Publication 536 - Net Operating Losses (Nols) For Individuals, Estates, And Trusts - Internal Revenue Service - 2006 Page 10
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19Martha completes lines 10 through 25, using
2004 Adjusted gross income after
expense deduction using her new adjusted
carryback . . . . . . . . . . . . . . . .
$40,000
the “Before carryback” column under the column
gross income. Her refigured medical expense
Less:
deduction is $3,000 [$6,000 − ($40,000 ×
for the second preceding tax year ended 12/31/
Itemized deductions:
04 on page 1 of Form 1045 using the following
7.5%)]. This increases her total itemized deduc-
Medical expenses
amounts from her 2004 return.
tions to $14,000 [$13,250 + ($3,000 − $2,250)].
[$6,000 − ($40,000
× 7.5%)] . . . . . . .
Martha uses her refigured taxable income
$3,000
2004 Adjusted gross income . . .
$50,000
($22,900) from line 15, and the tax tables in her
State income tax . .
+ 2,000
Itemized deductions:
Real estate tax . . .
+ 4,000
2004 Form 1040 instructions to find her income
Medical expenses
Home mortgage
[$6,000 − ($50,000
tax. She enters the new amount, $3,081, on line
× 7.5%)] . . . . . . .
interest . . . . . . . .
+ 5,000
$2,250
16, and her new total tax liability, $9,201, on line
−14,000
Total itemized deductions . . . .
State income tax . .
+ 2,000
25.
Less:
Real estate tax . . .
+ 4,000
Martha used up her $10,000 NOL in 2004 so
− 3,100
Exemption . . . . . . . . . . . . . . .
Home mortgage
she does not complete a column for the first
2004 Taxable income after
interest . . . . . . . .
+ 5,000
preceding tax year ended 12/31/2005. The de-
carryback . . . . . . . . . . . . . . . .
$22,900
Total itemized deductions . . . .
$13,250
crease in tax because of her NOL deduction
Exemption . . . . . . . . . . . . . . .
$3,100
Martha then completes lines 10 through 25,
(line 27) is $2,075.
Income tax . . . . . . . . . . . . . . .
$5,156
using the “After carryback” column under the
Self-employment tax . . . . . . . . .
$6,120
Martha files Form 1045 after filing her 2006
column for the second preceding tax year ended
Martha refigures her taxable income for 2004
return, but no later December 31, 2007. She
12/31/04. On line 10, Martha enters her $10,000
after carrying back her 2006 NOL as follows:
NOL deduction. Her new adjusted gross income
mails it to the Internal Revenue Service Center
on line 11 is $40,000 ($50,000 − $10,000). To
where she filed her 2006 return and attaches a
2004 Adjusted gross income . . .
$50,000
complete line 12, she must refigure her medical
copy of her 2006 return (including the applicable
Less:
forms and schedules).
−10,000
NOL from 2006 . . . . . . . . . . . .
Page 10
Publication 536 (2006)
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