Form 1139 (Rev. October 2018) – 2019 Tax Year Checklist
Purpose
Form 1139 requests a tentative refund based on carryback of net operating losses, net capital losses, or unused general business credits from a 2019 loss year to prior tax years. The CARES Act allows corporations to carry back NOLs arising in tax years beginning in 2018, 2019, or 2020 to each of the five preceding tax years.
You must verify your loss year qualifies under the CARES Act five-year carryback provision and compute the decrease in tax across the applicable carryback period. The October 2018 Form 1139 instructions predate the CARES Act and do not reflect these changes.
Preparation Steps
- Confirm CARES Act Eligibility: Verify the loss year is 2019 or falls within 2018, 2019, or 2020 to qualify for the five-year carryback period. Identify the five preceding tax years for carryback. Apply the carryback to the earliest year first and continue sequentially until the loss is fully absorbed. Enter information accurately on lines 11–28 to ensure proper processing and prevent delays.
- Gather Required Tax Returns and Schedules: Obtain the loss year tax return and original returns for all carryback years. Verify filing dates and service centers on line 2. Attach the first two pages of the loss year return and all relevant forms and schedules, such as Schedule D or Form 3800.
- Complete Line 1 Filing Reason: Select the filing reason on line 1, which may include NOL, net capital loss, unused general business credit, or claim of right adjustment. Attach supporting computations showing each claimed amount and its derivation from the loss year return.
Ensure all calculations reflect CARES Act provisions if filing for a 2019 NOL. Verify the loss year return was timely filed before submitting Form 1139.
- Address Consolidated Return Status: Answer line 5a regarding consolidated return status by entering the tax year ending date, common parent name, and EIN. Provide consolidation details if applicable. Confirm the carryback computation reflects consolidated taxable income and tax liability for group filing years. Apply separate entity rules for non-consolidated periods.
- Complete Computation of Decrease in Tax: Complete lines 11–28 for each carryback year. Enter taxable income before carryback in column (a), (c), or (e). Recompute taxable income after applying the loss deduction in column (b), (d), or (f). Calculate the net decrease in tax by showing tax liability before and after carryback.
- Account for Base Erosion Minimum Tax: Attach Form 8991 if the decrease in tax includes BEAT for corporations subject to section 59A. Corporations with average annual gross receipts of $500 million or more for the three preceding tax years must isolate the BEAT impact separately.
Include the BEAT computation in the carryback analysis on line 18. Refigure the base erosion minimum tax for each affected carryback year and attach supporting schedules.
- Disclose Reportable Transactions: Determine on line 10 whether the carryback arose from a reportable transaction under Treasury Regulations section 1.6011-4. Answer "Yes" if the transaction meets any of the five categories: listed transactions, confidential transactions, transactions with contractual protection, loss transactions, or transactions of interest. Attach Form 8886 for each affected year with required disclosures.
- Address Foreign Tax Credit Release: Answer line 4 regarding the release of foreign tax credits by determining whether the loss results in the release of a foreign tax credit in any carryback year. File Form 1120-X for the affected carryback year to claim released foreign tax credits separately if a loss carryback eliminates or reduces foreign tax credits.
Do not claim released credits solely on Form 1139, as this form does not reallocate tax attributes between years. File an amended return if a general business credit carryback was triggered by foreign tax credit release.
- Report Form 1138 Extension Information: Provide information on line 6 if Form 1138 was previously filed to request an extension of time for payment of taxes by a corporation expecting an NOL carryback. Enter the extension grant date, Form 1138 filing date, and unpaid tax amount.
Confirm that the tentative refund claim does not duplicate any amount covered by the Form 1138 deferral. Reconcile any amounts deferred under Form 1138 with the refund requested on Form 1139.
- Sign and File the Application: Sign and date the form under penalties of perjury using the signature block at the bottom of the form. The officer whose name, title, and signature appear must be authorized to bind the corporation in tax matters.
Attest to the accuracy of the computation and all supporting schedules attached to the application. Submit the form to the Internal Revenue Service Center where the corporation files its income tax return, not with the regular income tax return.
Year-Specific Updates for 2019
CARES Act Five-Year Carryback
NOLs arising in tax years beginning in 2018, 2019, or 2020 qualify for a mandatory five-year carryback to each of the five preceding taxable years unless the corporation elects to waive the carryback period.
Suspension of 80 Percent Limitation
The 80 percent of taxable income limitation on NOL deductions does not apply to NOLs arising in tax years beginning in 2018, 2019, or 2020 when used in carryback or carryforward years within this period.
Base Erosion Minimum Tax Integration
Corporations subject to BEAT must compute and report the tax separately in the carryback analysis using Form 8991 if BEAT liability exists in any preceding year.
Reportable Transaction Disclosure
Form 8886 attachment is mandatory if the loss, credit, or transaction qualifies as a reportable transaction under Treasury Regulations section 1.6011-4.
Amended Return Coordination
File Form 1120-X instead of Form 1139 when carrying back to years with section 965(a) inclusions or when prior-year foreign tax credits require release or adjustment.
Consolidated Return Carryback Rules
Corporations that changed consolidation status between the loss year and carryback years must apply separate entity rules for separate return years and consolidated return rules for consolidated years, with full disclosure required on line 5b.
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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.
