Form 1045 (2017): Application for Tentative Refund
Purpose and Overview
Form 1045 permits individuals, estates, and trusts to request a quick refund by carrying back net operating losses, unused general business credits, or net section 1256 contracts losses to prior tax years. In 2017, the ACA individual shared responsibility payment appears on line 28 as a reportable tax item on this carryback computation. Filers must verify that the decrease in tax calculation accounts for this penalty in both the before-carryback and after-carryback columns across all three preceding tax years shown on the form.
Filing Requirements and Deadlines
Taxpayers must file 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. Your 2017 income tax return must be filed no later than the date you file Form 1045. The IRS will process your application within 90 days from the later of the date you file the complete application or the last day of the month that includes the due date for filing your 2017 income tax return.
Step-by-Step Completion Instructions
Schedule A: NOL Calculation
Complete Schedule A using 2017 Form 1040 or 1040NR lines specific to tax year 2017. Include line 35 for the Domestic Production Activities Deduction if applicable, which was still permitted in 2017 and must be entered on Schedule A, line 23. The domestic production activities deduction was available to individuals, corporations, estates, and trusts for 2017 before its repeal for tax years beginning after December 31, 2017.
Loss Type Identification
Determine which carryback loss or credit applies by selecting net operating loss from Schedule A line 25, unused general business credit, or net section 1256 contracts loss. Only one type of loss carries back at a time, and you must identify which one applies on page 1, line 1.
- Individuals can elect to carry back a net section 1256 contracts loss to each of the three tax years preceding the loss year.
- Estates and trusts are not eligible to make the section 1256 contracts loss carryback election.
- The three-year carryback period for section 1256 contracts differs from the general NOL carryback rules.
NOL Carryback Period Rules for 2017
For 2017 NOLs, the general carryback period is two years to the 2nd and 1st preceding tax years. Special exceptions provide longer carryback periods for specific loss types.
Eligible losses from casualty, theft, or federally declared disasters for qualified small businesses carry back three years. Farming losses carry back five years to prior tax years. Qualified disaster losses also carry back five years under special provisions. Specified liability losses carry back ten years to offset income in earlier periods.
Schedule B: Itemized Deduction Adjustments
Complete Schedule B for each carryback year only if nonbusiness capital losses from Schedule A line 4, business capital losses from Schedule A line 14, or section 1202 exclusion adjustments from Schedule A line 17 exceed zero. Itemized deduction worksheets apply solely to individual filers in 2017. Estates and trusts skip these lines because they follow different rules for deductions.
NOL Deduction Entry
For each preceding tax year column, enter the NOL deduction from Schedule B line 1 as a positive number. The amount represents the portion of the NOL you apply to reduce taxable income in that carryback year. You must calculate the deduction separately for each year to which you carry the loss.
Mortgage Insurance Premium Refinancing
Refigure mortgage insurance premiums on Schedule B lines 19 through 20 for each carryback year using that year’s adjusted gross income threshold. In 2017, mortgage insurance premiums remained deductible, subject to income phase-out rules. Recalculate only if the NOL carryback changes AGI materially enough to affect the phase-out calculation.
Tax Calculation Documentation
On page 2, line 16, attach a written explanation of the income tax calculation for each carryback year showing the tax before and after carryback. Include statutory rate schedules for the applicable year. Do not reference 2017 rates for prior-year carrybacks because each year requires its own tax rate schedule.
Tax Computation Lines 17 Through 29
Complete the following lines for each preceding tax year:
- Line 17: Excess advance premium tax credit repayment
- Line 18: Alternative minimum tax
- Line 26: Additional Medicare tax
- Line 27: Net Investment Income Tax
- Line 28: Health care individual responsibility payment
Line 28 applies only to tax years 2014 through 2018. Verify the carryback year falls within this range before entering an amount on the health care responsibility line.
Foreign Tax Credit Disclosure
Answer question 9 on page 1 regarding the release of foreign tax credits or other credits due to NOL or section 1256 contracts loss carryback. In 2017, foreign tax credit limitation rules required disclosure if the carryback eliminated or reduced a foreign tax credit. Attach Form 1118 or a detailed computation if applicable to document the credit adjustment.
Critical Reminders
Penalty and interest on the tentative refund are not suspended while Form 1045 is pending. The application does not extend the statute of limitations for the carryback years. The IRS may assess and collect any excess refund immediately if later review determines the amount was too high. You must attach copies of all required forms and complete all lines on Form 1045 that apply to your situation to avoid delays or disallowances.
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.
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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.
