Form 1139 (Rev. October 2018) – 2017 Tax Year Checklist
Purpose
Form 1139 allows corporations to apply for a tentative refund resulting from carryback of 2017 net operating losses, capital losses, or unused general business credits without waiting for amended return processing. Within 90 days of filing, the IRS processes these applications and provides faster relief than the standard amended return procedure.
Line 18 was added in the October 2018 revision to address base erosion minimum tax reporting for carryback years beginning after December 31, 2017. Corporations other than S corporations use this form when seeking quick refunds from losses or credit carrybacks.
Filing Steps
1. Confirm 2017 Loss or Credit Eligibility
Verify the corporation incurred a net operating loss, capital loss, or unused general business credit during the 2017 tax year and identify which carryback year or years are eligible under applicable Internal Revenue Code provisions.
2. Gather Original 2017 Return Data
Obtain the filed 2017 Form 1120, including taxable income before and after loss or credit application, and confirm the tax year-end date and service center where the corporation filed its return.
3. Prepare Two-Year NOL Carryback Computation
Calculate taxable income before and after net operating loss carryback for each of the two preceding tax years (2016 and 2015) using the form's Computation of Decrease in Tax section, applying the carryback rules under section 172 for 2017 losses.
4. Prepare Three-Year Capital Loss Carryback Computation
Calculate taxable income before and after net capital loss carryback for each of the three preceding tax years (2016, 2015, and 2014) if claiming a capital loss carryback under section 1212.
5. Report General Business Credit Carryback Separately
Skip lines 11 through 15 and proceed directly to lines 20 through 28 if applying only an unused general business credit on line 1c, as credit carryback rules under section 39 for 2017 remain unchanged from prior years.
6. Address Consolidated Return or Group Status
Complete lines 5a through 5b if the corporation filed a consolidated return for any carryback year or joined a consolidated group during 2017. Identify the common parent and its employer identification number to ensure proper loss or credit allocation under Treasury Regulation section 1.1502-21.
7. File Form 1138 Extension Confirmation
Report the extension grant date and the unpaid tax amount on line 6 if the corporation filed Form 1138 for the extension of time for payment of underpayment of installments of estimated income tax by the corporation for any carryback year.
8. Disclose Reportable Transactions
Attach Form 8886 and answer yes on line 10 if any decrease in tax is attributable to a reportable transaction required to be disclosed under section 6011, as this requirement applies to 2017 carrybacks under existing disclosure rules.
9. Sign and Certify Under Penalty of Perjury
An authorized corporate officer must sign and date the application, including the president, vice president, treasurer, assistant treasurer, chief financial officer, or other duly authorized officer. Preparer's signature and preparer tax identification number are required if a paid preparer assisted with form preparation.
10. File Separately From 2017 Return
Submit Form 1139 as a standalone document separate from the original 2017 Form 1120 to the Internal Revenue Service Center where the corporation files its income tax return.
2017 Year-Specific Guidance
Net Operating Loss Carryback Period for 2017
The 2-year carryback and 20-year carryforward under pre-TCJA section 172 apply to 2017 net operating losses. You must carry back the entire amount of the net operating loss to the two tax years before the loss year, then carry forward any remaining loss for up to 20 years after the loss year.
The Tax Cuts and Jobs Act changes to carryback and carryforward mechanics do not affect 2017 loss year computations, as those rules apply to losses generated in 2018 and later.
Farming losses and losses from insurance companies other than life insurance companies receive special treatment under section 172.
Capital Loss Carryback Rules
Capital loss carryback provisions for corporations remain limited to the 3-year lookback period under section 1212(a)(1). The entire net capital loss for the 2017 tax year must be carried to the earliest of the taxable years to which the loss may be carried.
Any loss remaining after the carryback may be carried forward for five years following the loss year. The 2017 instructions do not reflect subsequent modifications to capital loss carryback rules.
Form 8886 Reportable Transaction Disclosure
Any loss or credit resulting from a transaction required to be disclosed under section 6011 must trigger Form 8886 attachment. This requirement was active in 2017 and continues in the October 2018 revision. The corporation must attach all Forms 8886 that were attached to the original 2017 tax return when filing Form 1139.
Base Erosion Minimum Tax Considerations
Line 18 addresses the base erosion minimum tax for carryback years beginning after December 31, 2017. The base erosion minimum tax under section 59A applies to corporations with average annual gross receipts for the three preceding tax years of $500 million or more.
Corporations subject to this tax must complete Form 8991 and compute the base erosion minimum tax amount for applicable carryback years.
Service Center Filing Location
Corporations must file Form 1139 at the Internal Revenue Service Center where they file their income tax return, according to the October 2018 instructions. Current Internal Revenue Service guidance provides the necessary information to identify the correct service center for paper filing based on the corporation's principal business location.
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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.
