RCT-103 — Net Loss Deduction Schedule Instructions

# preamble

1RCT-103revenue.pa.gov

# Instructions for RCT-103

Net Operating Loss ScheduleRCT-103 IN (SU) 10-25

For tax year 2019 and thereafter the NOL deduction is increased from 35 percent to 40 percent of PA taxable income after apportionment. This report is filed with the RCT-101.

# FEDERAL EMPLOYER IDENTIFICATION

NUMBER (FEIN) AND CORPORATE NAME Enter the FEIN and Corporate Name as they appear on the RCT-101.

# TAX YEAR

Enter month, day, and year (MMDDYYYY) for the tax year beginning and enter month, day, and year (MMDDYYYY) for the tax year ending.

# RECORDING DOLLAR AMOUNTS

Use only whole dollars when preparing tax reports.

# CALCULATION OF NET OPERATING LOSS LIMITATION

To support the net operating loss carryforward allowed for the current tax period, taxpayers are required to complete Part A of RCT-103 as follows: LINE 1 Enter the taxable income from RCT-101, Section C, Line 10. LINE 2 Enter total net operating loss carryforward to current period from RCT-103, Part B, Column D. LINE 3 Multiply Line 1 by 40 percent (0.40). LINE 4 This is your net operating loss deduction for the current period. LINE 5 Select Y ("yes") from the dropdown if your net operating loss is limited by §381 or §382. Select N ("no") if you do not have losses limited by §381 or §382. If you select Y, you must also attach a statement identifying the limitation amount along with the supporting calculation. See Section 381/382 Loss Limitations below. LINE 6 Select Y ("yes") from the dropdown if you have losses listed in Part B that you acquired in a merger or liquidation in the current year or in a prior year. Select N ("no") if you do not have losses acquired in a merger or liquidation. If you select Y, you must state the number of companies that merged with or liquidated into the taxpayer. You must also check box C on the corresponding line in Part B and complete the supplemental schedule, RCT-103 ML to provide details on the losses received from other corporations. See Merged Losses below.

Complete this schedule to calculate the amount of net loss carryforward available to be deducted in the current period and the net loss carryforward to the next period. Enter all dates (MMDDYYYY) and amounts from periods with returns filed. If no net loss carryforward is available, enter ''0". If short periods exist in calendar year or fiscal year, enter the MMDDYYYY of the beginning and end of all short periods and the net loss carryforward for all short periods in the appropriate row of the table. Do not combine amounts.

# COLUMN A

Beginning with the first line, enter the MMDDYYYY corresponding to the beginning date of each tax period. NOTE: Do not include the current tax period.

# COLUMN B

Enter the MMDDYYYY corresponding to the ending date of the tax period indicated in Column A.

# COLUMN C

Check the box (select X from the dropdown) if any of the net loss in Column D was acquired in a merger or liquidation in the current or any prior year.

# COLUMN D

Enter the net loss carryforward corresponding to each tax period end from Column E of the RCT-103, Net Operating Loss Schedule, for the prior year.

# COLUMN E

Enter the amount to be used as a net loss deduction to offset income in the current tax period. The total amount of net loss carryforwards should not exceed the amount reported on Part A, Line 4.

# GENERAL INFORMATION LINE INSTRUCTIONS PART A PART B

2 RCT-103 revenue.pa.gov

# COLUMN F

Subtract Column E from Column D and enter the difference in this column. Net operating losses generated in tax periods beginning after Dec. 31, 1997, may be carried forward 20 periods. Short years are considered to be one tax period for purposes of calculating the carryforward. Lines 1 thru 20 are used for the allowable, 20 carry-forward periods. Line 21 is used for the current period only if there is a loss in that period. CAUTION: Line 21 should only be completed for Columns A, B and F. SECTION 381/382 LOSS LIMITATIONS If the entity is subject to these limitations, select Y ("yes") from the dropdown in Part A, Line 5 and include a detailed schedule explaining the merger, liquidation, change in control, as applicable, as well as specific support for the actual limited loss figure claimed in your tax calculation. You must also check the Section 381/382/Merger NOLs checkbox in Step C on Page 1 of the RCT-101. See Corporation Tax Bulletin 2008-03 for additional guidance.

# MERGED LOSSES

If losses claimed in Column D reflect losses from a merger in the prior year, select Y ("yes") from the dropdown in Part A, Line 6 and complete the supplemental schedule RCT-103 ML. If not provided on a prior return, you must also provide copies of merger or liquidation documents. Failure to provide this information may result in denial of losses. IMPORTANT: The department must be notified of the merger or liquidation before any losses can be transferred. As noted on the cover page of the CT-1 instructions, you must also check the Section 381/382/Merger NOLs checkbox in Step C on Page 1 of the RCT-101.