Oklahoma Net Operating Loss (NOL)
Oklahoma allows individuals to claim a net operating loss (NOL) for tax purposes, which is separately determined under Section 172 of the Internal Revenue Code (IRC) as modified by the Oklahoma Income Tax Act. Importantly, an Oklahoma NOL is allowed even if there is no corresponding federal NOL.
Key Requirements for Establishing an Oklahoma NOL
- Loss Year Return Must Be Filed: To establish an Oklahoma NOL, the taxpayer must file a return for the loss year. This requirement applies to both residents and nonresidents/part-year residents.
- Pass-Through Entities: If the loss arises from a pass-through entity (such as an S corporation or partnership), the entity itself must also file a tax return.
- Computation and Documentation: Taxpayers must provide a detailed schedule showing the origin and computation of the NOL. A copy of the federal return for the loss year is required.
Reporting Oklahoma NOL on Tax Forms
- Residents: Use Form 511-NOL (Supplement to Form 511) to report Oklahoma Nлиs. The NOL is entered on Schedule 511-NOL, line 9, and must be computed based on Oklahoma sources.
- Nonresidents/Part-Year Residents: Use Form 511-NR-NOL (Supplement to Form 511-NR). The NOL is reported on Schedule 511-NR-B, line 9, in the Federal Amount Column for the tax year where the loss is being carried.
- Carryforward: The Oklahoma NOL can be carried forward to future tax years. The carryforward amount is entered in the appropriate column on Schedule 511-NR-B or Schedule 511-NOL, depending on residency status.
Additional Notes
- Oklahoma NOLs are computed independently of federal NOLs and are not dependent on the existence of a federal loss.
- Taxpayers should refer to Federal Publication 536 “Net Operating Losses (NOLs) for Individuals, Estates, and Trusts” or Federal Form 1045 for additional guidance.
- For full-year residents, Form 511-NOL is used; for nonresidents/part-year residents, Form 511-NR-NOL is required.
Source:
Form 511-NR
Form 511-NOL
Form 511-NR-NOL
Disclaimer: Always verify information with official forms and instructions from the Federal or State Department of Revenue.