What Form 1139 Is For

Form 1139 is a special application that allows corporations (except S corporations) to quickly recover taxes they've already paid. Think of it as hitting the "fast-forward" button on your tax refund. The form exists because the U.S. tax code recognizes that businesses don't always make money every year—sometimes you have losses, and those losses should help offset taxes you paid when times were better.

Specifically, you can use Form 1139 to get a tentative (preliminary) refund based on four situations:

1) Net Operating Loss (NOL) Carryback

Your corporation lost money in 2018, and you want to "carry back" that loss to reduce taxable income from profitable years (2016 or 2017). For 2018, this primarily applies to farming losses and losses from insurance companies (other than life insurance companies), since the Tax Cuts and Jobs Act eliminated most NOL carrybacks for losses after December 31, 2017.

2) Net Capital Loss Carryback

Your corporation's capital losses exceeded capital gains in 2018. You can carry this back three years (to 2015, 2016, or 2017) to offset capital gains you reported in those years.

3) Unused General Business Credit Carryback

Your business earned tax credits (like credits for research activities or renewable energy) that you couldn't fully use in 2018 because you didn't owe enough tax. You can carry these back one year (to 2017).

4) Claim of Right Adjustment

You reported income in a prior year, paid tax on it, but later had to pay it back. Section 1341(b)(1) lets you recover the tax you shouldn't have paid.

The beauty of Form 1139 is speed. While a normal amended return (Form 1120X) can take six months or longer to process, the IRS commits to processing Form 1139 within 90 days of filing—or 90 days after your 2018 tax return due date, whichever is later. IRS.gov

When You’d Use Form 1139 (Including Late and Amended Filing)

Filing Deadline: You must file Form 1139 within 12 months of the end of the tax year when the loss or credit occurred. For a 2018 calendar-year corporation, that means you had until December 31, 2019, to file Form 1139 for a 2018 loss or credit. Critical requirement: You must file your actual 2018 corporate tax return (Form 1120) by the same date you file Form 1139—or earlier. You cannot file Form 1139 before filing your regular return.

If You Missed the Deadline: If you missed the 12-month window for Form 1139, don't panic. You can still claim your refund by filing an amended return (Form 1120X) instead. The downside? You lose the 90-day fast-track processing. Amended returns generally must be filed within three years after the original return's due date (or the date you actually filed it, if later). For a 2018 loss, this typically means by April 15, 2022 (or later if you filed for extensions). IRS.gov

When You Must Use Form 1120X Instead

Certain situations disqualify you from using Form 1139's fast track, and you must file an amended return instead:

• You're carrying back losses to a year when you had a Section 965(a) inclusion (the one-time "repatriation tax" from the Tax Cuts and Jobs Act)
• You're claiming a prior year minimum tax credit or foreign tax credit that was released by the carryback
• Your 2018 was a "965 year" and you're trying to carry back an NOL

Amended Form 1139

If you filed Form 1139 but later discovered errors, you'll typically need to file Form 1120X to correct the carryback years, not another Form 1139.

Key Rules or Details for 2018

Major Tax Law Changes: The Tax Cuts and Jobs Act fundamentally changed NOL rules starting with losses incurred in tax years ending after December 31, 2017. This makes 2018 a pivotal year:

Limited NOL Carryback

For most corporations with 2018 losses, you cannot carry back your NOL at all—you can only carry it forward indefinitely. The two-year carryback was eliminated except for:

• Farming losses: Defined under section 263A(e)(4), these losses can still be carried back two years
• Insurance company losses: Non-life insurance companies can carry back losses two years

80% Limitation on NOL Deductions

When you carry a 2018 farming loss back to 2016 or 2017, the NOL deduction cannot exceed 80% of taxable income in those years (calculated without considering the NOL deduction itself). This means even with a large loss, you can't reduce prior year taxable income below 20%. However, this 80% cap does not apply to insurance companies (other than life insurers). IRS.gov

Waiving the Carryback Period

If your farming business or insurance company has the option to carry back a 2018 loss but prefers not to (maybe you expect higher tax rates in the future), you can make an irrevocable election to waive the carryback. Do this by checking the appropriate box on Form 1120, Schedule K, line 11, when you file your 2018 return. Once made, this election cannot be undone. IRS.gov

Capital Loss Carrybacks

Still allowed! A 2018 net capital loss can be carried back three years (to 2015, 2016, and 2017) as a short-term capital loss, but only to the extent it doesn't create or increase an NOL in those years.

General Business Credit Carrybacks

Still limited to one year back. A 2018 unused credit goes back to 2017 only (unless special rules apply to specific credits).

Alternative Minimum Tax (AMT) Repealed

For 2018 and later, corporations no longer pay alternative minimum tax (AMT). This simplifies the Form 1139 calculation for 2018 carrybacks.

Step-by-Step (High Level)

Here's how to complete Form 1139 in practical terms:

Step 1: File Your 2018 Tax Return First

Complete and file Form 1120 for 2018 showing your loss or unused credit. Form 1139 cannot be filed before or simultaneously with your income tax return—your 2018 return must be filed first (or at minimum, on the same date).

Step 2: Identify Your Carryback Years

Determine which prior years you'll carry the loss or credit back to. For a 2018 farming loss or insurance loss, that's 2016 and/or 2017 (two years back). For capital losses, it's 2015, 2016, and 2017 (three years back). For unused credits, just 2017 (one year back).

Step 3: Gather Carryback Year Returns

Pull out your original tax returns for the carryback years. You'll need the figures from those returns to show "before and after" comparisons.

Step 4: Complete the Form's Header

Fill in your corporation's name, address, EIN, and the tax year information for 2018 (the loss year). Identify which type of carryback you're claiming on lines 1a through 1d.

Step 5: Calculate the Carryback

The form's main section (lines 11-28) requires you to show taxable income and tax calculations for each carryback year in two columns: (a) before the carryback and (b) after applying the carryback. You'll recalculate:

• Taxable income with the NOL or capital loss deduction applied
• Income tax based on the reduced taxable income
• Credits and other taxes that may change

Step 6: Compute Your Refund

Line 30 shows the decrease in tax for each carryback year. Line 32 totals your refund claim. Subtract any overpayments you've already used (lines 33-34) to arrive at your net refund (line 35).

Step 7: Attach Required Documents

Include copies of:

• First two pages of your 2018 Form 1120
• Schedules showing the loss or credit (Schedule D for capital losses, Form 3800 for credits, etc.)
• Refigured forms/schedules for the carryback years
• Any Form 8886 (reportable transaction disclosures)
• Form 8302 if requesting direct deposit of $1 million or more

Step 8: Mail to the Correct Service Center

Send Form 1139 to the IRS Service Center where you normally file your corporate return. Do not attach it to your 2018 Form 1120—file it separately. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Filing Too Early

Many corporations try to file Form 1139 before filing their 2018 income tax return. The IRS will reject this. Solution: Always file Form 1120 first, then submit Form 1139.

Mistake #2: Missing the 12-Month Deadline

If December 31, 2019, passed and you never filed Form 1139, you've lost the fast-track option. Solution: File Form 1120X immediately instead. You still have time for the regular three-year refund claim period.

Mistake #3: Carrying Back Non-Eligible NOLs

For 2018, regular business losses (non-farming, non-insurance) cannot be carried back at all under the Tax Cuts and Jobs Act. Solution: Review whether your loss qualifies as a "farming loss" under section 263A(e)(4) or insurance company loss. If not, you can only carry the NOL forward to future years, not back.

Mistake #4: Incomplete Documentation

Failing to attach all required schedules, forms, and computations causes processing delays or outright rejection. Solution: Use the checklist on pages 1-2 of the Form 1139 instructions and attach everything listed under "What To Attach."

Mistake #5: Math Errors in Carryback Calculations

The IRS may disallow Form 1139 entirely if there are material math errors. Unlike a regular return, you can't just fix it—your application gets denied, and you must start over with Form 1120X. Solution: Double-check all calculations. Use tax software or consult a CPA for complex carrybacks.

Mistake #6: Not Understanding the 80% Limitation

For 2018 farming losses, forgetting that the NOL deduction is capped at 80% of carryback year taxable income leads to overstated refunds. Solution: When calculating line 14, apply the 80% limitation correctly. The instructions specifically address this for post-2017 losses. IRS.gov

Mistake #7: Trying to Use Form 1139 for Section 965 Years

If any of your carryback years (2015, 2016, or 2017) included the repatriation tax transition inclusion, Form 1139 is off-limits. Solution: File Form 1120X instead, following the special ordering rules for 965 years.

What Happens After You File

Processing Timeline: The IRS aims to process Form 1139 within 90 days of the later of: (1) the date you file a complete application, or (2) the last day of the month containing your 2018 return's due date (including extensions). For a calendar-year corporation with no extensions, that's generally 90 days from filing or 90 days from April 15, 2019. IRS.gov

Tentative Nature of the Refund

The refund you receive is called "tentative" because it's not final. The IRS sends you the money based on your calculations but reserves the right to audit and adjust it later. Receiving payment doesn't mean the IRS agrees with your claim—it just means they've processed it quickly.

Interest on Excessive Refunds

If the IRS later determines you received more than you should have, you'll owe the excess back plus interest. The IRS treats overpayments from Form 1139 as if they resulted from a math error, allowing them to assess additional tax without a full audit process.

No Appeal Rights for Disallowances

If the IRS disallows your Form 1139 application (rejects it before paying), you cannot sue them over that rejection. Your only recourse is to file Form 1120X and go through the regular refund claim process, which does give you appeal and litigation rights. IRS.gov

Potential for Audit

Even after paying your tentative refund, the IRS can audit the carryback years and the loss year. If they find overstatements due to negligence, substantial understatement, or overvalued property, you'll face penalties plus interest on the disallowed amounts.

Direct Deposit Option

For any carryback year where your refund is at least $1 million, you can request direct deposit by attaching Form 8302. This gets the money into your account faster once approved.

Follow-Up Communications

The IRS may contact you or your authorized representative (designated via Form 2848, Power of Attorney) if they need clarification or additional documentation. Respond promptly to avoid delays.

FAQs

Q1: Can I file Form 1139 electronically for 2018?

No. As of the 2018 tax year, Form 1139 must be filed by mail. Send it to the same IRS Service Center where you file your Form 1120, but mail it separately—do not attach it to your income tax return. IRS.gov

Q2: My corporation had a loss in 2018 but it wasn't from farming or insurance operations. Can I use Form 1139?

Probably not for an NOL carryback. The Tax Cuts and Jobs Act eliminated NOL carrybacks for most business losses incurred in tax years ending after December 31, 2017. However, you might still use Form 1139 if you have a net capital loss, unused general business credit, or claim of right adjustment from 2018. Otherwise, carry your 2018 NOL forward to offset future income. IRS.gov

Q3: What's the difference between Form 1139 and Form 1120X for carrybacks?

Form 1139 is an application for a quick "tentative" refund, processed within 90 days, but you have no right to sue if it's denied. Form 1120X is an amended return that takes longer to process (typically 6+ months) but gives you full appeal rights and the ability to sue if the IRS denies your claim. For certain situations (like 965 years), you must use Form 1120X. IRS.gov

Q4: I filed my 2018 return without making the NOL carryback waiver election. Can I still make it?

Yes, but you must act within six months of your 2018 return's due date (excluding extensions). File an amended Form 1120 for 2018 with the election statement attached, and write "Filed pursuant to section 301.9100-2" on the statement. After that six-month window closes, the election opportunity is lost. IRS.gov

Q5: Does the 80% NOL deduction limit apply to my insurance company?

It depends on what type of insurance company you are. The 80% limit applies to farming losses but does not apply to losses from insurance companies other than life insurance companies. Life insurance companies follow different rules under section 172(b) and (f). IRS.gov

Q6: My consolidated group has a 2018 loss. How does Form 1139 work for us?

The common parent of the consolidated group files Form 1139 on behalf of the group. If a subsidiary corporation became a "qualified new member" during 2018 and is carrying back a loss from its separate return year to a year it filed as part of the consolidated group, special rules apply—answer "Yes" on line 5a and provide the required information. The refund will be sent to the common parent (or designated agent). IRS.gov

Q7: What if I need to correct an error after filing Form 1139?

You generally cannot file a corrected Form 1139. If you discover errors after filing, you'll likely need to file Form 1120X for the affected carryback years to correct the amounts. The IRS will adjust your tentative refund through the regular examination process.