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Individual & Corporate Income Tax

Alabama's Net Operating Loss for Individuals


Alabama Net Operating Loss (NOL) Provisions

for Individuals


Alabama NOL Law and Rule:

Section 40-18-15.2, Code of Alabama 1975   Rule 810-3-15.2-.01                                       

Taxpayers are allowed to carryback a net operating loss to the two previous tax years.  Any remaining amount of net operating loss can be carried forward for up to fifteen years following the loss year.

Taxpayers are allowed to forego the carryback period, and the taxpayer has a choice of two methods for making the election.  The election can be made on Alabama Form NOL-85 (Part III), or the election can be made by carrying the loss forward on a timely-filed return for the year subsequent to the loss year.  

Alabama NOL Forms:

Form NOL-85 is used to compute the net operating loss for the loss year.

Form NOL-85A is used to carry the net operating loss back or forward.  Form NOL-85A is prepared for each year to which a loss is carried.  The form computes the modified taxable income, unused net operating loss, and the tax due for the carryback or carryforward year.