Form 1139 (2021) — Corporation Application for Tentative Refund
Purpose and Scope
Form 1139 permits corporations to claim a tentative refund for net operating losses, net capital losses, unused general business credits, or section 1341(b)(1) overpayments applicable to preceding tax years. For losses arising in tax year 2021, corporations face significant limitations on carryback eligibility under current law.
Only farming losses and losses from insurance companies other than life insurance companies qualify for a two-year carryback period. All other corporate net operating losses arising in 2021 cannot be carried back and must be carried forward indefinitely with an 80 percent taxable income limitation.
The five-year carryback provision established by the CARES Act applies exclusively to losses from tax years beginning after December 31, 2017, and before January 1, 2021. This means losses from tax years 2018, 2019, and 2020 qualify for the five-year carryback period.
Corporations must accurately identify the year of loss on line 2a to ensure proper application of the applicable carryback rules. Line 2 requires precise documentation of the tax years to which the carryback applies based on the type and timing of the loss.
Filing Requirements and Procedures
- Confirm the corporation files Form 1139 separately from its income tax return by submitting it to the Internal Revenue Service Center, where the corporation files its returns.
- File Form 1139 within 12 months of the end of the tax year in which the net operating loss, net capital loss, unused general business credit, or claim of right adjustment arose.
- Enter the reason for filing on line 1 by marking the appropriate box for net operating loss (line 1a), net capital loss (line 1b), unused general business credit (line 1c), or other claims (line 1d).
- Attach all required documentation, including copies of the first two pages of the corporation's income tax return for the loss year and all applicable forms and schedules.
- Complete line 2 with accurate information regarding the loss year, including the tax year-end date, the date the tax return was filed, and the service center where the return was filed.
- For a 2021 farming loss or insurance company loss, identify 2020 and 2019 as the two preceding years available for carryback.
- Skip lines 11 through 15 and proceed directly to line 16 if line 1c, unused general business credit, represents the only amount claimed on the application.
- Compute the capital loss carryback on line 12 under IRC section 1211(a) limitations and attach a worksheet showing the detailed calculation if applicable.
- Compute taxable income before and after carryback for each preceding year on lines 11 through 15 using the tax rates and income thresholds in effect for each specific carryback year.
- Subtract any net operating loss deduction claimed on line 14 following the methodology prescribed in the Form 1139 instructions for the applicable tax year.
Tax Computation and Credit Adjustments
- Enter the income tax and base erosion minimum tax on lines 16 through 19 for each carryback year before and after the loss application.
- Leave line 17 at zero for all carryback years after 2017 because the Tax Cuts and Jobs Act permanently repealed the corporate alternative minimum tax effective for tax years beginning after December 31, 2017.
- Complete line 18 and attach Form 8991 if the base erosion minimum tax applies to the corporation for any carryback year.
- Apply base erosion minimum tax rules to corporations with average annual gross receipts exceeding $500 million over three years and base erosion percentages exceeding applicable thresholds.
- Enter the general business credit limitation for each preceding year on line 20 using the computation rules under IRC section 38 in effect for that specific year.
- Enter other credits, such as the foreign tax credit on line 21, that reduce tax liability and remain allowable in the carryback years.
- Calculate the decrease in tax on line 28 by subtracting the sum of the After carryback column amounts on line 26 from the corresponding Before carryback column totals.
- Attach a separate computation showing the claim-of-right adjustment and resulting overpayment amount if line 29 applies under section 1341(b)(1).
Special Situations and Additional Requirements
- Answer Yes on line 4 if a loss released a foreign tax credit, which requires the corporation to file an amended return using Form 1120-X for each carryback year.
- Confirm that Form 1139 alone does not accomplish the carryback of released foreign tax credits or general business credits released because of foreign tax credit releases.
- Answer line 5a regarding consolidated return status for any carryback year or whether the corporation joined a consolidated group during the relevant period.
- Enter the tax year ending date, common parent name, and employer identification number on line 5b if line 5a receives a Yes response.
- Attach a statement detailing the consolidated group composition for each carryback year and confirming the carryback remains allowable within that group structure.
Form 1138 Extensions and Final Certification
- Answer line 6a regarding whether Form 1138 was filed for an extension of time to pay taxes.
- Enter the extension due date on line 6b, the Form 1138 filing date on line 6c, and any unpaid tax for which Form 1138 remains in effect on line 6d if applicable.
- Sign and date the application under penalty of perjury with the authorized corporate officer printing their name and title clearly.
- Include the preparer's signature, Preparer Tax Identification Number, firm information, and phone number in the Paid Preparer Use Only section if a tax professional prepared the return.
- Leave the Paid Preparer Use Only section blank if the corporation self-prepared the application without professional assistance.
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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.
