A loss that is deducted in computing the nonresident'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 income from a
trade or business in Maine on Schedule NR or Schedule NRH. A loss realized by a
nonresident is attributable to Maine when the loss is derived from or connected
with sources in Maine ("Maine-source loss").
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 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 carryforwards
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).
E.
Negative or zero federal adjusted gross income. If the nonresident
taxpayer's federal adjusted gross income is negative or zero for the taxable
year and the taxpayer has recognized Maine-source income, there will be no
Maine tax on that income.
