Can an individual subtract a CARES Act federal net operating loss carryback on the Kansas return?

Plain-English summary

Kansas Notice 24-17 explains a new income tax subtraction added by 2024 Senate Bill 410 (Section 18), which amended K.S.A. 79-32,117 to add subsection (c)(xxix). The federal CARES Act temporarily let taxpayers carry certain net operating losses (NOLs) back to earlier, higher-income years. This Kansas provision lets an individual subtract that carried-back federal NOL on the Kansas return.

The subtraction is available only to individual taxpayers, and only for losses that arose in a tax year beginning after December 31, 2017 and before January 1, 2021, under Section 172(b)(1) of the Internal Revenue Code as amended by the CARES Act. The amount is equal to the federal NOL carryback for each applicable year. If the carryback is larger than the taxpayer's Kansas adjusted gross income for the year, the excess may be carried forward as a subtraction in later years -- but not beyond the 20th tax year following the loss year.

What this means for you

Individual taxpayers with a 2018-2020 CARES Act NOL carryback

• If you (an individual) carried a federal NOL back to an earlier year under the CARES Act, you can subtract that carryback on your Kansas return.
• If the carryback exceeds your Kansas adjusted gross income for the year, carry the unused part forward as a Kansas subtraction until it is used up, up to the 20th year after the loss.
• The subtraction is not available to corporations or other non-individual taxpayers.
• You cannot subtract a carryback for a year in which it was already deducted when figuring your Kansas adjusted gross income (no double benefit).

Watch the deadline

To use this provision, any refund claim or amended return for tax years 2018, 2019, or 2020 had to be filed on or before April 15, 2025.

Common questions

Who can claim the subtraction? Only individual taxpayers.

Which losses qualify? Federal NOLs arising in a tax year beginning after December 31, 2017 and before January 1, 2021, carried back under IRC Section 172(b)(1) as amended by the CARES Act.

What if the carryback is bigger than my Kansas income? The excess carries forward as a Kansas subtraction in later years, up to the 20th tax year after the loss year.

Can I claim it if I already deducted the carryback for that year? No -- there is no subtraction for a year in which the carryback was already deducted in figuring Kansas adjusted gross income.

Was there a filing deadline? Yes -- refund claims and amended 2018-2020 returns for this purpose had to be filed on or before April 15, 2025.

Citations and references

• Senate Bill 410 (2024) -- Section 18 added the net operating loss carryback subtraction.
• K.S.A. 79-32,117 -- Kansas addition and subtraction modifications to federal adjusted gross income.
• K.S.A. 79-32,117(c)(xxix) -- the individual NOL-carryback subtraction, its 20-year carryforward, and the April 15, 2025 filing deadline.
• Internal Revenue Code Section 172(b)(1), as amended by the CARES Act -- the federal NOL carryback the Kansas subtraction is based on.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 24-17

Original ruling text

Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                        NOTICE 24-17

                            NET OPERATING LOSS CARRYBACK

                                     (AUGUST 15, 2024)

  During the 2024 Legislative Session Senate Bill 410 was passed and signed into law. Section

18 of the Bill amends K.S.A. 79-32,117, which requires or permits addition and subtraction
modifications to federal adjusted gross income when calculating Kansas adjusted gross income.

   As amended, K.S.A. 79-32,117(c)(xxix) provides a subtraction modification for an

individual taxpayer who carried back certain federal net operating losses arising in a taxable year
beginning after December 31, 2017, and before January 1, 2021. Only individual taxpayers may
claim the modification. The losses must have arisen pursuant to section 172(b)(1) of the federal
internal revenue code as amended by the coronavirus aid, relief, and economic security act
(CARES). The amount of the subtraction modification is equal to the amount of such federal net
operating loss carryback for each applicable year.

   If the amount of the carryback is greater than the taxpayer's Kansas adjusted gross income

for the taxable year, the amount of the excess carryback may be carried forward and used as a
subtraction modification in the following taxable year or years, for up to the 20th tax year following
the taxable year of the net operating loss.

   For purposes of this subsection, and specifically for this net operating loss provision, an

extension of time to claim a refund or file an amended return for tax years 2018, 2019, and 2020
returns is provided, but such claim for refund or amended return must be filed on or before April
15, 2025.

   Effective July 1, 2024, the amended provision will provide:

         (c)(xxix) For taxable years beginning after December 31, 2017, for an individual
   taxpayer who carried back federal net operating losses arising in a taxable year
   beginning after December 31, 2017, and before January 1, 2021, pursuant to section
   172(b)(1) of the federal internal revenue code as amended by the coronavirus aid, relief,
   and economic security act (CARES act), the amount of such federal net operating loss
   carryback for each applicable year. If the amount of such federal net operating loss
   carryback exceeds the taxpayer's Kansas adjusted gross income for such taxable year,
   the amount thereof that exceeds such Kansas adjusted gross income may be carried
   forward as a subtraction modification in the following taxable year or years until the
   total amount of such federal net operating loss carryback has been deducted, except
   that no such unused amount shall be carried forward for deduction as a subtraction
   modification after the 20th taxable year following the taxable year of the net operating

 loss. Notwithstanding any other provision of law to the contrary, an extension of time
 shall be allowed for a claim for refund or amended return for tax years 2018, 2019 or
 2020 limited to the application of the provisions of this paragraph and such claim for
 refund or amended return must be filed on or before April 15, 2025.

  If a net operating loss carryback was previously allowed as a deduction when

computing Kansas adjusted gross income for a particular tax year, no subtraction
modification for a net operating loss carryback under amended K.S.A. 79-32,117(c)(xxix)
will be permitted for that same tax year.

                                TAXPAYER ASSISTANCE

 Additional copies of this notice, forms or publications are available from our web site,

www.ksrevenue.gov. If you have questions about this Notice, please contact:

                             Taxpayer Assistance Center
                            Kansas Department of Revenue
                            Scott Office Building, 1st Floor
                                   120 SE 10th Ave
                                    P. O. Box 3506
                               Topeka, KS 66601-3506
                                 Phone: 785-368-8222
                                  Fax: 785-291-3614