What Form 1139 (2011) Is For
IRS Form 1139 (2011), the Corporation Application for Tentative Refund, allows corporations—excluding S corporations—to claim a quick refund of overpaid income tax through a net operating loss (NOL) carryback, net capital loss, or unused general business credit. When a net operating loss NOL occurs, the loss may offset future taxable income or reduce income tax from profitable years, providing valuable cash flow relief.
Under the tax code and Jobs Act provisions, corporations use this form to carry losses to earlier taxable years or carry them forward to future tax years beginning after 2011. NOL deductions, nonbusiness deductions, and proper adjustments are key factors, and amounts not absorbed can be carried forward indefinitely to offset future taxable income. This process, supported by the IRS website and guidance from tax professionals, enables many businesses to quickly recover tax refunds while improving deferred tax assets and preserving liquidity.
When You’d Use Form 1139
Corporations use IRS Form 1139 (2011) to apply a net operating loss, unused general business credit, or net capital loss from one tax year to prior taxable years and claim a quick refund. The application for tentative refund must be filed within 12 months after the tax year in which the NOL or credit arose. This corporation application helps reduce prior tax liability, improve cash flow, and provide faster access to tax refunds without waiting for a full amended return.
Key Rules or Details for 2011
For tax years beginning in 2011, corporations could carry back most net operating losses for two carryback years and carry forward unused NOLs for up to 20 future taxable years. Special rules applied to certain farming losses, casualty losses, and qualified small business stock gains. The NOL deduction could offset up to 80% of taxable income in future years, although this limit was generally eliminated under later tax cuts and the Inflation Reduction Act. NOL carryovers and NOL carrybacks allow deferred tax assets to reduce income tax liability across the same period or in a future year, depending on the elections made under the carryforward rules.
Unused general business credits could be carried back one year and carried forward 20 years, while alternative minimum tax and modified adjusted gross income calculations determined final refund amounts. The carryforward and carryback rules helped small businesses, corporations, and farming operations recover taxes paid in prior profitable years, ensuring flexibility in managing losses under evolving tax law.
Step-by-Step (High Level)
Step 1: Gather Documents
Collect the following before completing the form:
- The corporation’s income tax return for the loss year
- Schedules showing losses or unused credits
- Tax returns for the carryback years are being adjusted
Step 2: Calculate the Loss or Credit
Determine the net operating loss, capital loss, or unused credit amount to carry back. Ensure that all calculations are accurate and supported by documentation.
Step 3: Complete Identifying Information
Provide the corporation’s name, address, EIN, and tax year information. Indicate the type of carryback or adjustment being claimed.
Step 4: Recalculate the Carryback Years
Refigure the taxable income for each carryback year. Enter both the original and the adjusted figures showing how the loss or credit affects each year’s income tax.
Step 5: Compute the Refund
The difference between the original tax paid and the recomputed tax becomes the refund.
Step 6: Attach Supporting Documentation
Attach copies of the loss-year return, schedules supporting the loss or credit calculation, and recalculated carryback-year schedules.
Step 7: File Form 1139
Mail the completed form to the IRS Service Center where the corporation typically files its income tax return. For 2011, electronic filing was not available.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
Many corporations face refund delays due to avoidable filing errors on Form 1139. Following these best practices helps ensure faster and smoother IRS review.
- File Form 1120 first: The corporate tax return for the loss year must be on record before submitting Form 1139.
- Meet the 12-month deadline: Late filings must use Form 1120X, which is processed more slowly.
- Attach complete documentation: Include all recalculations, schedules, and explanations for adjustments or carrybacks.
- Check all math: Review computations on Lines 11–28 carefully to prevent processing delays.
- Explain adjustments clearly: Provide concise explanations for any tax elections or modifications that have been made.
- Use the correct form: File Form 1120X instead of Form 1139 when claiming foreign tax credits or section 965 years.
- Keep supporting records: Refunds are tentative and subject to later review or audit.
Accurate filing, proper documentation, and timely submission help corporations avoid rejections and ensure prompt processing by the IRS.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
Once IRS Form 1139 (2011) is filed, the IRS reviews the corporation's application for accuracy and verifies all calculations related to taxable income, net operating loss, and NOL deductions. The agency must process the tentative refund within 90 days of the filing date or the due date for the loss-year return. If additional information is required, the IRS contacts the filer or tax professionals. Approved refunds are issued by direct deposit or check, but may be adjusted later if errors or excess business losses are found. Accurate records and compliance with the tax code help prevent delays or assessments.
FAQs
What is IRS Form 1139 (2011) used for?
IRS Form 1139 (2011) is a corporation application for tentative refund used by corporations to claim a quick refund when a net operating loss occurs. It helps offset future taxable income and recover prior year income tax payments efficiently.
How does a net operating loss deduction reduce taxable income?
A net operating loss deduction enables corporations to apply losses against previous or future taxable years, thereby reducing their overall tax liability. The loss can be carried back or carried forward indefinitely to offset future taxable income and improve cash flow.
Can unused general business credits and capital losses be carried forward?
Unused general business credits and net capital losses may be carried forward to offset taxable income in future years. These items follow specific carry-forward rules under the tax code, enabling corporations to lower their future tax liability and manage deferred tax assets.
Are there limits on excess business losses for corporations?
Yes, the Tax Cuts and Jobs Act introduced excess business loss limitations, restricting how much business income a corporation can offset using NOL deductions. These limits, later modified by the CARES Act and the Inflation Reduction Act, affect both carryback and carryforward periods.
What happens if a corporation misses the filing deadline for Form 1139?
If a corporation misses the 12-month deadline for applying for a tentative refund, it must file an amended return instead. This process takes longer and does not guarantee the 90-day quick refund provided by Form 1139.
Can tax professionals assist with Form 1139 and NOL calculations?
Yes, tax professionals can ensure accurate computation of net operating losses, modified adjusted gross income, and nonbusiness deductions. Their expertise helps corporations comply with the tax code, optimize carryback year benefits, and prevent errors in the tentative adjustment process.
