Instructions for Form 172

Instructions for Form 172

(Rev. December 2024)

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

For use with Form 172 (Rev. December 2024) or later revision

Section references are to the Internal Revenue Code unless

otherwise noted.

of the partnership’s or S corporation’s business income and

business deductions to figure their individual NOLs.

Future Developments

Carrying back an NOL to an earlier tax year may create

an alternative minimum tax (AMT) liability for that earlier

CAUTION year. This may be true even if there was no AMT liability

on the tax return filed for that earlier year.

For the latest information about developments related to Form

172 and its instructions, such as legislation enacted after they

were published, go to IRS.gov/Form172.

What’s New

This form was created for taxpayers (other than corporations) to

figure the amount of net operating loss that is available to carry

back or carry forward.

Reminders

NOL carryback eliminated. Generally, you can only carry

NOLs arising in tax years after 2020 to a later year. An exception

applies to certain farming losses, which may be carried back 2

years. See section 172(b) and Pub. 225, Farmer’s Tax Guide.

NOL deduction limitation. In general, your NOL deduction for

tax years beginning after December 31, 2020, cannot exceed the

sum of: (1) the NOLs carried to the year from tax years beginning

before January 1, 2018; plus, (2) the lesser of: (a) the NOLs

carried to the year from tax years beginning after December 31,

2017, or (b) 80% of the excess (if any) of taxable income

computed without regard to deductions for NOLs, or Qualified

Business Income (QBI), or section 250 deductions, over the

NOLs carried to the year from tax years beginning before

January 1, 2018.

General Instructions

Purpose of Form

Individuals, estates, and trusts use Form 172 to figure the

amount of the NOL that is available for carrying back or forward.

If your deductions for the year are more than your income for

the year, you may have a net operating loss. 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.

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

deductions from your:

• Trade or business,

• Work as an employee (although not deductible for most

taxpayers for 2018 through 2025),

• Casualty and theft losses resulting from a federally declared

disaster,

• Moving expenses (although not deductible for most taxpayers

for 2018 through 2025), or

• Rental property.

A loss from operating a business is the most common reason

for an NOL.

Partnerships and S corporations generally can’t use an NOL.

However, partners or shareholders can use their separate shares

Dec 23, 2024

!

Carrying back an NOL to tax year 2021 may create an

excess advance child tax credit (CTC) payment, based

CAUTION on the refigured adjusted gross income (AGI) and

Modified AGI (MAGI). With the NOL reduction in MAGI, however,

repayment protection under section 24(j) may reduce the amount

of tax you owe, based on certain income thresholds. See the

2021 Instructions for Schedule 8812 (Form 1040) for more

details.

!

Individuals, estates, and trusts that carry NOLs back to

years in which they have a section 965(a) inclusion (“965

CAUTION year”) may not use this form. You must use an amended

return to carry back to such years.

!

Keeping records. You should keep records for any tax year that

generates an NOL for 3 years after you have used the carryback/

carryforward or 3 years after the carryforward expires.

Election to waive carryback. A taxpayer may elect to waive

carrybacks. See section 172 for details.

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 amount appears in these cases.

• Individuals—You subtract your standard deduction or itemized

deductions from your adjusted gross income (AGI).

• Estates and trusts—You combine taxable income, charitable

deductions, income distribution deduction, and exemption

amounts from your Form 1041.

Step 2. Determine whether you have an NOL and its amounts.

See How To Figure an NOL, later. If you do not have an NOL,

stop here.

Step 3. If applicable, 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.

Step 5. Determine the amount of your unused NOL. See How to

Figure an NOL Carryover, later. Carry 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.

Instructions for Form 172 (Rev. 12-2024) Catalog Number 94487B

Department of the Treasury Internal Revenue Service www.irs.gov

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.

• Capital losses in excess of capital gains.

• The section 1202 exclusion of the gain from the sale or

exchange of qualified small business stock.

• Nonbusiness deductions in excess of nonbusiness income.

• The NOL deduction.

• The section 199A deduction for qualified business income.

When To Use an NOL

If you have an NOL for a tax year ending after 2020, only the

farming loss portion, if any, can be carried back.

NOL year. This is the year in which the NOL occurred.

Exception to the No Carryback Rule. Farming losses, defined

next, qualify for a 2-year carryback period. Only the farming loss

portion of an NOL can be carried back 2 years. The 80%

limitation rule does not apply to a carryback period before 2021.

Farming business. A farming business is a trade or business

involving cultivation of land or the raising or harvesting of any

agricultural or horticultural commodity. A farming business can

include operating a nursery or sod farm or raising or harvesting

most ornamental trees or trees bearing fruit, nuts, or other crops.

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 entirely by

someone else.

Farming loss. A farming loss is the smaller of:

• The amount that would be the NOL for the tax year if only

income and deductions from farming businesses (as defined in

section 263A(e)(4)) were taken into account, or

• The NOL for the tax year.

Annual losses limited. Noncorporate taxpayers may be

subject to excess business loss limitations. For more information

see Excess Business Loss, later.

Waiving the Carryback Period

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).

If you filed your original return on time but did not file the

statement with it, you can make this choice on an amended

return filed within 6 months of the due date of the return

(excluding extensions). Attach a statement to your amended

return, and write “Filed pursuant to section 301.9100-2” at the

top of the statement.

Once you choose to waive the carryback period, it is

generally irrevocable. The election must be made by the due

date of the return, including extensions.

!

If you do not file this statement on time, you cannot

waive the carryback period.

CAUTION

How to Carry an NOL Back or Forward

If you choose to carry back a farming loss, you must first carry

the farming loss to the earliest year in the 2-year carryback

period. If the farming loss is not used up, you can carry the rest

to the next earliest carryback year, and then on to carryover

years after the loss year, and so on.

If you waive the carryback period or do not use up all of the

farming loss in the carryback period, you will have an NOL that

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can be carried forward indefinitely until used up. This NOL will be

equal to the sum of what remains of the farming loss, plus any

nonfarm NOL, plus any excess business loss for the NOL year.

See Excess Business Loss, later. Start by carrying the NOL 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.

For nonfarming businesses, since you can’t carry the NOL to

an earlier year, your NOL deduction for tax years beginning after

December 31, 2020, cannot exceed the sum of:

1. The NOLs carried to the year from tax years beginning

before January 1, 2018; plus

2. The lesser of:

a. The NOLs carried to the year from tax years beginning

after December 31, 2017, or

b. 80% of the excess (if any) of taxable income computed

without regard to deductions for NOLs, or Qualified Business

Income (QBI), or section 250 deductions, over the NOLs

carried to the year from tax years beginning before January

1, 2018.

Only NOLs arising after 2017 and carried forward to a year

after 2020 are subject to the 80%-of-taxable-income limit. The

total amount of any NOL deduction for 2021 or thereafter that is

attributable to NOLs from tax years after 2017 can’t exceed 80%

of taxable income without regard to the NOL deduction or

sections 199A or 250.

How to Claim an NOL Deduction

If you carried the NOL to an earlier year, your NOL deduction is

the carried over NOL minus the NOL 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 resulting in no taxable income. If your NOL is more than

the taxable income of the year you carry it to (figured before

deducting the NOL), you will generally 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 1040-X. You can get your refund faster by using Form

1045, but you have a shorter time to file it and because it is not

treated as a claim for credit or refund, you may need to file a

claim for credit or refund (such as Form 1040-X) if your

application on Form 1045 is disallowed. For more information,

see the Instructions for Form 1045. You can use Form 1045 to

apply an NOL to all carryback years. If you use Form 1040-X,

you must use a separate Form 1040-X for each carryback year

to which you apply the NOL.

Estates and trusts that do not file Form 1045 must file an

amended Form 1041 (instead of Form 1040-X) for each

carryback year to which NOLs are applied. Use a copy of the

appropriate year's Form 1041, check the Net operating loss

carryback box, and follow the Form 1041 instructions for

amended returns. Include the NOL deduction with other

deductions not subject to the 2% limit. Also, see the special

procedures for filing an amended return due to an NOL

carryback, explained under Form 1040-X, later.

Carrying back an NOL to an earlier tax year may create

an alternative minimum tax (AMT) liability for that earlier

CAUTION year. This may be true even if there was no AMT liability

on the tax return filed for that earlier year.

!

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.

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 1 year after

the end of the NOL year. If the last day of the NOL year falls on a

Saturday, Sunday, or holiday, the form will be considered timely

filed if postmarked on the next business day.

If you were affected by a federally declared disaster, you

may have additional time to file your Form 1045. For

CAUTION more information, go to IRS.gov/DisasterTaxRelief.

!

Attach Form 172 to your Form 1045 if it applies.

Form 1040-X If you do not file Form 1045, you can file Form

1040-X to get a refund of tax because of an NOL carryback.

Generally, file Form 1040-X for the carryback year within 3 years

after the due date, including extensions, for filing the return for

the NOL year.

!

Filing Form 1040-X does not extend the carryback

period. See When To Use an NOL, earlier.

CAUTION

Attach a Form 172 for each NOL to your Form 1040-X if it

applies to the computation of your NOL.

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 Schedule 1

(Form 1040) for the year to which the NOL is carried. Estates

and trusts, include an NOL deduction on Form 1041.

Attach a Form 172 for each NOL to your Form 1040 or Form

1041 if it applies.

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 also

had 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 the tax 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 tax 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 by separating the NOL portion for

each spouse from within the joint return. Because the joint NOL

is being carried to a tax year involving separate returns, the

separate NOL of each spouse must be figured.

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.

Example 1. Mark and Nancy are married and file a joint

return for the current tax year. They have an NOL of $5,000 from

a farming business. They carry the NOL back to the second

preceding tax year, a year in which Mark and Nancy filed

separate returns. Figured separately, Nancy's current tax year

deductions were more than her income, and Mark's income was

more than his deductions. Mark does not have any NOL to carry

back. Nancy can carry back the entire $5,000 NOL to her

separate return for the second preceding tax year.

Example 2. Assume the same facts as in Example 1, except

that both Mark and Nancy had deductions in the current tax year

that were more than their income. Figured separately, his NOL is

$1,800 and her NOL is $3,000. The sum of their separate NOLs

($4,800) is less than their $5,000 joint NOL because his

deductions included a $200 net capital loss that is not allowed in

figuring his separate NOL. The loss is allowed in figuring their

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joint NOL because it was offset by Nancy's capital gains. Mark's

share of their $5,000 joint NOL is $1,875 ($5,000 ×

$1,800/$4,800) and Nancy's is $3,125 ($5,000 − $1,875).

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.

3. You cannot claim a deduction for your exemptions for

yourself, your spouse, or your dependents.

4. You must figure any item affected by the amount of your

AGI after making the changes in (1), (2), and (3) above, and

certain other changes to your AGI that result from (1), (2), and

(3). This includes income and deduction items used to figure AGI

(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.

Your taxable income as modified cannot be less than zero.

You can use Form 172, Part II, to figure your modified taxable

income for carryback years and your carryover from each of

those years.

Excess Business Loss

Noncorporate taxpayers may be subject to excess business loss

limitations. The at-risk limits and the passive activity limits are

applied before figuring the amount of any excess business loss.

An excess business loss is the amount by which the total

deductions attributable to all of your trades or businesses

exceed your total gross income and gains attributable to those

trades or businesses plus the threshold amount for excess

business losses. The threshold amount for your NOL year can

be found in the Instructions for Form 461. The excess is treated

as an NOL to be carried forward. Further, when carryforwards

can be used, they can only offset 80% of taxable income in

future years. A trade or business includes, but is not limited to,

Schedule C and Schedule F activities, and certain activities

reported on Schedule E. (In the case of a partnership or S

corporation, although the limitation is applied at the partner or

shareholder level, the trade or business determination is made at

the entity’s level.) Business gains and losses reported on

Schedule D and Form 4797 are included in the excess business

loss calculation. Excess business losses that are disallowed are

treated as an NOL carryover to the following tax year. See Form

461 and its instructions for details. For application of these rules

to farmers, see also Pub. 225 and the Instructions for Schedule F

(Form 1040 or 1040-SR). Use NOL Carryover with an Excess

Business Loss Worksheet below to figure the total NOL

carryover with an excess business loss.

Example. For the current tax year, an unmarried taxpayer

operates a Schedule C business and incurs a loss of $1 million.

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The taxpayer completes Form 461 and determines that they

have incurred an excess business loss of $738,000. The

taxpayer reports the excess business loss as a positive number

on Schedule 1 (Form 1040 or 1040-SR) – effectively offsetting

part of the loss claimed on Schedule C. This excess business

loss of $738,000 will be treated as an NOL carryover to the next

tax year. The taxpayer must then complete the NOL Carryover

with an Excess Business Loss Worksheet below to figure the

total NOL carryover from the current tax year to the next tax year.

NOL Carryover with an Excess Business Loss

Worksheet

For Use by Individuals, Estates, and Trusts (Keep for you records.)

1. Enter the amount from Form 172, line 33, if less than

zero. Enter as a negative number. . . . . . . . . . . . . .

2. Portion of line 1 above that is a loss that was carried

back and used. Enter as a positive number . . . . . . .

3. Enter the total excess business loss from Form 461.

Enter as a negative number . . . . . . . . . . . . . . . . .

4. Combine lines 1 through 3. This is your NOL to carry

over to the next tax year . . . . . . . . . . . . . . . . . . . .

Specific Instructions

Tax Year

Above your name, enter the calendar year or other tax year you

are using. If you are a fiscal year filer using a tax year other than

January 1 through December 31, enter the beginning and ending

months of your fiscal year in the entry space provided.

Address

P.O. box. Enter your box number only if your post office doesn't

deliver mail to your home.

Foreign address. If you have a foreign address, enter the city

name on the appropriate line. Don’t enter any other information

on that line, but also complete the spaces below that line. Don’t

abbreviate the country name. Follow the country’s practice for

entering the postal code and the name of the province, county, or

state.

Part I—NOL

Complete Part I to figure the amount of the NOL that is available

for carryback or carryforward.

Line 2—Nonbusiness Capital Losses

Don't include on this line any section 1202 exclusion amounts

(even if entered as a loss on Schedule D (Form 1041)).

Line 6—Nonbusiness Deductions

Enter as a positive number deductions that aren't connected with

a trade or business. They include:

• Health savings account deduction,

• Archer MSA deduction,

• Deductions for payments on behalf of a self-employed

individual to a SEP, SIMPLE, or qualified plan,

• IRA deductions,

• Alimony paid,

• Most itemized deductions (except for casualty and theft

losses resulting from a federally declared disaster and state

income tax on trade or business income), and

• Standard deduction.

Don't include on line 6 any business deductions. These are

deductions that are connected with a trade or business. They

include:

• State income tax on income from your trade or business

(including wages, salary, and unemployment compensation).

• Moving expenses for members of the Armed Forces on active

duty.

• Educator expenses.

• The deduction for the deductible part of self-employed health

insurance and the deduction for the deductible part of

self-employment tax.

• 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 an S

corporation.

• Ordinary loss on the sale or exchange of section 1244 (small

business) stock.

• 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

resulting from a federally declared disaster (even if they involve

nonbusiness property).

• 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.

Line 7—Nonbusiness Income Other Than

Capital Gains

Enter income that isn't from a trade or business. Examples are

ordinary dividends, annuities, and interest on investments. This

includes:

• Your taxable IRA distributions.

• Pension benefits.

• Social security benefits.

• Annuity income.

• Dividends.

• Interest on investments.

• Your share of nonbusiness income from a partnership or an S

corporation.

Don't enter business income on line 7. This is income from a

trade or business and includes:

• Salaries and wages.

• Self-employment income.

• Unemployment compensation.

• Rental income.

• Gain on the sale or exchange of business real estate or

depreciable property.

• Your share of business income from a partnership or an S

corporation.

capital losses are more than your nonbusiness capital gains

without regard to any section 1202 exclusion, you cannot deduct

the excess.

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).

Line 23—NOL Deduction for Losses from Other

Years

You cannot deduct any NOL carryovers or carrybacks from other

years. Enter the total amount of your NOL deduction for losses

from other years.

Part II—NOL Carryover

Complete this part to figure the NOL deduction for each

carryback year and the amount to be carried forward, if not fully

absorbed.

If an NOL is more than the modified taxable income for the

earliest year to which it is carried, you must complete Part II to

figure the amount of the NOL to be carried to the next tax year.

The amount of the carryback is the excess, if any, of the NOL

carryback over the modified taxable income for that earlier year.

Modified taxable income is the amount figured on line 9 of Part II.

If you carry two or more NOLs to a tax year, figure your

modified taxable income by deducting the NOLs in the

CAUTION order in which they were incurred. First, deduct the NOL

from the earliest year, then the NOL from the next earliest year,

etc. After you deduct each NOL, there will be a new, smaller,

modified taxable income to compare to any remaining NOL.

!

Use one pair of columns to enter amounts before and after

carryback for each year to which the loss or credit is being

carried. Start with the earliest carryback year. Use the next pair

of columns for the next consecutive preceding tax year if not fully

absorbed. Enter the date the carryback year ends in the spaces

provided in the column headings at the top of each page.

Line 1—NOL Deduction

For the second preceding tax year, enter on line 1 the amount of

the current year farming loss carried back to the year. For the

first preceding tax year, enter on line 1 the amount from line 10 of

Part II for the second preceding tax year.

Line 2—Taxable Income Before the Current Year

NOL Carryback

Don't take into account on this line any NOL carryback from the

current year or later. However, do take into account NOLs that

occurred in tax years before the current year and are otherwise

allowable as carrybacks or carryforwards.

Enter as a positive number on line 17 any gain you excluded

under section 1202 on the sale or exchange of qualified small

business stock.

Line 17—Section 1202 Exclusion

Note. If your taxable income is shown as zero on your tax return

(or as previously adjusted) for any carryback year, refigure it

without limiting the result to zero and enter it on line 2 as a

negative number.

Lines 19–22—Capital Loss Limitation

Line 3—Net Capital Loss Deduction

The amount deductible for capital losses is limited based on

whether the losses are business capital losses or nonbusiness

capital losses.

Individuals. Enter as a positive number the net long-term

capital loss, if any, shown (or as previously adjusted) on

Schedule D (Form 1040).

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

Estates and trusts. Enter as a positive number the net

long-term capital loss, if any, shown (or as previously adjusted)

on Schedule D (Form 1041).

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Line 4—Section 1202 Exclusion

Enter as a positive number any gain excluded under section

1202 on the sale or exchange of qualified small business stock.

Line 5—Qualified Business Income Deduction

Enter as a positive number the amount of any qualified business

income (QBI) deduction under section 199A(a) and domestic

production activities deduction allocated from specified

agricultural or horticultural cooperatives under section 199A(g)

claimed on your return for tax years beginning after December

31, 2017. See the Instructions for Form 8995 and Form 8995-A

for guidance on figuring QBI and the deductible amount based

on threshold income levels.

Line 6—Adjustment to AGI

If you entered an amount on line 3 or line 4, you must refigure

certain income and deductions based on AGI. These include:

• The special allowance for passive activity losses from rental

real estate activities,

• Taxable social security benefits,

• IRA deductions,

• Excludable savings bond interest,

• The exclusion of amounts received under an employer's

adoption assistance program,

• The student loan interest deduction, and

• The tuition and fees deduction.

For purposes of figuring the adjustment to each of these

items, your AGI is increased by the total of the amounts on line 3

and line 4. Don't take into account any NOL carryback from the

current year or later.

In most cases, figure the adjustment to each item of income

or deduction in the order listed above and, when figuring the

adjustment to each subsequent item, increase or decrease AGI

by the total adjustments you figured for the previous items.

However, a special rule applies if you received social security

benefits and deducted IRA contributions. Use the worksheets in

Pub. 590-A, Contributions to Individual Retirement

Arrangements (IRAs), to refigure your taxable social security

benefits and IRA deductions under the special rule.

Enter on line 6 the total adjustments made to the listed items.

Attach a computation showing how you figured the adjustments.

Line 7—Adjustment to Itemized Deductions

Note. Miscellaneous itemized deductions are suspended for tax

years beginning after 2017 and before 2026. See section 67.

Note. Overall limitation on itemized deductions is suspended for

tax years beginning after 2017 and before 2026. See section 68.

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Individuals. Skip this line if, for the applicable carryback year:

• You didn’t itemize deductions; or

• The amounts on lines 3 through 5, are zero.

Otherwise, complete lines 11 through 33 and enter on line 7 the

amount from line 33.

Estates and trusts. Refigure the miscellaneous itemized

deductions shown (or as previously adjusted) on Form 1041 for

the carryback year, and any casualty and theft loss deduction of

property not used in a trade or business or for income-producing

purposes shown (or as previously adjusted) on Form 4684,

Casualties and Thefts, by substituting MAGI (see below) for the

AGI of the estate or trust.

Subtract the refigured deductions and losses from the

deductions and losses previously shown, and enter the

difference on line 7.

Modified AGI for estates and trusts. For purposes of

figuring miscellaneous itemized deductions subject to the 2%

limit, figure MAGI by adding the following amounts to the AGI

previously used to figure these deductions.

• The total of the amounts from lines 3 through 6 of Form 172,

Part II.

• The exemption amount shown (or as previously adjusted) on

Form 1041 for the carryback year.

• The income distribution deduction shown (or as previously

adjusted) on Form 1041 for the carryback year.

For purposes of figuring casualty or theft losses, figure MAGI

by adding the total of the amounts from lines 3 through 6 of Part

II, to the AGI previously used to figure these losses.

Line 9—Modified Taxable Income

Combine lines 2 through 8. If zero or less, enter -0-.

Line 10—NOL Carryover to the Subsequent Year

Generally, subtract line 9 from line 1. If zero or less, enter -0-.

After completing all applicable columns, carry forward to the

next year the amount, if any, on line 10 of the column for the first

preceding tax year.

NOLs arising after 2017 and carried forward to a year

after 2020 are subject to the 80%-of-taxable-income

CAUTION limit. The total amount of any NOL deduction for 2021 or

thereafter that is attributable to NOLs from tax years after 2017

can’t exceed 80% of taxable income without regard to the NOL

deduction or sections 199A or 250. Attach a statement to your

tax return showing how you figured the 80% limitation, if

applicable.

!

Line 20—Refigured Mortgage Insurance

Premiums

Mortgage insurance premiums that are paid or accrued before

2022 may be deducted like qualified residence interest. See

section 163. For years prior to 2022, is your MAGI from line 13

more than $100,000 ($50,000 if married filing separately)?

Yes. Your deduction is limited. Refigure your deduction

using the Mortgage Insurance Premiums Deduction Worksheet

next.

No. Your deduction isn't limited. Enter the amount from

line 19 on line 20 and enter -0- on line 21.

Mortgage Insurance Premiums Deduction Worksheet—Line 20

Before you begin:

See the instructions for line 20 to see if you must use this worksheet to refigure your deduction.

1.

Enter the total premiums you paid in the carryback year for mortgage insurance for a contract issued after 2006 . . . . . . . . . . . . 1.

2.

Enter the amount from Form 172, Part II, line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3.

Enter $100,000 ($50,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4.

Is the amount on line 2 more than the amount on line 3?

No.

Your deduction isn't limited. Enter the amount from line 19 on line 20 of Form 172, Part II,

and enter -0- on line 21. Don't complete the rest of this worksheet.

Yes.

Subtract line 3 from line 2. If the result isn't a multiple of $1,000 ($500 if married filing

separately), increase it to the next multiple of $1,000 ($500 if married filing separately). For

example, increase $425 to $1,000, increase $2,025 to $3,000; or if married filing

separately, increase $425 to $500, increase $2,025 to $2,500, etc. . . . . . . . . . . . . . . . 4.

5.

Divide line 4 by $10,000 ($5,000 if married filing separately). Enter the result as a decimal. If the result is 1.0 or more, enter

1.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

6.

Multiply line 1 by line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

7.

Refigured mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here and on Form 172, Part

II, line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

Line 25—Charitable Contributions

Enter your total gifts to charity reported on Schedule A (Form

1040 or Form 1040–NR), or as previously adjusted.

Line 26—Refigured Charitable Contributions

Refigure your charitable contributions using line 24 as your AGI

unless, for any preceding tax year:

• You entered an amount other than zero on line 23; and

• You had any items of income or deductions based on AGI,

which are listed in the instructions for line 6 of Part II.

If you can't use the amount from line 24 as your AGI, figure

your AGI as follows.

1. Figure the adjustment to each item of income or

deduction in the same manner as explained in the instructions

for line 6 of Part II, except don't take into account any NOL

carryback when figuring AGI. Attach a computation showing how

you figured the adjustments.

2. Add lines 3, 4, 5, 11, and 23 of Part II to the total

adjustments you figured in (1) above. Use the result as your AGI

to refigure charitable contributions.

For NOL carryover purposes, you must reduce any charitable

contributions carryover to the extent that the NOL carryover on

line 10 is increased by any adjustment to charitable

contributions.

Paperwork Reduction Act Notice. We ask for you to obtain

the information on this form to carry out the Internal Revenue

laws of the United States. You are required to obtain this

information. You are not required to obtain the information

requested on a form that is subject to the Paperwork Reduction

Act unless the form displays a valid OMB control number. Books

or records relating to a form, or its instructions must be retained

as long as their contents may become material in the

administration of any Internal Revenue law. Generally, tax returns

and return information are confidential, as required by Internal

Revenue Code section 6103. The time needed to complete and

file this form will vary depending on individual circumstances.

The estimated burden for individual filers is approved under

OMB control number 1545-0074, and estate and trust filers are

approved under OMB control number 1545-0092, for the

estimated averages, see the instructions for your income tax

return. If you have comments concerning the accuracy of these

time estimates or suggestions for making this form simpler, we

would be happy to hear from you. See the instructions for the tax

return with which this form is filed.

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