1998 Department of the Treasury Internal Revenue Service Instructions for Form 1045 Application for Tentative Refund Section references are to the Internal Revenue Code unless otherwise noted. General Instructions Changes To Note Net operating loss carryback and carryforward rules changed.   For losses arising in tax years beginning after August 5, 1997, the carryback and carryforward rules for most net operating losses (NOLs) have changed. Generally, NOLs are now carried back 2 years and then forward 20 years. However, the carryback period for eligible losses (defined below) remains unchanged at 3 years. For losses arising in tax years beginning after December 31, 1997, the carryback period for farming losses (defined below) has been extended to 5 years. Specified liability losses.   For losses arising in tax years ending after October 21, 1998, the definition of specified liability loss, which qualifies for a 10-year carryback period, has changed. See the revised definition below. Section 1202 exclusion not allowed in figuring an NOL.   The gain excluded under section 1202 on the sale or exchange of qualified small business stock is not allowed in figuring your NOL. General business credit carryback and carryforward rules changed.   For credits arising in tax years beginning after December 31, 1997, the carryback and carryforward rules have changed. Unused credits are now carried back 1 year and then forward 20 years. Purpose of Form Form 1045 is used by an individual, estate, or trust to apply for a quick refund of taxes from: l  The carryback of an NOL or an unused general business credit, or l  An overpayment of tax due to a claim of right adjustment under section 1341(b)(1). Waiving the carryback period.   Instead of first carrying back an NOL, you may elect to carry it forward. To make the election, attach a statement to your 1998 income tax return filed on or before the due date (including extensions) that you are electing to relinquish the entire carryback period under section 172(b)(1) with regard to any 1998 net operating losses. Also, if you filed your return timely without making that election, you may still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions).   Attach the election to the amended return and write “Filed pursuant to section 301.9100-2” on the election statement. File the amended return at the same address that you filed the original return. Once made, the election is irrevocable and the carryforward is limited to 20 years. Definitions Eligible loss.   For an individual, an eligible loss is any loss of property arising from fire, storm, shipwreck, other casualty, or theft. For a small business (as defined in section 172(b)(1)(F)(iii)) or a farming business (as defined in section 263A(e)(4)), an eligible loss is any loss attributable to Presidentially declared disasters (as defined in section 1033(h)(3)). An eligible loss does not include a farming loss, unless you elect to treat the farming loss as if it were not a farming loss, as explained in the instructions for line 11 on page 3. Farming loss.   A farming loss is the smaller of: l  The amount which would be the NOL for the tax year if only income and deductions attributable to farming businesses (as defined in section 263A(e)(4)) were taken into account, or l  The NOL for the tax year. Specified liability loss.   Generally, a specified liability loss is limited to a loss arising from: l  Product liability, or l  An act (or failure to act) that occurred at least 3 years before the beginning of the loss year and that resulted in a liability under a Federal or state law requiring: 1.  The reclamation of land, 2.  The dismantling of a drilling platform, 3.  The remediation of environmental contamination, or 4.  A payment under any workers compensation act. Except for losses arising from product liability, a specified liability loss is available only to taxpayers that used an accrual method of accounting throughout the period in which the act (or failure to act) occurred. For more details, see section 172(f). When To File File Form 1045 within 1 year after the end of the year in which the NOL, unused credit, or claim of right adjustment occurred, but only on or after the date you file your 1998 return. If you carry back any portion of an NOL or an unused general business credit to tax years before the 3 years preceding the 1998 tax year, use additional Form(s) 1045 for the earlier year(s). On the additional Form(s) 1045, skip Form 1045, lines 1 through 9, and Schedule A. Also file the additional form(s) within 1 year after the end of the 1998 tax year.   To expedite processing, file all the Forms 1045 together. Where To File File Form 1045 with the Internal Revenue Service Center for the place where you live as shown in the instructions for your 1998 tax return. Caution:   Do not mail Form 1045 with your 1998 income tax return. What To Attach Attach copies of the following, if applicable, to Form 1045 for the year of the loss or credit: l  If you are an individual, pages 1 and 2 of your 1998 Form 1040, and Schedules A, D, and J (Form 1040), if applicable. l  All Schedules K-1 you received from partnerships, S corporations, estates, or trusts that contribute to the carryback. l  Any application for extension of time to file your 1998 income tax return. l  All Forms 8271, Investor Reporting of Tax Shelter Registration Number, attached to your 1998 return. l  Any other form or schedule from which the carryback results, such as Schedule C or F (Form 1040), or Form 3800, Form 8586, etc. l  All forms or schedules for items refigured in the carryback years, such as Form 6251 or Form 8586. Be sure to attach copies of all required forms listed above, and complete all lines on Form 1045 that Cat. No. 13666W