Section 316-23-013 - LOSS CARRYOVER AND CARRYBACK013.01 Deduction of Net Operating Losses Losses realized on or after January 1, 1968, by an estate or trust may be included for purposes of computing the Nebraska income tax. The appropriate federal rules will be used, except that no loss shall be carried back to income earned before January 1, 1968.
013.02 Period of Carryback or Carryover An estate or trust, which has incurred a Nebraska net operating loss, shall be allowed to carry back such loss for the period allowed by the Internal Revenue Code (IRC) as an adjustment decreasing federal taxable in the prior year. If the taxable income for this period is not sufficient to absorb the entire loss, the estate or trust is then entitled to a carryover of the remaining amount of the loss to the taxable years allowed by the IRC following the loss year. The loss will be absorbed in the earliest year of the above period that the estate or trust has taxable income. The provisions of the IRC shall be used in computing the amount of the loss available for carryover.
013.02A If an estate or trust elects to forego the entire carryback period for a federal net operating loss and only deduct the losses during the carryover period, the election for federal purposes will be followed for Nebraska purposes with regard to a Nebraska net operating loss.013.02B When an estate or trust has incurred a Nebraska net operating loss, but has no federal net operating loss, the estate or trust may elect to relinquish the carryback period for Nebraska purposes when the IRC provides for a similar election for federal purposes. The election must be made by attaching a statement to the Nebraska return and filing the return by the due date, including extensions, for the tax year of the net operating loss. Failure to timely file the election with the original return for the loss year will require the use of the carryback period. The election cannot be changed once it has been made.013.03 Computation of a Net Operating Loss In order to be deducted from income subject to Nebraska income tax under Reg-23-004, the net operating loss must be a Nebraska net operating loss which has been reported on a return filed for the loss year.
013.03A For a resident estate or trust, the Nebraska net operating loss is the reported federal net operating loss as adjusted within this paragraph. 013.03A(1) The loss will be increased by the amount of allowable adjustments decreasing federal taxable income, such as deductions for interest or dividend income from U.S. government bonds or other U.S. obligations and decreased by the amount of adjustments increasing federal taxable income, such as increases for interest or dividends from obligations issued by states other than Nebraska.013.03A(2) A loss may be created when the allowable adjustments decreasing federal taxable income exceed the adjusted federal taxable income. 013.03B For tax years beginning before January 1, 1987, for a nonresident estate or trust during the loss year, the Nebraska net operating loss is the loss that was derived from activities which would have generated Nebraska source income under Reg-23-004.04.013.03C For tax years beginning on or after January 1, 1987, the net operating loss of a nonresident estate or trust is the lesser of its federal net operating loss as adjusted pursuant to Reg-23-004.03 and its loss derived from Nebraska sources.013.04 Capital Losses Estates or trusts who have incurred, after December 31, 1967, a capital loss, may carry over the loss until the loss has been exhausted. The appropriate federal capital loss carryover rules apply in reducing long term capital gains, short term capital gains, and ordinary income in the carryover year.
013.05 Federal Net Operating Losses and Capital Losses Estates or trusts which have deducted a federal net operating loss or a federal capital loss in computing their adjusted federal taxable income shall add such deduction to their adjusted federal taxable income in order to determine Nebraska taxable income.
316 Neb. Admin. Code, ch. 23, § 013
Section 77-2716(2), R.S.Supp., 1998, and section 77-2714, R.R.S. 1996. November 11, 1998.