Page 2Form 1138 (Rev. 12-2005)
General Instructions
Section references are to the Internal Revenue Code.
Paperwork Reduction Act Notice. We ask for the information
on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it
to ensure that you are complying with these laws and to allow
us to figure and collect the right amount of tax.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated average
time is:
Recordkeeping
3 hr., 21 min.
Termination of extension. The IRS can terminate the extension
if it believes that any part of the form contains erroneous or
unreasonable information. The IRS can also terminate the
extension if it believes it may not be able to collect the tax.
Learning about the law or the form
42 min.
Preparing and sending the form to the IRS
47 min.
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. You can write to the Internal
Revenue Service, Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6406,
Washington, DC 20224. Do not send Form 1138 to this office.
Instead, see When and where to file, above.
Period of extension. In general, the extension for paying the tax
expires at the end of the month in which the return for the tax year
of the expected NOL is required to be filed (including extensions).
The corporation can further extend the time for payment by
filing Form 1139, Corporation Application for Tentative Refund,
before the period of extension ends. See the instructions for Form
1139. The period will be further extended until the date the IRS
informs the corporation that it has allowed or disallowed the
application in whole or in part.
Purpose of form. A corporation that expects a net operating
loss (NOL) in the current tax year can file Form 1138 to extend
the time for payment of tax for the immediately preceding tax
year. This includes extending the time for payment of a tax
deficiency. The payment of tax that can be postponed cannot
exceed the expected overpayment from the carryback of the
NOL.
Interest. Interest is charged on postponed amounts from the
dates that the payments would normally be due. The interest is
figured at the underpayment rate specified in section 6621.
Only payments of tax that are required to be paid after the
filing of Form 1138 are eligible for extension. Do not file this form
if all the required payments have been paid or were required to
have been paid.
Specific Instructions
Line 3. Enter the reduction of previously determined tax
attributable to the carryback, for tax years before the tax year of
the NOL. Previously determined tax is generally:
See section 1314(a).
If the corporation previously filed Form 1138 and later finds
information that will change the amount of the expected NOL,
the corporation can file a revised Form 1138. If the amount of
the NOL is increased based on the new information, the
corporation can postpone the payment of a larger amount of tax
as long as the larger amount has not yet been paid or is not yet
required to be paid. If the amount of the NOL is reduced
because of the new information, the corporation must pay the
tax to the extent that the amount of tax postponed on the
original filing exceeds the amount of tax postponed on the
revised filing.
Line 6a. For the year shown on line 4, enter on line 6a the total of:
1. The total tax shown on the return, plus
2. Any amount assessed as a deficiency (or as interest or a
penalty) prior to the filing of this Form 1138.
Line 6b. Enter the total of the following:
When and where to file. File Form 1138 after the start of the
tax year of the expected NOL but before the tax of the
preceding tax year is required to be paid. Generally, file Form
1138 with the Internal Revenue Service Center where the
corporation files its income tax return.
1. The amount of tax paid or required to be paid before the
date this form is filed. This includes any amount assessed as a
deficiency or as interest or a penalty if this form is filed more than
21 calendar days after notice and demand for payment was made
(more than 10 business days if the amount for which the notice
and demand for payment was made equals or exceeds $100,000).
An amount of tax for which the corporation has received an
extension of time to pay (under section 6161) is not considered
required to be paid before the end of the extension, plus
2. The amount of refunds, credits, and abatements made
before the date this form is filed.
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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
INSTRUCTIONS TO PRINTERS
FORM 1138, PAGE 2 of 2
MARGINS: TOP 13mm (
1
⁄2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20. INK: BLACK
FLAT SIZE: 216mm (8
1
⁄2 ") x 279mm (11")
PERFORATE: NONE
Address. Include the suite, room, or other unit number after the
street address. If the Post Office does not deliver mail to the
street address and the corporation has a P.O. box, show the box
number instead.
A corporation can file Form 1138 separately or with Form
7004, Application for Automatic 6-Month Extension of Time To
File Certain Business Income Tax, Information, and Other
Returns. If Form 1138 and Form 7004 are filed together, Form
1138 will reduce or eliminate the amount of tax to be deposited
when Form 7004 is filed. If Form 1138 is filed with Form 7004,
then file Form 1138 with the Internal Revenue Service Center at
the applicable address where the corporation files Form 7004.
Line 2. The amount of the expected NOL must be based on all of
the facts relating to the operation of the corporation. Consider the
following items when estimating the amount of the expected NOL:
1. The number and dollar amounts of the corporation’s
Government contracts that have been canceled,
2. Profit and loss statements, and
3. Other factors peculiar to the corporation’s operations.
See section 172, Pub. 542, Corporations, and Pub. 536, Net
Operating Losses for Individuals, Estates, and Trusts, to help
determine the amount of the expected NOL. Limitations apply to
(a) the amount of taxable income of a new loss corporation for any
tax year ending after an ownership change that may be offset by
any pre-change NOLs and (b) the use of preacquisition losses of
one corporation to offset recognized built-in gains of another
corporation. See sections 382 and 384 for details.
If your address is outside the United States or its possessions
or territories, fill in the line for “City or town, state, and ZIP code”
in the following order: city, province or state, and country. Follow
the foreign country’s practice for entering the postal code, if any.
Do not abbreviate the country name.
You are not required to provide 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 section 6103.
If the corporation receives its mail in care of a third party (such
as an accountant or attorney), enter on the street address line
“C/O” followed by the third party’s name and street address or
P.O. box.
1. The amount shown on the return, plus any amounts
assessed as deficiencies before Form 1138 is filed, minus
2. Any abatements, credits, or refunds allowed or made before
Form 1138 is filed.
Printed on Recycled Paper
Attach a schedule showing how the reduction was figured.
See the instructions for the corporate income tax return for
information on figuring the NOL deduction and recomputing the
tax.
