2016 Form 1045 Checklist: Application for Tentative Refund
Form 1045 permits individuals, estates, and trusts to claim quick refunds by carrying back Net Operating Losses, unused general business credits, or net section 1256 contracts losses to prior tax years. The 2016 version includes Net Investment Income Tax computation on line 27 at 3.8% on unearned income and Excess Advance Premium Tax Credit repayment on line 17, both reflecting Affordable Care Act provisions applicable through 2016.
Eligibility and Filing Procedures
Only individuals, estates, or trusts may file Form 1045 for the 2016 tax year. Partnerships, S corporations, and C corporations cannot use this form and must follow other carryback procedures specified in their respective tax codes. The filing deadline requires you to submit Form 1045 within one year after the end of the year in which an NOL, unused credit, net section 1256 contracts loss, or claim of right adjustment arose.
File your 2016 income tax return no later than the date you file Form 1045. Mail Form 1045 as a separate mailing in its own envelope and do not attach it to your 2016 tax return per Form 1045 header instructions.
Net Operating Loss Computation
Complete Schedule A on page 3 to compute your 2016 Net Operating Loss. Include all nonbusiness capital losses, nonbusiness capital gains, business capital losses, business capital gains, and the domestic production activities deduction from 2016 Form 1040 line 35 or Form 1040NR line 34 when calculating the final NOL on Schedule A line 25.
Report the NOL amount from Schedule A line 25 as a positive number on page 1, line 1a. If carrying back unused general business credit on line 1b or net section 1256 contracts loss on line 1c, obtain those figures from prior-year forms and enter them on respective lines.
Carryback Period Rules
For the 2016 NOL, you generally must carry back the entire loss to the two tax years before the loss year. Any loss not used in the second preceding year carries to the first preceding year. The carryforward period extends up to twenty years for losses not applied in the two preceding years.
The two-year carryback period does not apply to the portion of an NOL attributable to an eligible loss, farming loss, qualified disaster loss, or specified liability loss. For the 2016 NOL, you may carry back two years to 2015 and 2014 unless you elected under section 172(b)(3) to relinquish the entire carryback period, which results in carrying the NOL forward only.
Carryback Year Requirements
Tax Court and Filing Status
● Confirm no Tax Court petition is pending for carryback years by answering line 7 accurately.
● Verify all-year filing status consistency on line 4 by identifying any carryback year where you filed a joint or separate return status differently from the current 2016 return.
● If status differs, the IRS applies special carryback allocation rules and requires an attached explanation of how NOL is allocated between spouses for any separate return year.
Foreign Tax Credit Coordination
If your carryback triggered release of foreign tax credits or credits dependent on foreign tax credit limitation, answer "Yes" on line 9. Attach a detailed explanation showing which credits were released and the tax year released as required under section 904(c) coordination rules for 2016.
Schedule B Completion for Carryback Years
Complete Schedule B on page 4 for each carryback year, starting with the earliest year. Enter the NOL deduction as a positive number on line 1 and taxable income before carryback on line 2. Apply adjustments for net capital loss deduction, section 1202 exclusion, domestic production activities deduction, and AGI or itemized deduction changes unique to that carryback year.
Tax Recalculation Grid
Recalculate tax for each carryback year using the computation grid on lines 10 through 32:
● Recompute the NOL deduction after carryback on line 10.
● Recalculate the adjusted gross income on line 11.
● Refigure the deductions on line 12.
● Adjust the exemptions on line 14.
● Recompute the income tax on line 16.
Include Excess Advance Premium Tax Credit repayment on line 17, alternative minimum tax on line 18, and all three 2016-specific tax additions: Additional Medicare Tax on line 26, Net Investment Income Tax at 3.8% on modified adjusted gross income above thresholds on line 27, and Health Care Individual Responsibility Payment if applicable on line 28.
Itemized Deduction Adjustments
On Schedule B lines 22 through 38, if any carryback year had itemized deductions and your NOL carryback affects the deduction base, refigure itemized deduction limitations:
● Recalculate the mortgage insurance premiums on lines 19 through 21.
● Adjust the charitable contributions subject to modified AGI floors on lines 25 through 27.
● Refigure the casualty and theft losses subject to a 10% threshold on lines 28 through 32.
● Recompute the miscellaneous deductions using the 2% of modified AGI threshold on lines 33 through 37.
Complete the worksheet in the instructions if line 22 exceeds the applicable threshold for that year's phase-out rules.
Tax Decrease Computation
Complete the computation of tax decrease on page 2, lines 10 through 32, for each carryback year column. Show "Before carryback" and "After carryback" tax amounts for each year. Line 32 calculates the decrease in tax for each year, and these decreases support the refund claim amount.
Required Documentation
Attach all required supporting documentation to Form 1045:
● Attach Form 1045-X if amending a prior carryback claim.
● Attach Form 8886 if any loss resulted from a reportable transaction.
● Include computation showing section 1341(b)(1) claim-of-right adjustment if applicable on line 33.
● Include an explanation of the income tax calculation method used on line 16 if not using standard tax tables.
Both spouses must sign and date the form under penalties of perjury if filed jointly for 2016. If using a paid preparer, the preparer must sign, enter PTIN, and include the firm EIN and address.
Year-Specific 2016 Tax Provisions
Net Investment Income Tax on line 27 incorporates the 3.8% tax on unearned income for high earners under section 1411. When refiguring tax for carryback years, you must recompute this tax on modified adjusted gross income, as it applies only to 2013 forward and changes the decrease-in-tax calculation.
Excess Advance Premium Tax Credit Repayment on line 17 requires computation if you received advance health insurance premium tax credits in 2016. Carrybacks may reduce your modified AGI for subsequent years, affecting the repayment amount you must include on line 17 for each carryback year's tax decrease.
Additional Medicare Tax on line 26 requires 2016 filers carrying back NOL to refigure the 0.9% Additional Medicare Tax on wages and self-employment income for each carryback year. The tax was introduced in 2013 and applies through 2016, affecting the overall tax decrease calculation.
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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.
