Common questions about Net Operating Losses (NOLs), Form 172 and diagnostic ref 61199 in ProConnect Tax

Form 172 for individual returns for tax year 2024

Starting in tax year 2024 a Form 172 page 1 will also generate for applicable returns. This form generates automatically and requires no manual entries. To make adjustments to the 172 page 1 use the NOL Worksheet.

To view Page 1 for current year NOL:

1. From the Check Return tab and under Forms select US.
2. Select Form 172.
3. The current year NOL will show on line 24.
4. If any adjustments are needed use Input Return ⮕ Income ⮕ Net Operating Loss ⮕ Federal Net Operating Loss.
5. Select Cur. Yr NOL/Misc from the upper right corner.

Form 172 Page 2 is required for tax returns that have a farming loss resulting in a NOL Carryback and is used to calculate the amount of carryover remaining. This will generate diagnostic ref. 61199 Manually prepare and attach as a PDF attachment a prior year Form 172 for each NOL deduction that originate in prior years.

1. Go to Input Return ⮕ Income ⮕ Net Operating Loss ⮕ Prior Year Form 172.
2. Scroll down to the Form 172 Part II - NOL Carryover section.
3. In the 2nd preceding tax year put the earliest carryback period information.
4. In the 1st preceding tax year information section put the next tax period.
5. This will generate the 172 page 2. If more then two tax years are needed you'll need to manually attach the prior year NOL Worksheets (From the prior year returns) to the current year e-file rules since the Form 172 does not exist in prior years. This will satisfy the requirements of Diagnostic ref 61199

Resolving diagnostic ref 61199

If you have more then one copy of the 172 page 2 you'll need to add the additional NOL Worksheets as PDF attachments

1. If more then two tax years are needed you'll need to manually attach the prior year NOL Worksheets (From the prior year returns) to the current year e-file rules since the Form 172 does not exist in prior years. This will satisfy the requirements of Diagnostic ref 61199
2. Open the prior year return.
3. Go to the File Return tab.
4. Under Print select Partial print to PDF.
5. Select the NOL wkshts
6. Select the Create PDF button.
7. Enter a name for the PDF and where you want to save the file.
8. Repeat steps 2-7 for each tax year needed.
9. In the 2024 tax return go to Input Return ⮕ General ⮕ Electronic Filing ⮕ e-file Miscellaneous.
10. Select e-file Attachment in the upper right.
11. Select Attach PDF.
12. Browse to the PDF you need to attach and select OK.
13. Under Link to Form select Form 172.
14. Repeat steps 9-13 for each additional tax year.

For NOL's arising in 2021 or newer:

For most taxpayers, NOLs arising in tax years ending after 2020 can only be carried forward. See Net operating losses for more information.

For NOL's arising in tax year 2018, 2019 or 2020:

In 2020, the CARES Act changed the rules for individual NOL carrybacks. Taxpayers may carryback the entire amount of the NOL from tax years 2018, 2019, and 2020 for 5 years. They can also carry forward any remaining NOL indefinitely until it's used up. Refer to IRS Pub. 536 for more information on NOL carrybacks.

You can choose to waive the carryback period by attaching a section 172(b) statement to your return. The NOL will carry forward indefinitely until it’s fully absorbed.