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  • Does Alabama have a carry forward provision for net operating losses?
View All Corporate Income Tax FAQs

Does Alabama have a carry forward provision for net operating losses?

Yes. Alabama’s net operating loss carry forward provision began with net operating losses incurred during a tax year beginning on or after January 1, 1984. Prior to this period Alabama did not have a net operating loss provision. A net operating loss incurred during a tax year beginning on or after January 1, 1984 and before January 1, 1985 can be carried forward 5 years. A loss from a tax year beginning on or after January 1, 1985 can be carried forward 15 years. For tax years beginning on or after January 1, 1985 and before January 1, 1990, the net operating loss deduction was limited to $600,000 per year.

NOTE: For all tax periods beginning during calendar year 2001, Section 40-18-35.1 (Act 2001-1088 (HB2)) suspends net operating losses.

Yes. Alabama’s net operating loss carry forward provision began with net operating losses incurred during a tax year beginning on or after January 1, 1984. Prior to this period, Alabama did not have a net operating loss provision. A net operating loss incurred during a tax year beginning on or after January 1, 1984, and before January 1, 1985, can be carried forward five years. A loss from a tax year beginning on or after January 1, 1985, can be carried forward 15 years. For tax years beginning on or after January 1, 1985, and before January 1, 1990, the net operating loss deduction was limited to $600,000 per year.

NOTE: For all tax periods beginning during calendar year 2001, Section 40-18-35.1 (Act 2001-1088 (HB2)) suspends net operating losses.

Related FAQs in Corporate Income Tax

View information on the Small Business Health Premiums Deduction (Act 2008-559, amended by Act 2011-155). View Form 4020- Small Business Health Insurance Deduction Information.

View information regarding Alabama Consolidated Income Tax Returns.

C-corporations, and those LLCs that have elected to file as a c-corporation, doing business in Alabama or deriving income from sources within Alabama, including income from property located in Alabama and on every corporation licensed or qualified to transact business in Alabama except for those corporations specifically exempted by §40-18-32.

Yes. If the company has registered or qualified to do business in the state, a Form 20C is required to report no activity and/or business activity as provided by Sections 40-18-2 and 40-18-31, Code of Alabama 1975.

Yes. If an extension has been granted for federal purposes, the extension is also granted for Alabama purposes; the Federal Form 7004 must be submitted with the Form 20C.

NOTE: This is an extension for filing purposes ONLY. The full amount of the tax liability is due by the original due date of the return.

Yes. Alabama Code §40-2A-7(c)(2) states, “A petition for refund shall be filed with the department or an automatic refund issued pursuant to Section 40-29-71, or a credit allowed, within (i) three years from the date that the return was filed, or (ii) two years from the date of payment of the tax, whichever is later, or, if no return was timely filed, two years from the date of payment of the tax.”