What Is IRS Form 1138
IRS Form 1138, "Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback," is a document that corporations can file to extend the time for payment of certain types of taxes. This extension is particularly useful if the corporation anticipates a net operating loss that could be carried back to a prior tax year, leading to a refund or offset against previous tax liabilities.
Importance of IRS Form 1138 for Corporations
The primary benefit of filing Form 1138 is the financial flexibility it offers. When expecting a net operating loss, a struggling business's last need is to part with precious capital to pay taxes. By using IRS Form 1138, corporations can manage their cash flow more efficiently, holding onto funds that might otherwise go to tax payments until they resolve their financial status.
Eligibility Criteria for Filing Form 1138
Not all corporations can take advantage of the 1138 Form. A corporation must expect a net operating loss for the current tax year that can be carried back to a prior period under existing tax laws. It's crucial to consult with a tax advisor to determine whether your corporation qualifies.
Form 1138 Instructions: A Step-by-Step Guide
Completing IRS Form 1138 might seem daunting, but it is relatively straightforward when you carefully follow the Form 1138 instructions.
Step 1: Identification and Basic Information
Fill out the corporation's name, address, and Employer Identification Number (EIN).
Step 2: Tax Year Details
Enter the details of the tax year for which you expect a net operating loss.
Step 3: Taxes Applicable for Extension
Identify the specific taxes for which you are seeking an extension. This could include income taxes, estimated income taxes, and more.
Step 4: Calculation of Anticipated Net Operating Loss
Provide a detailed breakdown of the expected net operating loss, including supporting documents.
Step 5: Previous Years for Loss Carryback
Identify the tax years to which the anticipated net operating loss will be returned.
Step 6: Signature
A corporate officer must sign the form authorized to sign tax returns.
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