PIT 2002-06 Personal Income Tax Information Release: Net
Operating Loss Carryback Five-Year Rule - August 12, 2002
In accordance with Section 4 of Amended Substitute Senate
Bill 261, 124th General Assembly, if a taxpayer (individual,
estate or trust) has elected for federal purposes to carry
back a net operating loss (NOL) for five years, the taxpayer
must make the same election for Ohio income tax purposes. The
Department will not require a separate statement. The
taxpayer may indicate the election to use the five-year
method by filing an amended Ohio income tax return reflecting
the five-year NOL carryback calculation.
Generally, the taxpayer must request an income tax refund
within four years from the date of the overpayment. Refund
requests involving NOL’s may be filed after that date if (i)
the taxpayer's Ohio amended income tax return shows a refund
due to a decrease in the individual's federal adjusted gross
income or the estate's or trust's federal taxable income,
(ii) the IRS has issued to the taxpayer a refund check or a
statement of agreement based upon that decrease, and (iii)
the taxpayer files the Ohio amended income tax return within
sixty days after receiving the federal refund or statement of
agreement.
Please note that we cannot consider NOL refund requests until
the IRS issues either the federal income tax refund or the
statement of agreement. We will return for additional
documentation premature refund requests.
For Ohio individual income tax purposes the net operating
loss deduction for any year is limited to the amount needed
to reduce federal adjusted gross income (computed without
regard to the NOL deduction) down to the sum of federal
itemized deductions (or standard deduction) plus the personal
and dependent exemption federal deduction. Limiting the NOL
deduction to that amount results in federal taxable income,
after application of the NOL deduction, of zero.