Frequently Asked Questions
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Tax Information
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Corporation Income Tax
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Net Operating Losses
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If a taxpayer has incurred a net operating loss, when
is a net operating loss modification computed?
A net operating loss modification is computed when a net operating loss deduction
is claimed. If there was a net operating loss for the tax year 2004 and the
taxpayer carried it back two years and claimed a net operating loss deduction on
an amended federal return for tax year 2002, then a net operating loss modification
would be computed for the 2002 amended Missouri return.
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Is the Net Operating Loss Modification computed for the year of the loss?
No, it is computed for the year a net operating loss deduction is claimed.
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If a taxpayer has claimed a net operating loss deduction
and in the year of the initial loss Missouri addition modifications are less than
its subtraction modifications, does it have to compute a net operating loss modification?
No, there is no net operating loss modification attributable to that net operating
loss deduction when in the year of the initial loss the Missouri addition modifications
are less than the Missouri subtraction modifications.
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What are Missouri addition modifications for purposes
of section 143.431.4 RSMo Cum. Supp. 2004?
- State tax addback
- State and local bond interest (except Missouri)
- Fiduciary and partnership adjustment
- Missouri depreciation basis adjustment ( Section 143.121.2(c) RSMo )
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What are Missouri subtraction modifications for purposes
of section 143.431.4 RSMo Cum. Supp. 2004?
- Interest from exempt federal obligations
- Federally taxable - Missouri exempt obligations
- Reduction in gain due to basis difference
- Previously taxed income
- Amount of any state income tax refund included in federal taxable income
- Capital gain exclusion from the sale of low income housing project
- Fiduciary and partnership adjustment
- Missouri depreciation basis adjustment ( Section 143.121.3(g), RSMo )
- Net operating loss carryback previously disallowed for Missouri ( Section 143.121.2(d), RSMo )
- Depreciation recovery on qualified property that is sold ( Section 143.121.3(h), RSMo )
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If the net operating loss deduction is composed of net operating loss amounts from
more than one year, is there more than one net operating loss modification?
Yes, a net operating loss modification must be computed for each net operating loss
included in the net operating loss deduction.
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If more than one net operating loss modification is
computed, in what order are the amounts computed?
The net operating loss modifications are computed in the same order as the net operating
losses are used as net operating loss deductions for federal income tax purposes.
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When did SB 1394 become effective?
Absent a specified effective date, SB 1394 became effective August 28, 2004.
The changes to
Section 143.431.4, RSMo
, became effective August 28, 2004.
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Can line 1 on the Missouri return be zero?
Yes, line 1 of the Missouri return can be zero only when federal taxable income
is zero. When a corporation has positive federal taxable income, line 1 on
the Missouri return is the same amount. When a corporation has a net operating
loss, i.e., line 30 is negative on
Federal Form 1120
, then line 1 on the Missouri return is also that same negative amount.
, then line 1 on the Missouri return is also that same negative amount.
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If line 1 on Form MO-1120 is negative and the corporation
has net addition modifications, i.e., the addition modifications exceed the subtraction
modification for that year, does the corporation have to file Form MO-5090 for the
year of the loss?
No, the corporation only computes the net operating loss modification and files
Form MO-5090
for each year a net operating loss deduction is claimed on a federal
return not when the loss was incurred.
for each year a net operating loss deduction is claimed on a federal
return not when the loss was incurred.
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An affiliated group of corporations that files a consolidated
federal income tax return may elect to file a consolidated Missouri income tax return.
If the affiliated group incurs a consolidated net operating loss and has net addition
modifications on its consolidated Missouri return, does the affiliated group have
to file Form MO-5090?
No. the affiliated group would only file
Form MO-5090
for each year a net operating loss deduction is claimed on a consolidated federal
return not in the year that the loss was incurred.
for each year a net operating loss deduction is claimed on a consolidated federal
return not in the year that the loss was incurred.
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An affiliated group of corporations files a consolidated
federal income tax return but does not file a consolidated Missouri income tax return.
Some members of the group file separate company Missouri returns. If a separate
company incurs a net operating loss and has net addition modifications on its separate
company Missouri return, does the separate company have to file Form MO-5090?
No, the separate company would only file
Form MO-5090
for each year a net operating
loss deduction is reported on a separate company pro forma federal return not in
the year that the loss was incurred.
for each year a net operating
loss deduction is reported on a separate company pro forma federal return not in
the year that the loss was incurred.