Code of Maine Rules › 18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES › 125 - BUREAU OF REVENUE SERVICES › Chapter 806 - NONRESIDENT INDIVIDUAL INCOME TAX › Section 125-806-04 - Deduction of losses

Current through 2024-29, July 17, 2024
A loss that is deducted in computing the nonresident
				  taxpayer's federal adjusted gross income is automatically included in that
				  taxpayer's Maine adjusted gross income for the same tax year. If the loss is a
				  "Maine-source loss," it is allocated to Maine when computing business income
				  from Maine sources on Schedule NR or Schedule NRH. A Maine-source loss is
				  determined in the same manner that a Maine-source gain is determined.
A.
Net operating loss.
A net
				operating loss that is derived from or connected with the carrying on of a
				trade or business in Maine is a Maine-source loss.
B.
Capital loss.
A capital loss
				that is derived from the ownership or disposition of any interest in real or
				tangible personal property located in Maine is a Maine-source loss.
C.
Rental loss.
A rental loss
				derived from real or tangible personal property located in Maine is a
				Maine-source loss.
D.
Carryback or carryforward.
Since Maine adjusted gross income is
				derived from federal adjusted gross income and the Internal Revenue Code
				provides for the carry back or carry forward of certain losses, a taxpayer may
				carry back (except as provided in the next paragraph) or carry forward a loss
				on the Maine return only if that loss is carried back or carried forward on the
				taxpayer's federal return for the same tax year, excluding losses disallowed in
				2009, 2010 and 2011. If the only Maine-source items in federal adjusted gross
				income are losses, and those Maine losses are fully absorbed by income derived
				from sources outside of Maine, the Maine losses cannot be carried back or
				carried forward for Maine purposes.
1.
Net operating losses realized after 2001.
Net operating losses
				realized after 2001 that are carried back for federal income tax purposes are
				not allowed for Maine income tax purposes in the carryback year. The
				disallowance is effected through an addition income modification in the
				carryback year. The amount of the addition income modification may be used as a
				subtraction modification in the loss year (assuming there are sufficient Maine
				income tax income additions in that year) or in tax years subsequent to the
				year of the loss, but only to the extent not previously used to offset Maine
				income. Only that portion of the carry back loss that is sourced to Maine may
				be used to reduce federal adjusted gross income in the loss year or
				carryforward years. The net operating loss amount must be used within the
				allowable net operating loss carryover period.
2.
Tax years beginning in 2009, 2010,
				and 2011.
Maine disallows carry forwards in 2009, 2010, and 2011. Any
				federal carryforward in those years must be offset with a corresponding
				addition modification. The addition modifications for a federal carryback or
				carryforward can be recaptured in years subsequent to the year of the loss,
				beginning with tax year 2012, through subtraction modifications. The recapture
				modifications must be reduced by any Maine income that is offset in the year of
				the loss.
				36
				M.R.S. §5122(1)(DD) and
				(2)(CC).