Form 1139 (Rev. December 2012) Checklist: Corporation Application for Tentative Refund
Purpose and Eligibility
Form 1139 permits corporations other than S corporations to request a tentative refund based on the carryback of a net operating loss, the carryback of a net capital loss, the carryback of an unused general business credit, or an overpayment from a section 1341(b)(1) claim of right adjustment. The IRS processes these applications within 90 days of the later of two dates: the date you file the complete application or the last day of the month that includes the due date for filing your income tax return for the year in which the loss or credit arose.
You must file your corporation's income tax return for the tax year no later than the date you file Form 1139. The payment of the requested refund does not mean the IRS has accepted the application as correct, and the IRS may assess penalties if claimed deductions or credits result from overstatement of property value, negligence, disregard of rules, or substantial understatement of income tax.
Filing Requirements and Timing
You must file Form 1139 within 12 months of the end of the tax year in which a net operating loss, net capital loss, unused credit, or claim of right adjustment arose. File Form 1139 separately with the Internal Revenue Service Center where your corporation files its income tax return.
Do not attach Form 1139 to your corporation's income tax return or staple it to Form 1120. If your corporation filed Form 1138 to extend the time for payment of taxes, you can obtain an additional extension by filing Form 1139 by the last day of the month that includes the due date for filing the return from which the NOL carryback arose.
Net Operating Loss Carryback Rules
For net operating losses arising in tax years beginning after December 31, 2020, the general NOL carryback has been eliminated for most corporations. Only farming losses and losses from insurance companies other than life insurance companies qualify for a two-year carryback period.
Corporations can carry forward unused NOLs indefinitely, but the NOL deduction for tax years beginning after December 31, 2020, cannot exceed 80 percent of taxable income for NOLs arising in tax years beginning after December 31, 2017. You can elect to waive the entire carryback period for farming losses and insurance company losses by checking the appropriate box on Form 1120, Schedule K, line 11, and filing your return by its due date, including extensions.
Capital Loss Carryback Requirements
A net capital loss can be carried back three years and treated as a short-term capital loss in the carryback year. The net capital loss can be carried back only to the extent it does not increase or produce a net operating loss in the tax year to which it is carried.
When carrying over a net capital loss to a later tax year, you must reduce the amount available by the amount of net capital loss deductions used in earlier years. You must attach Schedule D (Form 1120) for the carryback year and enter the capital loss carryback as a positive number to document your computation.
Documentation You Must Attach
Attach the following items to Form 1139 for the year of the loss or credit:
- The first two pages of your corporation's income tax return.
- All forms and schedules from which a carryback results, such as Schedule D (Form 1120), Form 3800, or other applicable credit forms.
- All Forms 8886, Reportable Transaction Disclosure Statement, are attached to your corporation's tax return.
- Any applicable election statements required under specific sections.
- All carryback year forms and schedules for which items were refigured.
- Form 8302, Electronic Deposit of Tax Refund of $1 Million or More, if applicable for any carryback year.
Consolidated Return Considerations
If your corporation filed a consolidated return for any carryback year or joined a consolidated group, you must answer "Yes" on line 5a and provide the common parent's name, employer identification number, and tax year end on line 5b. If the common parent of a consolidated group files Form 1139 to carry back a loss arising in a corporation's separate return year to a year in which the corporation joined in filing a consolidated return, the IRS sends the refund directly to and in the name of the common parent. A separate return year of a qualified new member that ends on the date of joining the new group is treated as ending on the same date as the end of the tax year of the consolidated group that includes the date of the end of the separate return year.
Computation of Decrease in Tax
Complete lines 11 through 28 of the Computation of Decrease in Tax section for each applicable preceding tax year. Enter amounts for the applicable carryback year as shown on your original or amended return or as adjusted by the IRS in columns (a), (c), and (e).
Use column pairs to enter amounts before and after carryback for each year to which you carry the loss, starting with the earliest carryback year. Enter the ordinal number of years you are carrying back the loss and the date the carryback year ends in the spaces provided above the column pairs.
Alternative Filing Method
You can obtain a refund by filing Form 1120X or another amended return instead of Form 1139. Processing an amended return does not require the IRS to act within 90 days, but if the agency does not process it within six months from the date you file it, you can file suit in court.
Corporations must file Form 1120X instead of Form 1139 to carry back a prior year foreign tax credit released due to an NOL or net capital loss carryback. Similarly, you must use Form 1120X to carry back a prior year general business credit released because of the release of the foreign tax credit.
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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.
