42.23.802    CARRYOVERS OF NET OPERATING LOSSES

(1) For taxable periods beginning before January 1, 2018, a net operating loss is carried back to the third preceding taxable period from which it was incurred. Any balance remaining must be carried to the second preceding taxable period, then to the first preceding taxable period, and then forward to the next seven succeeding taxable periods in the order of their occurrence.

(2) For taxable periods beginning after December 31, 2017, a net operating loss is carried back to the third preceding taxable period from which it was incurred. Any balance remaining must be carried to the second preceding taxable period, then to the first preceding taxable period, and then forward to the next ten succeeding taxable periods in the order of their occurrence. A net operating loss carryback provided in this subsection may not exceed $500,000 per taxable period. If a combined report that is filed includes more than one entity with Montana activity, the total net operating loss carryback for all entities cannot exceed $500,000 per taxable period.

(3) When a net operating loss exceeds the net income of the year to which it is carried, the net income for such year must be adjusted by making the following modifications to determine the unused portion of the net operating loss to be carried forward:

(a) No deduction is allowed for any net operating loss carryover or carryback from another year.

(b) Any excess of percentage depletion over cost depletion must be eliminated.

(4) The taxable income as modified by the adjustments shown in (3) shall not be considered to be less than zero. The amount of the net operating loss which may be carried forward is the excess of the loss over the modified net income.

(5) A taxpayer may elect to forgo the entire carryback period. Montana corporate income tax Form CIT provides an area to perfect this election. When Form CIT is filed with the department, the election must be clearly marked in the area provided on that form. If no indication is made in the area provided on Form CIT, the net operating loss will be carried back and applied as provided in (1) and (2). For state purposes, an election to forgo a federal net operating loss carryback provision will not be accepted as a valid election.

(6) If a taxpayer files an amended Montana return under 15-31-506, MCA, and reports a net operating loss, the time to perfect the election in (5) may be extended. If the taxpayer failed to make the election on its originally filed return, and the original return reported net income, an election may be made by filing an amended return if it is clearly marked in the area provided on the return. If more than one amended return is filed for a taxable period, the election must be made on the first return reporting a net operating loss.

 

History: 15-31-501, MCA; IMP, 15-31-119, MCA; Eff. 12/31/72; AMD, 1982 MAR p. 104, Eff. 1/29/82; AMD, 1990 MAR p. 645, Eff. 3/30/90; AMD, 2001 MAR p. 2046, Eff. 10/12/01; AMD, 2002 MAR p. 207, Eff. 12/21/01; TRANS, from ARM 42.23.413, 2011 MAR p. 2053, Eff. 9/23/11; AMD, 2016 MAR p. 2198, Eff. 11/26/16; AMD, 2017 MAR p. 2327, Eff. 1/1/18; AMD, 2020 MAR p. 395, Eff. 2/29/20.