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Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, Publication 536 (2007)

What's New

Introduction

What this publication covers

Keeping records

Useful Items - You may want to see:

Publication

Form (and Instructions)

NOL Steps

Step 1

Step 2

Step 3

Step 4

Step 5

Note

How To Figure an NOL

Nonbusiness capital losses

Business capital losses

Illustrated Schedule A (Form 1045)

Example —

When To Use an NOL

NOL year

Exceptions to 2-Year Carryback Rule

Eligible loss

Qualified small business

Farming loss

Farming business

Qualified GO Zone loss

Qualified GO Zone casualty loss

Specified liability loss

Waiving the Carryback Period

How To Carry an NOL Back or Forward

Example —

Example —

How To Claim an NOL Deduction

NOL more than taxable income

Deducting a Carryback

Form 1045

Form 1040X

Refiguring your tax

Deducting a Carryforward

Change in Marital Status

Refund limit

Figuring your share of a joint tax liability

Figuring your contribution toward tax paid

Change in Filing Status

Separate to joint return

Joint to separate returns

Joint return in NOL year

Example —

Example —

Joint return in previous carryback or carryforward year

Example —

Illustrated Form 1045

Example —

Form 1045, page 1

How To Figure an NOL Carryover

Modified taxable income

Illustrated Schedule B (Form 1045)

Example —

NOL Carryover From 2007 to 2008

Worksheet Instructions

More than one NOL

Example —

Line 2

Line 6

Line 7

Estates and trusts

Modified adjusted gross income

Line 11

Line 20

Line 23

What's New

Certain timber losses. You can no longer treat income and expenses attributable to qualified timber property located in the GO Zone, Rita GO Zone, or Wilma GO Zone, as a farming business for 2007 or later years.

Introduction

If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). An NOL year is the year in which an NOL occurs. You can use an NOL by deducting it from your income in another year or years.

What this publication covers

This publication discusses NOLs for individuals, estates, and trusts. It covers:

• How to figure an NOL,
• When to use an NOL,
• How to claim an NOL deduction, and
• How to figure an NOL carryover.

To have an NOL, your loss must generally be caused by deductions from your:

• Trade or business,
• Work as an employee,
• Casualty and theft losses,
• Moving expenses, or
• Rental property.

A loss from operating a business is the most common reason for an NOL.

Partnerships and S corporations generally cannot use an NOL. However, partners or shareholders can use their separate shares of the partnership's or S corporation's business income and business deductions to figure their individual NOLs.

Keeping records

You should keep records for any tax year that generates an NOL for three years after you have used the carryback/carryforward or three years after the carryforward expires. What is not covered in this publication? The following topics are not covered in this publication.

• Bankruptcies. See Publication 908, Bankruptcy Tax Guide.
• NOLs of corporations. See Publication 542, Corporations.

Useful Items - You may want to see:

Publication

• 4492 Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma

Form (and Instructions)

• 1040X
  Amended U.S. Individual Income Tax Return
• 1045
  Application for Tentative Refund

See How To Get Tax Help near the end of this publication for information about getting these forms.

NOL Steps

Follow Steps 1 through 5 to figure and use your NOL.

Step 1

Complete your tax return for the year. You may have an NOL if a negative figure appears on the line below:

Step 2

Determine whether you have an NOL and its amount. See How To Figure an NOL, later. If you do not have an NOL, stop here.

Step 3

Decide whether to carry the NOL back to a past year or to waive the carryback period and instead carry the NOL forward to a future year. See When To Use an NOL, later.

Step 4

Deduct the NOL in the carryback or carryforward year. See How To Claim an NOL Deduction, later. If your NOL deduction is equal to or less than your taxable income without the deduction, stop here — you have used up your NOL.

Step 5

Determine the amount of your unused NOL. See How To Figure an NOL Carryover, later. Carry over the unused NOL to the next carryback or carryforward year and begin again at Step 4.

Note

If your NOL deduction includes more than one NOL amount, apply Step 5 separately to each NOL amount, starting with the amount from the earliest year.

How To Figure an NOL

If your deductions for the year are more than your income for the year, you may have an NOL.

There are rules that limit what you can deduct when figuring an NOL. In general, the following items are not allowed when figuring an NOL.

• Any deduction for personal exemptions.
• Capital losses in excess of capital gains.
• The section 1202 exclusion of 50% of the gain from the sale or exchange of qualified small business stock.
• Nonbusiness deductions in excess of nonbusiness income.
• Net operating loss deduction.
• The domestic production activities deduction.

• Alimony,
• Contributions to an IRA or other self-employed retirement plan,
• Health savings account deduction,
• Archer MSA deduction,
• Itemized deductions (except for casualty and theft losses, state income tax on business profits, and any employee business expenses), and
• The standard deduction (if you do not itemize your deductions).

• State income tax on business profits.
• Moving expenses.
• Educator expenses.
• The deduction of one-half of your self-employment tax or your deduction for self-employed health insurance.
• Domestic production activities deduction.
• Rental losses.
• Loss on the sale or exchange of business real estate or depreciable property.
• Your share of a business loss from a partnership or S corporation.
• Ordinary loss on the sale or exchange of stock in a small business corporation or a small business investment company.
• If you itemize your deductions, casualty and theft losses (even if they involve nonbusiness property) and employee business expenses (such as union dues, uniforms, tools, education expenses, and travel and transportation expenses).
• Loss on the sale of accounts receivable (if you use an accrual method of accounting).
• Interest and litigation expenses on state and federal income taxes related to your business.
• Unrecovered investment in a pension or annuity claimed on a decedent's final return.
• Payment by a federal employee to buy back sick leave used in an earlier year.

Nonbusiness capital losses

You can deduct your nonbusiness capital losses (line 2) only up to the amount of your nonbusiness capital gains without regard to any section 1202 exclusion (line 3). If your nonbusiness capital losses are more than your nonbusiness capital gains without regard to any section 1202 exclusion, you cannot deduct the excess.

Business capital losses

You can deduct your business capital losses (line 11) only up to the total of:

• Your nonbusiness capital gains that are more than the total of your nonbusiness capital losses and excess nonbusiness deductions (line 10), and
• Your total business capital gains without regard to any section 1202 exclusion (line 12).

Illustrated Schedule A (Form 1045)

The following example illustrates how to figure an NOL. It includes filled-in pages 1 and 2 of Form 1040 and Schedule A (Form 1045).

When To Use an NOL

Generally, if you have an NOL for a tax year ending in 2007, you must carry back the entire amount of the NOL to the 2 tax years before the NOL year (the carryback period), and then carry forward any remaining NOL for up to 20 years after the NOL year (the carryforward period). You can, however, choose not to carry back an NOL and only carry it forward. See Waiving the Carryback Period, later. You cannot deduct any part of the NOL remaining after the 20-year carryforward period.

NOL year

This is the year in which the NOL occurred.

Exceptions to 2-Year Carryback Rule

Eligible losses, farming losses, qualified GO Zone losses, and specified liability losses, defined below, qualify for longer carryback periods.

Eligible loss

The carryback period for eligible losses is 3 years. Only the eligible loss portion of the NOL can be carried back 3 years. An eligible loss is any part of an NOL that:

• Is from a casualty or theft, or
• Is attributable to a Presidentially declared disaster for a qualified small business.

Qualified small business

A qualified small business is a sole proprietorship or a partnership that has average annual gross receipts (reduced by returns and allowances) of $5 million or less during the 3-year period ending with the tax year of the NOL. If the business did not exist for this entire 3-year period, use the period the business was in existence.

Farming loss

The carryback period for a farming loss is 5 years. Only the farming loss portion of the NOL can be carried back 5 years. A farming loss is the smaller of:

1. The amount that would be the NOL for the tax year if only income and deductions attributable to farming businesses were taken into account, or
2. The NOL for the tax year.

Farming business

A farming business is a trade or business involving cultivation of land, raising or harvesting of any agricultural or horticultural commodity, operating a nursery or sod farm, raising or harvesting of trees bearing fruit, nuts, or other crops, or ornamental trees. The raising, shearing, feeding, caring for, training, and management of animals is also considered a farming business. A farming business does not include contract harvesting of an agricultural or horticultural commodity grown or raised by someone else. It also does not include a business in which you merely buy or sell plants or animals grown or raised by someone else. Waiving the 5-year carryback. You can choose to figure the carryback period for a farming loss without regard to the special 5-year carryback rule. To make this choice for 2007, attach to your 2007 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2007 farming losses without regard to the special 5-year carryback rule. If you filed your original return on time, you can make this choice on an amended return filed within 6 months after the due date of the return (including extensions). Attach a statement to your amended return and write “Filed pursuant to section 301.9100-2” at the top of the statement. File the amended return at the same address you used for your original return. Once made, this choice is irrevocable.

Qualified GO Zone loss

The carryback period for a qualified GO Zone loss is 5 years. Only the qualified GO Zone loss portion of the NOL can be carried back 5 years. A qualified GO Zone loss is the smaller of:

1. The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or
2. The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year):
   1. Qualified GO Zone casualty loss (defined later),
   2. Moving expenses paid or incurred for the employment of an individual whose main home was in the GO Zone before August 28, 2005, who was unable to remain in that home because of Hurricane Katrina, and whose main job location (after the move) is in the GO Zone,
   3. Temporary housing expenses paid or incurred to house employees of the taxpayer whose main job location is in the GO Zone,
   4. Depreciation or amortization allowable for any qualified GO Zone property (even if you elected not to claim the special GO Zone depreciation allowance for such property) for the year placed in service, and
   5. Repair expenses (including expenses for the removal of debris) paid or incurred for any damage from Hurricane Katrina to property located in the GO Zone.

Qualified GO Zone casualty loss

A qualified GO Zone casualty loss is any deductible section 1231 loss of property located in the GO Zone if the loss was caused by Hurricane Katrina. For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by Hurricane Katrina of property located in the GO Zone. Any such loss taken into account in figuring your qualified GO Zone loss is not eligible for the election to be treated as having occurred in the previous tax year. Waiving the 5-year carryback. You can choose to figure the carryback period for a qualified GO Zone loss without regard to the special 5-year carryback rule. To make this choice for 2007, attach to your 2007 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2007 qualified GO Zone losses without regard to the special 5-year carryback rule. If you filed your original return on time, you can make this choice on an amended return filed within 6 months after the due date of the return (including extensions). Attach a statement to your amended return, and write “Filed pursuant to section 301.9100-2” at the top of the statement. File the amended return at the same address you used for your original return. Once made, this choice is irrevocable.

Specified liability loss

The carryback period for a specified liability loss is 10 years. Only the specified liability loss portion of the NOL can be carried back 10 years. Generally, a specified liability loss is a loss arising from:

• Product liability, or
• An act (or failure to act) that occurred at least 3 years before the beginning of the loss year and resulted in a liability under a federal or state law requiring:

1. Reclamation of land,
2. Dismantling of a drilling platform,
3. Remediation of environmental contamination, or
4. Payment under any workers compensation act.

Waiving the Carryback Period

You can choose not to carry back your NOL. If you make this choice, then you can use your NOL only in the 20-year carryforward period. (This choice means you also choose not to carry back any alternative tax NOL.)

To make this choice, attach a statement to your original return filed by the due date (including extensions) for the NOL year. This statement must show that you are choosing to waive the carryback period under section 172(b)(3) of the Internal Revenue Code.

If you filed your return timely but did not file the statement with it, you must file the statement with an amended return for the NOL year within 6 months of the due date of your original return (excluding extensions). Enter “Filed pursuant to section 301.9100-2” at the top of the statement.

Once you choose to waive the carryback period, it is irrevocable. If you choose to waive the carryback period for more than one NOL, you must make a separate choice and attach a separate statement for each NOL year.

How To Carry an NOL Back or Forward

If you choose to carry back the NOL, you must first carry the entire NOL to the earliest carryback year. If your NOL is not used up, you can carry the rest to the next earliest carryback year, and so on.

If you do not use up the NOL in the carryback years, carry forward what remains of it to the 20 tax years following the NOL year. Start by carrying it to the first tax year after the NOL year. If you do not use it up, carry the unused part to the next year. Continue to carry any unused part of the NOL forward until the NOL is used up or you complete the 20-year carryforward period.

How To Claim an NOL Deduction

If you have not already carried the NOL to an earlier year, your NOL deduction is the total NOL. If you carried the NOL to an earlier year, your NOL deduction is the NOL minus the amount you used in the earlier year or years.

If you carry more than one NOL to the same year, your NOL deduction is the total of these carrybacks and carryovers.

NOL more than taxable income

If your NOL is more than the taxable income of the year you carry it to (figured before deducting the NOL), you generally will have an NOL carryover to the next year. See How To Figure an NOL Carryover, later, to determine how much NOL you have used and how much you carry to the next year.

Deducting a Carryback

If you carry back your NOL, you can use either Form 1045 or Form 1040X. You can get your refund faster by using Form 1045, but you have a shorter time to file it. You can use Form 1045 to apply an NOL to all carryback years. If you use Form 1040X, you must use a separate Form 1040X for each carryback year to which you apply the NOL.

Estates and trusts not filing Form 1045 must file an amended Form 1041 (instead of Form 1040X) for each carryback year to which NOLs are applied. Use a copy of the appropriate year's Form 1041, check the Amended return box, and follow the Form 1041 instructions for amended returns. Include the NOL deduction with other deductions not subject to the 2% limit (line 15a). Also, see the special procedures for filing an amended return due to an NOL carryback, explained under Form 1040X, later.

Form 1045

You can apply for a quick refund by filing Form 1045. This form results in a tentative adjustment of tax in the carryback year. See the Form 1045 illustrated at the end of this discussion. If the IRS refunds or credits an amount to you from Form 1045 and later determines that the refund or credit is too much, the IRS may assess and collect the excess immediately. Generally, you must file Form 1045 on or after the date you file your tax return for the NOL year, but not later than one year after the NOL year. If the last day of the year falls on a Saturday, Sunday, or holiday, the form will be considered timely if postmarked on the next business day. For example, if you are a calendar year taxpayer with a carryback from 2007 to 2005, you must file Form 1045 on or after the date you file your tax return for 2007, but no later than December 31, 2008.

Form 1040X

If you do not file Form 1045, you can file Form 1040X to get a refund of tax because of an NOL carryback. File Form 1040X within 3 years after the due date, including extensions, for filing the return for the NOL year. For example, if you are a calendar year taxpayer and filed your 2004 return by the April 15, 2005, due date, you must file a claim for refund of 2002 tax because of an NOL carryback from 2004 by April 15, 2008. Attach a computation of your NOL using Schedule A (Form 1045) and, if it applies, your NOL carryover using Schedule B (Form 1045), discussed later.

Refiguring your tax

To refigure your total tax liability for a carryback year, first refigure your adjusted gross income for that year. (On Form 1045, use lines 10 and 11 and the After carryback column for the applicable carryback year.) Use your adjusted gross income after applying the NOL deduction to refigure income or deduction items that are based on, or limited to, a percentage of your adjusted gross income. Refigure the following items.

1. The special allowance for passive activity losses from rental real estate activities.
2. Taxable social security and tier 1 railroad retirement benefits.
3. IRA deductions.
4. Excludable savings bond interest.
5. Excludable employer-provided adoption benefits.
6. Student loan interest deduction.
7. Tuition and fees deduction.

• The itemized deduction for medical expenses.
• The itemized deduction for casualty losses.
• Miscellaneous itemized deductions subject to the 2% limit.
• The overall limit on itemized deductions.
• The phaseout of the deduction for exemptions.

Deducting a Carryforward

If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the Other income line of Form 1040 or Form 1040NR (line 21 for 2007). Estates and trusts include an NOL deduction on Form 1041 with other deductions not subject to the 2% limit (line 15a for 2007).

You must attach a statement that shows all the important facts about the NOL. Your statement should include a computation showing how you figured the NOL deduction. If you deduct more than one NOL in the same year, your statement must cover each of them.

Change in Marital Status

If you and your spouse were not married to each other in all years involved in figuring NOL carrybacks and carryovers, only the spouse who had the loss can take the NOL deduction. If you file a joint return, the NOL deduction is limited to the income of that spouse.

For example, if your marital status changes because of death or divorce, and in a later year you have an NOL, you can carry back that loss only to the part of the income reported on the joint return (filed with your former spouse) that was related to your taxable income. After you deduct the NOL in the carryback year, the joint rates apply to the resulting taxable income.

Refund limit

If you are not married in the NOL year (or are married to a different spouse), and in the carryback year you were married and filed a joint return, your refund for the overpaid joint tax may be limited. You can claim a refund for the difference between your share of the refigured tax and your contribution toward the tax paid on the joint return. The refund cannot be more than the joint overpayment. Attach a statement showing how you figured your refund.

Figuring your share of a joint tax liability

There are five steps for figuring your share of the refigured joint tax liability.

1. Figure your total tax as though you had filed as married filing separately.
2. Figure your spouse's total tax as though your spouse had also filed as married filing separately.
3. Add the amounts in (1) and (2).
4. Divide the amount in (1) by the amount in (3).
5. Multiply the refigured tax on your joint return by the amount figured in (4). This is your share of the joint tax liability.

Figuring your contribution toward tax paid

Unless you have an agreement or clear evidence of each spouse's contributions toward the payment of the joint tax liability, figure your contribution by adding the tax withheld on your wages and your share of joint estimated tax payments or tax paid with the return. If the original return for the carryback year resulted in an overpayment, reduce your contribution by your share of the tax refund. Figure your share of a joint payment or refund by the same method used in figuring your share of the joint tax liability. Use your taxable income as originally reported on the joint return in steps (1) and (2) above, and substitute the joint payment or refund for the refigured joint tax in step (5).

Change in Filing Status

If you and your spouse were married and filed a joint return for each year involved in figuring NOL carrybacks and carryovers, figure the NOL deduction on a joint return as you would for an individual. However, treat the NOL deduction as a joint NOL.

If you and your spouse were married and filed separate returns for each year involved in figuring NOL carrybacks and carryovers, the spouse who sustained the loss may take the NOL deduction on a separate return.

Special rules apply for figuring the NOL carrybacks and carryovers of married people whose filing status changes for any tax year involved in figuring an NOL carryback or carryover.

Separate to joint return

If you and your spouse file a joint return for a carryback or carryforward year, and were married but filed separate returns for any of the tax years involved in figuring the NOL carryback or carryover, treat the separate carryback or carryover as a joint carryback or carryover.

Joint to separate returns

If you and your spouse file separate returns for a carryback or carryforward year, but filed a joint return for any or all of the tax years involved in figuring the NOL carryover, figure each of your carryovers separately.

Joint return in NOL year

Figure each spouse's share of the joint NOL through the following steps.

1. Figure each spouse's NOL as if he or she filed a separate return. See How To Figure an NOL, earlier. If only one spouse has an NOL, stop here. All of the joint NOL is that spouse's NOL.
2. If both spouses have an NOL, multiply the joint NOL by a fraction, the numerator of which is spouse A's NOL figured in (1) and the denominator of which is the total of the spouses' NOLs figured in (1). The result is spouse A's share of the joint NOL. The rest of the joint NOL is spouse B's share.

Joint return in previous carryback or carryforward year

If only one spouse had an NOL deduction on the previous year's joint return, all of the joint carryover is that spouse's carryover. If both spouses had an NOL deduction (including separate carryovers of a joint NOL, figured as explained in the previous discussion), figure each spouse's share of the joint carryover through the following steps.

1. Figure each spouse's modified taxable income as if he or she filed a separate return. See Modified taxable income under How To Figure an NOL Carryover, later.
2. Multiply the joint modified taxable income you used to figure the joint carryover by a fraction, the numerator of which is spouse A's modified taxable income figured in (1) and the denominator of which is the total of the spouses' modified taxable incomes figured in (1). This is spouse A's share of the joint modified taxable income.
3. Subtract the amount figured in (2) from the joint modified taxable income. This is spouse B's share of the joint modified taxable income.
4. Reduce the amount figured in (3), but not below zero, by spouse B's NOL deduction.
5. Add the amounts figured in (2) and (4).
6. Subtract the amount figured in (5) from spouse A's NOL deduction. This is spouse A's share of the joint carryover. The rest of the joint carryover is spouse B's share.

Illustrated Form 1045

The following example illustrates how to use Form 1045 to claim an NOL deduction in a carryback year. It includes a filled-in page 1 of Form 1045.

How To Figure an NOL Carryover

If your NOL is more than your taxable income for the year to which you carry it (figured before deducting the NOL), you may have an NOL carryover. You must make certain modifications to your taxable income to determine how much NOL you will use up in that year and how much you can carry over to the next tax year. Your carryover is the excess of your NOL deduction over your modified taxable income for the carryback or carryforward year. If your NOL deduction includes more than one NOL, apply the NOLs against your modified taxable income in the same order in which you incurred them, starting with the earliest.

Modified taxable income

Your modified taxable income is your taxable income figured with the following changes.

1. You cannot claim an NOL deduction for the NOL carryover you are figuring or for any later NOL.
2. You cannot claim a deduction for capital losses in excess of your capital gains. Also, you must increase your taxable income by the amount of any section 1202 exclusion claimed on Schedule D (Form 1040).
3. You cannot claim the domestic production activities deduction.
4. You cannot claim a deduction for your exemptions for yourself, your spouse, or dependents.
5. You must figure any item affected by the amount of your adjusted gross income after making the changes in (1), (2), and (3), above, and certain other changes to your adjusted gross income that result from (1), (2), and (3). This includes income and deduction items used to figure adjusted gross income (for example, IRA deductions), as well as certain itemized deductions. To figure a charitable contribution deduction, do not include deductions for NOL carrybacks in the change in (1) but do include deductions for NOL carryforwards from tax years before the NOL year.

Illustrated Schedule B (Form 1045)

The following example illustrates how to figure an NOL carryover from a carryback year. It includes a filled-in Schedule B (Form 1045).

NOL Carryover From 2007 to 2008

If you had an NOL deduction carried forward from a year prior to 2007 that reduced your taxable income on your 2007 return to zero (to less than zero, if an estate or trust), complete Table 1, Worksheet for NOL Carryover From 2007 to 2008. It will help you figure your NOL to carry to 2008. Keep the worksheet for your records.

Worksheet Instructions

At the top of the worksheet, enter the NOL year for which you are figuring the carryover.

More than one NOL

If your 2007 NOL deduction includes amounts for more than one loss year, complete this worksheet only for one loss year. To determine which year, start with your earliest NOL and subtract each NOL separately from your taxable income figured without the NOL deduction. Complete this worksheet for the earliest NOL that reduces your taxable income below zero. Your NOL carryover to 2008 is the total of the amount on line 10 of the worksheet and all later NOL amounts.

Line 2

Treat your NOL deduction for the NOL year entered at the top of the worksheet and later years as a positive amount. Add it to your negative taxable income. Enter the result on line 2.

Line 6

You must refigure the following income and deductions based on adjusted gross income.

1. The special allowance for passive activity losses from rental real estate activities.
2. Taxable social security and tier 1 railroad retirement benefits.
3. IRA deduction.
4. Excludable savings bond interest.
5. Excludable employer-provided adoption benefits.
6. Student loan interest deduction.
7. Tuition and fees deduction.

Line 7

Enter zero if you claimed the standard deduction. Otherwise, use lines 11 through 44 of the worksheet to figure the amount to enter on this line. Complete only those sections that apply to you.

Estates and trusts

Enter zero on line 7 if you did not claim any miscellaneous deductions on Form 1041, line 15b, or a casualty or theft loss. Otherwise, refigure these deductions by substituting modified adjusted gross income (see below) for adjusted gross income. Subtract the recomputed deductions from those claimed on the return. Enter the result on line 7.

Modified adjusted gross income

To refigure miscellaneous itemized deductions of an estate or trust (Form 1041, line 15b), modified adjusted gross income is the total of the following amounts.

• The adjusted gross income on the return.
• The amounts from lines 3 through 5 of the worksheet.
• The exemption amount from Form 1041, line 20.
• The NOL deduction for the NOL year entered at the top of the worksheet and for later years.

• The adjusted gross income amount you used to figure the deduction claimed on the return.
• The amounts from lines 3 through 5 of the worksheet.
• The NOL deduction for the NOL year entered at the top of the worksheet and for later years.

Line 11

Treat your NOL deduction for the NOL year entered at the top of the worksheet and for later years as a positive amount. Add it to your adjusted gross income. Enter the result on line 11.

Line 20

Is your modified adjusted gross income from line 13 of this worksheet more than $100,000 ($50,000 if married filing separately)? □ Yes. Your deduction is limited. Refigure your deduction using the Qualified Mortgage Insurance Premiums Deduction Worksheet in the 2007 Instructions for Schedule A & B (Form 1040). On line 2 of the Qualified Mortgage Insurance Premiums Deduction Worksheet, enter the amount from line 13 of this worksheet. □ NO. Your deduction is not limited. Skip line 20 and enter -0- on line 21.

Line 23

If you had a contributions carryover from 2006 to 2007 and your NOL deduction includes an amount from an NOL year before 2006, you may have to reduce your contributions carryover. This reduction is any adjustment you made to your 2006 charitable contributions deduction when figuring your NOL carryover to 2007. Use the reduced contributions carryover to figure the amount to enter on line 23. This image is too large to be displayed in the current screen. Please click the link to view the image.

Worksheet for NOL Carryover

Worksheet for NOL Carryover (Continued)

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