Form 1045 (2014): Tentative Refund Application Guide Checklist

Form 1045 (2014) – Application for Tentative Refund

Purpose

Form 1045 permits individuals, estates, and trusts to claim a tentative refund by carrying back a 2014 net operating loss, unused general business credit, or net Section 1256 contracts loss to prior years. Corporations must use Form 1139 for the same purpose, as they cannot file Form 1045.

The domestic production activities deduction under IRC §199 remains a component of the NOL calculation for 2014. You must incorporate the Domestic Production Activities Deduction on Schedule A, line 23, as a positive number when computing the NOL for the 2014 tax year.

Preparation Steps

1. Confirm Applicant Eligibility and Entity Type

Verify the applicant qualifies as an individual, estate, or trust before filing Form 1045. You must document each year and filing status on line 4 if you filed jointly for 2014 but used different filing statuses in prior carryback years.

2. Complete Identifying Information and Tax Year Details

Enter the required identifying and tax year information as follows.

• Enter the 2014 tax year or applicable fiscal year ending date on line 2a.
• Report the actual filing date of the 2014 return on line 2b.
• Enter the prior Social Security Number and corresponding year on line 5 if your Social Security Number changed between 2014 and the carryback year.

3. Calculate 2014 Net Operating Loss Using Schedule A

Complete Schedule A on page 2 to compute the NOL for the 2014 tax year. Begin with 2014 Form 1040, line 43 taxable income, or Form 1040NR, line 41 for nonresident aliens.

Estates and trusts must increase the taxable income amount by the sum of the charitable deduction, income distribution deduction, and exemption amount. Include the 2014 Domestic Production Activities Deduction on Schedule A, line 23, as a positive number to subtract when computing the NOL.

4. Account for Capital Loss Limitations and Section 1202 Exclusions

Apply capital loss and exclusion rules as follows.

• Segregate nonbusiness capital losses from nonbusiness capital gains on Schedule A, lines 2 through 5.
• Enter the Section 1202 small business stock exclusion as a positive number on line 17 and subtract it separately.
• Do not apply the Section 1202 exclusion when computing capital gains on line 3.

This treatment ensures the NOL calculation excludes the tax benefit of excluded gains and properly limits capital loss deduction carryforwards.

5. Determine NOL Carryback Years and Complete Schedule B

Work chronologically backward from 2014 on Schedule B, page 3, completing one column before advancing to the next. Enter taxable income from the carryback year before the 2014 NOL carryback on Schedule B, line 2.

Estates and trusts must increase this amount by the charitable deduction and income distribution deduction. Compute the modified taxable income on line 9 by combining adjustments for capital loss deductions, Section 1202 exclusions, Domestic Production Activities Deduction, and prior NOL carryovers.

6. Adjust Itemized Deductions for Carryback Years (Individuals Only)

Complete Schedule B, lines 11 through 38, for each carryback year if you itemized deductions and any of the following conditions apply.

• The net capital loss deduction on line 3 exceeds zero.
• The Section 1202 exclusion on line 4 exceeds zero.
• The Domestic Production Activities Deduction on line 5 exceeds zero.

You must recalculate medical expense, mortgage insurance premium, charitable contribution, casualty or theft loss, and miscellaneous itemized deduction thresholds using the modified adjusted gross income from line 13.

7. Compute the Tax Decrease on Page 1, Main Columns

Complete the tax decrease computation using the following steps.

1. Enter the NOL deduction on line 10 using the amounts from Schedule B for each carryback year.
2. Recalculate adjusted gross income, deductions, exemptions, taxable income, income tax, alternative minimum tax, general business credit, and other credits.
3. Subtract total credits from total tax to derive the tax before carryback.
4. Repeat the calculation with the 2014 NOL applied to determine the after-carryback tax.
5. Calculate the decrease in tax on line 27 by subtracting the after-carryback total tax from the before-carryback total tax.

8. Address Special Situations and Disclosures

Complete all required disclosures accurately.

• Declare on line 7 whether you filed a Tax Court petition for any carryback year, as answering yes may limit the refund claim.
• Confirm on line 8 whether any decrease in tax results from a reportable transaction under IRC §6011 requiring Form 8886 disclosure.
• Disclose on line 9 whether the NOL or net Section 1256 contracts loss carryback triggered the release of foreign tax credits or related credits.

Attach Form 8886 if you answer yes to line 8, and explain if you answer yes to line 9.

9. Signature and Preparer Authority

Complete execution requirements as follows.

• Sign and date the form under penalties of perjury.
• Both spouses must sign if you filed jointly.
• Paid preparers must sign, enter their Preparer Tax Identification Number, and provide their firm name, Employer Identification Number, and address.
• Retain a copy for your records.

Year-Specific Regulatory Updates for 2014

IRC §199 domestic production activities deduction remains active for the 2014 tax year and appears on Schedule A, line 23. You must enter this deduction as a positive number to calculate the correct NOL. Schedule B includes year-specific Form 4684 line references for casualty and theft losses covering 2005, 2006, 2008, 2009, and 2010 carryback years.

Form 1040 Schedule A line references vary by year, and the 2014 instructions provide cross-references to ensure you correctly identify lines when carryback years used different form versions. The Form 8914 adjustment on Schedule B, line 8, applies only if the carryback year is 2005 or 2006.

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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.