Form 1139 (Rev. October 2018) — 2020 Tax Year Checklist
Purpose
Form 1139 allows corporations to apply for a tentative refund by carrying back a net operating loss, net capital loss, or unused general business credit to prior tax years. The CARES Act expanded NOL carryback periods for 2020 filers, requiring corporations to reflect the extended lookback window in their applications.
This form also accommodates section 1341(b)(1) overpayment claims arising from 2020 income adjustments. Corporations must file Form 1139 with the Internal Revenue Service Center where they file their income tax return, and they must not attach it to their regular income tax return.
Eligibility and Filing Requirements
You must identify the loss year (2020) and confirm whether the NOL arose from ordinary business operations or a recognized casualty or disaster event. The CARES Act mandates a five-year carryback period for NOLs arising in taxable years beginning in 2018, 2019, or 2020 unless you elect to waive the entire carryback period.
Form 1139 must be filed within twelve months of the end of the tax year in which an NOL, net capital loss, unused credit, or claim of right adjustment arose. Your corporation must file its income tax return for the tax year no later than the date it files Form 1139.
Required Line Entries
- Complete line 1 by entering the specific dollar amount of the NOL, net capital loss, or unused general business credit created in 2020.
- If you file under section 1341(b)(1) for an overpayment due to income restoration, complete line 1d and attach the full calculation showing the original deduction year, the 2020 restoration, and the tax recalculation.
- Enter on line 2 the ending date of the 2020 tax return and the service center where you filed it.
- Confirm the actual filing date matches the corporate return filing date or extension date as of October 2020 instructions.
- Answer line 4 regarding foreign tax credit release or general business credit carryback triggered by FTC release.
- Note that you must file amended returns for prior years separately to claim released credits, as Form 1139 alone does not accomplish this.
- Complete lines 5a through 5b to disclose any consolidated return filing or group membership status for carryback years.
- Identify whether your corporation was part of a consolidated group in prior years and name the common parent and its employer identification number.
- Answer lines 6a through 6d only if Form 1138 was filed for the 2020 loss year.
- If yes, enter the extension date granted and the Form 1138 filing date, and state the unpaid tax amount for which the extension remains in effect.
Tax Computation Methodology
Compute the decrease in tax on lines 11 through 28 for each carryback year. NOLs arising in taxable years beginning in 2018, 2019, or 2020 must be carried back to each of the five taxable years preceding the loss year unless you make an affirmative election under section 172(b)(3) to waive the entire carryback period.
Original reported income and tax, as shown on your filed return or as adjusted by the IRS, must appear in the "before carryback" columns. Apply the 2020 loss to recalculate taxable income and tax liability for each carryback year in the "after carryback" columns.
Signature and Attachments
You must sign and date the form under penalties of perjury as an officer of the corporation. Attach all supporting schedules showing how you computed the loss and the decrease in tax for each carryback year.
Form 8886 must be included if the loss results from a reportable transaction as defined in Treasury regulations. Any amended returns required for released foreign tax credits should accompany your application, as Form 1139 does not carry back items other than NOLs to a section 965 year except under specific CARES Act provisions.
2020 CARES Act Provisions
The CARES Act amended section 172(b)(1) by adding subsection (D), which requires corporations to carry back NOLs arising in taxable years beginning after December 31, 2017, and before January 1, 2021, for five taxable years. This carryback period applies automatically unless you elect to waive it under section 172(b)(3).
The October 2018 Form 1139 instructions do not address these five years, so you must attach a separate statement identifying 2020 as the loss year and referencing section 172(b)(1)(D) as amended by the CARES Act. You may elect to waive the carryback period for NOLs arising in 2018 or 2019 under Rev. Proc. 2020-24.
Section 1341 Claim of Right Adjustments
If your corporation's 2020 income includes a restoration of amounts deducted in prior years, you may claim a tentative refund for the resulting overpayment. Complete line 1d to indicate you are filing for a claim of right adjustment under section 1341(b)(1).
Enter the overpayment amount on line 29 and attach a detailed computation showing the original deduction year, the 2020 restoration, and the tax recalculation. The computation must comply with the requirements specified in Regulations section 5.6411-1(d).
Base Erosion Minimum Tax Considerations
The October 2018 instructions reference Form 8991 for the base erosion minimum tax under section 59A. If your corporation is subject to BEAT, you must complete line 18 and attach Form 8991 showing the BEAT calculation for each carryback year after application of the NOL.
Corporations with average annual gross receipts for the three preceding tax years of five hundred million dollars or more face potential base erosion minimum tax liability. Deductions paid or accrued to foreign related parties exceeding three percent of total deductions trigger BEAT applicability requirements.
Reportable Transaction Disclosure
If the 2020 NOL or credit results in whole or in part from a reportable transaction, line 10 requires you to answer "Yes" and attach Form 8886. Review whether the loss-generating transaction meets reportable transaction criteria as defined in Treasury regulations as of the 2020 tax year. The IRS will process your application within ninety days of 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 corporate income tax return for the year in which the loss or credit arose.
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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.
