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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.
