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Frequently Asked Questions
About Nebraska Business Income Taxes



Further Questions?
Contact Nebraska Taxpayer Assistance
at 800-742-7474 (NE & IA) or 402-471-5729


Is my business subject to Nebraska corporation income tax?

Corporations (foreign, domestic, or domesticated) and other entities taxed as a corporation under the I.R.C. are subject to the Nebraska income tax when part or all of its federal taxable income is derived from sources within Nebraska (Neb. Rev. Stat. §§ 77-2734.02, 77-2734.04, and 77-3801). The only exceptions are corporations that are exempt under the provisions of Public Law 86-272 (15 U.S.C.A. 381-384, 1959), or financial institutions.

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What is the filing requirement for a group of corporations?

Corporations operating as a unitary group must file a single combined return to report the income of the entire group. If you operate a multistate corporation or group of corporations, see the answer to "How does a multistate business apportion its income?" (Neb. Rev. Stat. §§ 77-2734.02, 77-2734.04, and 77-2734.06)

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What if I operate as a Limited Liability Company (LLC)?

An LLC will have the same filing status for Nebraska purposes as it does for federal purposes. An LLC filing a federal Corporation Income Tax Return must also file a Nebraska Corporation Income Tax Return, Form 1120N. If, however, the LLC is taxed federally as a partnership or S corporation, then it must file a Nebraska Partnership Return of Income, Form 1065N, or a Nebraska S Corporation Income Tax Return, Form 1120-SN, respectively.

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Who must file a Nebraska partnership or S corporation return?

Every partnership or S corporation must file a Nebraska income tax return, unless: (1) all of the partners/shareholders are Nebraska residents; and (2) all of its income is derived from Nebraska sources. A return must also be filed by every partnership/S corporation that will distribute Nebraska tax incentive credits to its shareholders, regardless of where the partnership/S corporation income is earned or the residence of the shareholders.

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How does a multistate business apportion its income?

When a group of corporations conducts a unitary business both within and outside Nebraska, it must determine the income of the group attributable to its activities in Nebraska by using an apportionment formula utilizing the combined income approach. Nebraska uses a single factor, sales-only formula to apportion income (Neb. Rev. Stat. § 77‑2734.05).

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How does a multistate business apportion income from the sale of intangibles and services?

Effective for tax years beginning January 1, 2014, income from the sale of intangibles and services is sourced on a market-based income approach; except for the sale of intangibles or services by a communications company, which will continue to be sourced to the location where the majority of the cost of performance takes place (Neb. Rev. Stat. §§ 77-2734.04 and 77-2734.14).

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What are the Nebraska net operating loss provisions?

Nebraska net operating losses may be carried back and forward as follows:

Loss Year

Carryback

Carryforward

1984 through 1986
3 years
15 years
1987 through 2013
0 years
5 years
2014 to present
0 years
20 years

For additional information, see Reg-24-060, Net Operating Losses and Capital Losses.

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What are the Nebraska capital loss provisions?

Nebraska capital losses may be carried back and forward as follows:

Loss Year

Carryback

Carryforward

1984 through 1986
3 years
15 years
1987 to present
0 years
5 years

For additional information, see Reg-24-060, Net Operating Losses and Capital Losses.

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How do I report changes due to federal amended returns and audits?

Any corporation whose reported amounts of federal taxable income or deductions are changed by the IRS must report the change or correction to the Department within 60 days of the determination by filing an Amended Nebraska Corporation Income Tax Return, Form 1120XN.

Any corporation that files an amended return with the IRS that will not result in a credit or refund must file a Form 1120XN within 60 days of the filing of the amended federal return. Any corporation filing an amended return with the IRS that will result in a credit or refund, must file a Form 1120XN within 60 days after receiving proof that the IRS accepted the federal return (Neb. Rev. Stat. § 77-2775).

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How can I request an extension of time for filing my Nebraska corporation income tax return?

A Nebraska extension of time to file a Form 1120N may be obtained by:

  • Filing a Nebraska Application for Automatic Extension of Time, Form 7004N, on or before the due date of the return;
     
  • Attaching a copy of a timely filed Form 7004N to the Nebraska return when filed;
     
  • Attaching a copy of the approved federal extension to the Nebraska return when filed;
     
  • Attaching a schedule to the Nebraska return listing the federal confirmation number and providing an explanation that the electronic request for automatic federal extension was not denied; or
     
  • If a federal extension has been granted, additional time to file the Nebraska return may be obtained by filing a Form 7004N on or before the date that the federal extension expires. Attach a copy of the Federal Form 7004 or approved federal extensions to the Form 7004N when filed.

When an extension of time to file a Nebraska return is granted, interest is still due on any unpaid tax. An extension of time cannot exceed a total of seven months after the due date of the return. You can make a tentative payment to stop interest from accruing. If this payment is made, Form 7004N must also be filed. When filing your Form 1120N, claim the tentative payment on the line "Tax deposited with Form 7004N." (Neb. Rev. Stat. § 77‑2770).

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What U.S. Government obligations are exempt from tax for state purposes, and how do I show these on my tax return?

See the information guide, "Taxability of Interest and Dividend Income from State, Local, and U.S. Government Obligations" for a current list of U.S. interest and dividend income that is exempt from state taxation.

Dividends and other income received from a regulated investment company are exempt to the extent they represent U.S. Government interest and dividend income listed above.

A deduction for U.S. Government interest and dividend income is taken on line 1 of Nebraska Schedule A, Form 1120N. For additional information, see the Nebraska Corporation Income Tax Booklet instructions.

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What is the penalty for filing the corporation income tax return late and without full payment?

A penalty of 5% per month (up to 25%) may be assessed on any outstanding tax liability.

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What is the due date of the corporation income tax return?

The due date for the Nebraska corporation income tax return is the 15th day of the third month following the close of the taxable year (Neb. Rev. Stat. § 77-2768). Due dates may vary for other entities such as cooperatives and exempt organizations.

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What are the current year corporation income tax rates?

Nebraska Corporation Income Tax Rates
If taxable income is:
over but not over The Nebraska tax is:
$0
$100,000
 
5.58% of income
$100,000
-----
$5,580 +
7.81% of the excess over $100,000

For a listing of the tax rates in prior years, click here.

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What are the current year fiduciary income tax rates?

Nebraska Tax Rate Schedule for Fiduciary Income Tax
If taxable income is:
over but not over The Nebraska tax is:
$0
$500
 
2.46% of income
500
4,700
$12.30 +
3.51% of the excess over $500
4,700
15,150
$159.72 +
5.01% of the excess over $4,700
15,150
-----
$683.27 +
6.84% of the excess over $15,150

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