Application of NOL Carryback
Accounting for NOL carrybacks is complex, and tax statutes may vary by state. This is especially true for NOL carrybacks, as opposed to carryforwards, because many states heavily restrict their use. Thirty states disallow the carryback altogether. Per IRS rules, taxpayers may carryback NOLs two years, and forward 20 years. The subchapter S corporation, specifically, does not benefit from the NOL carryback, because of its pass-through nature. As an individual shareholder in the S corporation, you can calculate the NOL carryback using Form 1065 Schedule K-1 and apply it on your individual income tax return.