The Kentucky Net Operating Loss (KNOL) entry is used to calculate a taxpayer's Kentucky Net Operating Loss deduction and any available carryforward amounts. Taxpayers claiming a Kentucky Net Operating Loss deduction on Kentucky Schedule M must complete Schedule KNOL.
Net operating losses generated on or after January 1, 2018, are limited to 80% of Kentucky taxable income, determined without regard to the net operating loss deduction. Any unused net operating loss may be carried forward indefinitely.
Program Entry
Kentucky > Subtractions from Income > Kentucky Net Operating Loss, Schedule KNOL
When Will This Section Appear?
Complete Schedule KNOL when the taxpayer:
- Is claiming a Kentucky Net Operating Loss deduction on Kentucky Schedule M.
- Has a Kentucky NOL carryforward from a prior year.
- Needs to calculate a current-year Kentucky Net Operating Loss for future carryforward.
What Information Is Required?
Select Who the KY NOL Is For
Use the Select Who the KY NOL Is For field to identify the applicable taxpayer.
Part I - Section A: Adjustments to Current Year NOL
Enter the applicable amounts for:
- Nonbusiness Capital Losses
- Nonbusiness Capital Gains
- Nonbusiness Deductions
- Nonbusiness Income (Other than Capital Gains)
- Business Capital Losses
- Business Capital Gains
- Section 1202 Exclusion Amount
These entries are used to determine the current-year Kentucky Net Operating Loss.
Part I - Section B: NOL Carryforward Calculation
Enter any available carryforward information:
- Pre-2024 NOL Carryforward
- Post-2023 NOL Carryforward
- Excess Business Losses
The program uses this information to calculate the available Kentucky Net Operating Loss.
Part II - Net Operating Loss Deduction
Enter:
- Pre-2024 NOL Carryforward
- Post-2023 NOL Carryforward
The allowable Kentucky Net Operating Loss deduction is calculated from these entries.
Part III - Kentucky NOL Carryforward
Enter any applicable:
- Excess Business Losses
This section calculates any remaining loss available to carry forward to future tax years.
Important Notes
- Net operating losses generated on or after January 1, 2018, are limited to 80% of Kentucky taxable income, determined without regard to the net operating loss deduction.
- Any unused Kentucky Net Operating Loss may be carried forward indefinitely.
- The Kentucky Net Operating Loss deduction flows to Kentucky Schedule M, Line 16.
- Taxpayers claiming the deduction must complete Schedule KNOL.
- If the net operating loss occurred during the current tax year, complete Part I of Schedule KNOL to determine the amount available for future carryforward.
- Taxpayers should retain a copy of the completed Schedule KNOL with their tax records and include it with the return when applicable.