Form 1138 (Rev. 11-2018)
Page 2
General Instructions
Section references are to the Internal Revenue Code unless otherwise
noted.
Future developments. For the latest information about developments
related to Form 1138 and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/Form1138.
What’s New
The 2-year carryback rule generally does not apply to net operating
losses (NOLs) arising in tax years ending after December 31, 2017.
Exceptions apply to certain farming losses and NOLs of insurance
companies, other than life insurance companies. See section 172(b) as
amended by P.L. 115-97, section 13302.
Purpose of Form
A corporation that expects to incur an NOL in the current tax year that
can be carried back to its preceding tax year can file Form 1138 to
extend the time for payment of tax for such 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.
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.
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.
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.
A corporation can file Form 1138 separately or with Form 7004,
Application for Automatic 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.
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.
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 also can terminate the extension if it
believes it may not be able to collect the tax.
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.
Specific Instructions
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.
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.
If the corporation’s 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.
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 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. For more information, see sections 382 and 384 and the
related regulations.
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:
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.
See section 1314(a).
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.
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.
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.
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.
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.
The time needed to complete and file this form will vary depending on
individual circumstances. The estimated burden for business taxpayers
filing this form is approved under OMB control number 1545-0123 and
is included in the estimates shown in the instructions for their business
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. You can send us comments from www.irs.gov/
FormComments. Or you can write to: Internal Revenue Service, Tax
Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send Form 1138 to this office. Instead,
see When and Where To File, earlier.
