How to enter a NOL carryback for the prior year in Lacerte

For most taxpayers, NOLs arising in tax years ending after 2020 can only be carried forward. See Net operating losses for more information.

For tax year 2020 and prior the taxpayer may elect to apply a Net Operating Loss (NOL) incurred in the current year to a prior year. Follow these steps to enter a NOL carryback in an individual return:

Step 1: In the current year of Lacerte:

1. Go to Screen 15 Net Operating Loss Deduction.
2. Select the Prior Year Form 172 section.
3. From the Sections list select the Form 172 Part II - NOL Carryover section.
4. In the 2nd preceding tax year put the earliest carryback period information.
5. In the 1st preceding tax year information section put the next tax period.
6. This will generate the 172 page 2. If more then two tax years are needed you'll need to manually attach the prior year NOL Worksheets (From the prior year Lacerte returns) to the current year e-file rules since the Form 172 does not exist in prior years. This will satisfy the requirements of Diagnostic ref 61199

Step 2: In the prior years of Lacerte:

1. Open Lacerte for the year that you need to carry back to.
2. Make a copy of the client file. For more information on how to do this, see How to make a copy of a client in Lacerte.
3. Go to Screen 59, Amended Return (1040-X).
4. Select the Federal/state return(s) to amend from the dropdown menu.
5. Go to Screen 15, Net Operating Loss.
6. Enter the original year of loss in the field Year of loss (e.g., 2014) (MANDATORY).
7. Enter amount of loss being carried back in the field Initial loss.
8. Enter the amount of AMT loss being carried back in AMT initial loss. Not all NOL's will have an accompanying AMT NOL.
9. Enter the amount of Carryover available in 20YY (same as Initial loss).
10. Enter the amount of AMT carryover available in 20YY (same as AMT Initial loss).

If the year entered in Year of loss is a future year this will indicate that an amount has been carried back from a future year, rather than forward from a prior year.  NOL Worksheets will generate, specifically, Net Operating Loss Carrybacks Used in 20YY.

• The amount remaining to be utilized in the next year, if any, appears in the Forms tab, in the General Info page, in the Carryovers to 20YY section.

Step 3: Resolving diagnostic 6199 in the current year of Lacerte

If you have more then one copy of the 172 page 2 you'll need to add the additional NOL Worksheets as PDF attachments

1. If more then two tax years are needed you'll need to manually attach the prior year NOL Worksheets (From the prior year Lacerte returns) to the current year e-file rules since the Form 172 does not exist in prior years. This will satisfy the requirements of Diagnostic ref 61199
2. Open the prior year program.
3. Open this client to the Forms tab.
4. Select the NOL wkshts
5. Select the Print Form button in the upper right.
6. Choose the applicable option to print the calculation page of the NOL Worksheet.
7. Select the Settings button
8. Uncheck Printer and select File (PDF)
9. Select Ok to save the Settings.
10. Select OK to print the worksheet to pdf.
11. Enter a name for the PDF and where you want to save the file.
12. Repeat steps 2-11 for each tax year needed.
13. In the 2024 Lacerte go to screen 4.4 e-file Miscellaneous.
14. Select the PDF Attachment button.
15. Select Attach PDF.
16. Browse to the PDF you need to attach and select OK.
17. Under Link to Form select Form 172.
18. Repeat steps 14-17 for each additional tax year.

Additional information:

Per the 1045 form instructions:

• "Individuals can get a refund by filing Form 1040X, Amended U.S. Individual Income Tax Return, instead of Form 1045. An estate or trust can file an amended Form 1041, U.S. Income Tax Return for Estates and Trusts. In most cases, you must file an amended return no later than 3 years after the due date of the return for the applicable tax year. If you use Form 1040X or other amended return, follow the instructions for that return. Attach to the amended return a copy of Schedule A of Form 1045 showing the computation of the NOL and, if applicable, a copy of Schedule B of Form 1045 showing the computation of the NOL carryover. Complete a separate Form 1040X or other amended return for each year for which you request an adjustment."

Per Publication 536:

• "You must use a separate Form 1040X for each carryback year to which you apply the NOL." For more information, refer to IRS Pub. 536.

Related topics:

• Generating Form 1045 Application for Tentative Refund
• Amending an individual return (1040X) in Lacerte