS Form 1139 (2015) used for?
IRS Form 1139 (2015) allows corporations to apply for a tentative refund when they experience a net operating loss or net capital loss. This corporation application helps companies recover overpaid taxes by carrying losses back to prior tax years.
How does a tentative refund differ from a regular tax return?
A tentative refund provides a quick refund processed within 90 days, while a standard tax return or amended return may take longer. Corporations file this form separately to reduce prior taxable income and recover earlier payments.
Can a business claim an unused general business credit with this form?
Yes, corporations can file Form 1139 to apply unused general business credit amounts to previous tax years, as permitted under existing tax law. This adjustment may reduce prior taxes owed and provide faster refunds through IRS review.
What are the benefits of filing Form 1139 for a corporation?
The primary advantage is faster processing, enabling corporations to receive refunds more quickly. It helps businesses manage costs, protect cash flow, and maintain stable financing by promptly recovering overpayments or making proper adjustments from earlier tax years.
What deductions or limits apply to a 2015 tax return?
The carryback limits for the 2015 tax year are determined each year. Companies generally must refer to IRS instructions for specific computations, including adjustments for dividends, business credits, and prior losses.
Can taxpayers use Form 1139 to correct errors resulting from overpayments?
Yes, corporations may file to claim refunds from excess tax payments if an overpayment resulted from a loss or credit. The IRS reviews the filing and issues a refund, subject to audit and applicable penalties if errors occur.
Where can corporations find additional information or download the form?
Corporations can visit the IRS website to access the most recent version of Form 1139, related forms, and instructions. The official page includes the IRS’s “locked padlock icon,” ensuring secure access to authorized tax filing information.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library.
