Alabama Application of NOL Carryback or Carryforward

Application of NOL Carryback or Carryforward
85A
FORM

NOL-85A

*2200258A*

Rev. 5/22

Alabama Department of Revenue
APPLICATION OF

For Year Ending
•__________________, ________

Net Operating Loss
Carryback or Carryforward

(Enter year to which loss is being carried)

Name(s) as shown on Form 40, 40NR, or 40X

Your Social Security Number

PURPOSE OF SCHEDULE. Form NOL-85A is designed to apply a net operating loss to the tax year to which the loss is being carried. Before Form NOL-85A can be completed, you must first
complete Form NOL-85 to determine the amount of net operating loss that may be carried back or forward. See instructions on the reverse side for further information.

1(a) Enter the tax year during which the net operating loss was incurred. Beginning •_______________________, ______ Ending •_____________________, ______
(b) Did you elect on Form NOL-85 to forfeit the election to carry this loss back?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Yes

(c) Did you timely file the subsequent year’s return and claim the net operating loss thereon? . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Yes
PART I – Computation
2 Enter the net operating loss as shown on line 7, Part II, Form NOL-85, or
as shown on line 7, Form NOL-85A (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
3 Enter the taxable income as shown on Form 40, Form 40NR, or Form 40X for the
tax year to which the loss is being carried . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MODIFICATIONS
4(a) Personal Exemption. Enter the amount of personal exemption claimed on the
return to which the loss is being carried. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4a •
(b) Dependent Exemption. Enter the amount of dependent exemption claimed on the
return to which the loss is being carried. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4b •
5 TOTAL MODIFICATIONS. Add lines 4(a) and 4(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
7

MODIFIED TAXABLE INCOME. Add lines 3 and 5. If negative enter zero. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UNUSED NET OPERATING LOSS. If line 2 exceeds line 6, subtract line 6 from line 2. Enter difference here and
enter zero (0) on the tax due line of Form 40 or Form 40NR. DO NOT complete Part II below. The amount on line 7
may be carried forward to the next applicable year (Form NOL-85A, line 2). If line 6 exceeds line 2, enter zero here
and complete Part II below. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
If the Net Operating Loss Deduction on line 2 above is:
a. Less than the taxable income reported on line 3 above, complete lines 8 through 14 below.
b. Equal to or greater than the taxable income reported on line 3 above, check here . . . . . . . . . . . . . . . . . . . . .  and
SKIP lines 8 through 13, and enter zero on line 14.
Form NOL-85A

 No
 No

2 •
3 •

5
6

7 •

ADOR

*2200268A*
Form NOL-85A – (5/22)

Page 2

PART II – Application
8 Enter the Adjusted Gross Income as shown on the return (or prior adjustment or prior NOL-85A) for the year to which the
loss is being carried . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 •

Net Operating Loss to be Applied. Enter the amount from line 2, Part I above.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 •
MODIFIED ADJUSTED GROSS INCOME. Subtract line 9 from line 8 and enter the result here. (If you filed Form 40NR,
complete Part III before completing lines 11 through 14.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10 •
DEDUCTIONS
11(a) Standard Deduction. If you claimed the Standard Deduction on the return to which
the loss is being carried, recompute the Standard Deduction based on the Modified
Adjusted Gross Income shown on line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11a •
(b) Itemized Deductions. If you claimed Itemized Deductions on the return to which the
loss is being carried, recompute the itemized deductions based on the Modified
Adjusted Gross Income shown on line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11b •
(c) Federal Income Tax. Enter the federal income tax as last determined and claimed
as a deduction on the return to which the loss is being carried. . . . . . . . . . . . . . . . . . . . . . . . . 11c •
(d) Personal Exemption. Enter the personal exemption as claimed on the return to
which the loss is being carried . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11d •
(e) Dependent Exemption. Enter the dependent exemption as last determined and
claimed on the return, recompute the dependent exemption based on the Modified
Adjusted Gross Income shown on line 10, to which the loss is being carried . . . . . . . . . . . . . . 11e •
12 TOTAL DEDUCTIONS. Add lines 11a through 11e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9
10

13
14

TAXABLE INCOME AS ADJUSTED. Subtract line 12 from line 10 and enter result here. . . . . . . . . . . . . . . . . . . . . . . . . . .  13 •
TAX DUE AFTER APPLICATION OF NET OPERATING LOSS. Compute the tax due using the tax tables for the year to
which the loss is being carried. Enter the result here and also on the TAX DUE line of Form 40X, Form 40, or Form 40NR .  14

PART III – Modified Adjusted Gross Income Percentage
15
16
17
18
19

(This section to be completed by nonresidents only)

Adjusted Gross Income From All Sources. Enter the adjusted gross income from all sources as shown on the
return to which the loss is being applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Operating Loss to be Applied. Enter the amount shown on line 9, Part II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modified Adjusted Gross Income From All Sources. Subtract line 16 from line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Modified Adjusted Gross Income From Alabama Sources. Enter the amount from line 10, Part II . . . . . . . . . . . . . . . . . . . .
Percentage of Alabama Adjusted Gross Income to Total Adjusted Gross Income From All Sources After
Modifications. Divide the amount on line 18 by the amount on line 17 and enter percentage here (but not over 100%). . . . 

15
16
17
18

•
•
•
•

19 •

The percentage on line 19 should be used to recompute the Standard Deduction or Itemized Deductions, Federal Income Tax Deduction, Personal Exemption, and Dependent Exemption on lines 11a through 11e, Part II. NOTE: If you are married and filed separate Alabama returns and a joint Federal return, DO NOT use the percentage on line
19 to recompute the federal income tax deduction. See Special Instructions for Nonresidents.
ADOR

Instructions For Completing Form NOL-85A
General Instructions

skip lines 8 through 13 and enter zero on line 14.

If you incurred a net operating loss for a taxable year beginning after December 31,
1984, Form NOL-85A should be used to carry the loss back or forward.
For loss years beginning before January 1, 1998, a net operating loss may
be carried back and deducted from taxable income of the three years preceding the loss. Any unused portion of the loss may then be brought forward for 15
years or until used up, whichever comes first. For loss years beginning after
December 31, 1997, a net operating loss may be carried back and deducted
from taxable income of the two years preceding the loss. Any unused portion of
the loss may then be brought forward for 15 years. The loss must be carried
back before bringing forward, unless an election is made to forfeit the carryback
provision or the loss is claimed on the subsequent year’s timely filed return.
Before Form NOL-85A can be completed, you must first complete Form
NOL-85 to determine the actual amount of the net operating loss that may be
carried back or brought forward.
If a net operating loss is not used up the first year to which it is applied, you
must complete another Form NOL-85A to carry the unused portion to the next
available year.

Line 8. The Adjusted Gross Income as shown on the return to which the
loss is being carried should be entered on line 8. If this return has been amended
or adjusted, enter the adjusted gross income as last amended or last adjusted.
If a net operating loss from another year has previously been applied to this
year, then the amount on line 10 of Form NOL-85A should be entered on this
line.

Special Instructions
Most lines on Form NOL-85A are self-explanatory. The following information
is provided for those lines needing further explanation.
In the top right corner, enter the tax year to which the loss is being carried.
Line 2. If this is the first year to which the net operating loss is being applied, enter the amount shown on Form NOL-85, Part II, line 7. If the entire loss
was not used up the first year to which the loss was applied, then the amount
shown on line 7 of the previous Form NOL-85A should be entered on line 2.
Line 3. The taxable income as shown on the return to which the loss is carried should be entered on this line. Example: If the loss is carried to a 2000
Form 40, the taxable income is on line 18.
Lines 4a and 4b. Enter the personal exemption and dependent exemption
claimed on the return to which the loss is carried. If you did not receive a tax benefit for the full amount of these exemptions, enter only the amount for which you
received a tax benefit.
Line 7. Complete line 7 to determine if you have any unused net operating
loss to carry to another tax year.
If the amount on line 7 is more than zero, this represents the unused net operating loss that can be carried over to another tax year. This amount should be
entered on line 2 of Form NOL-85A for the tax year to which it is being carried.
BEFORE COMPLETING LINES 8 THROUGH 14 — Compare the
amounts on lines 2 and 3. If the amount on line 2 is less than the amount on
line 3, you must complete lines 8 through 14 to determine the tax due after applying the net operating loss.
If the amount on line 2 is equal to or greater than the amount on line 3,

NOTE: If more than one Net Operating Loss is applied to the same tax
year, the earliest loss incurred must be applied first. A separate NOL-85A
must be completed for each loss.
For further information on applying more than one net operating loss to the
same tax year, please refer to Regulation 810-3-15.2-.01 (Section 40-18-15.2,
Code of Alabama 1975). A copy of this regulation is available upon request.

Special Instructions for Nonresidents
Nonresidents must complete Part III before completing Part II, lines 11a
through 11e. This is necessary in order to arrive at a new percentage to determine the Standard or Itemized Deductions, Federal Income Tax Deduction, Personal Exemption, and Dependent Exemption allowable as a deduction after
applying the net operating loss.
If you are married and filed separate Alabama returns and a joint Federal return, you must make a separate computation to determine the Federal Income
Tax Deduction. Use the following worksheet to determine this percentage:
1.  Your Modified Adjusted Gross
Income From All Sources as shown
on line 17, Part III Form NOL-85A . . . . . $______________
2.  Your spouseʼs Federal Adjusted
Gross Income . . . . . . . . . . . . . . . . . . . . .   ______________
3.  Add the amounts on lines 1 and 2 . . . . . $______________
4.  Divide the amount on line 1 by the
amount on line 3. . . . . . . . . . . . . . . . . . . .   ____________%
Multiply the Federal Income Tax Liability by the percentage on line 4 and
enter the result on line 11c.
A COPY OF FORM NOL-85A MUST BE ATTACHED
TO FORM 40X, FORM 40, OR FORM 40NR.
BE SURE TO KEEP A COPY FOR YOUR RECORDS
FOR FURTHER REFERENCE.