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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?

Any corporation or other entity taxed as a corporation under the Internal Revenue Code, whether foreign, domestic, or domesticated, shall be subject to the Nebraska income tax; provided such corporate entity is not exempt under the provisions of Public Law 86-272 (15 U.S.C.A. 381-384, 1959), is not a financial institution, and has part of its federal taxable income derived from sources within Nebraska (Neb.Rev.Stat. Sections 77-2734.02, 77-2734.04, and 77-3801).

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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 question "How does a multistate business apportion its income?" (Neb.Rev.Stat. Sections 77-2734.02, 77-2734.04, and 77-2734.06)

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What if I operated as an LLC (Limited Liability Company)?

Nebraska taxes LLCs in the same way as the Internal Revenue Service. LLCs filing Federal Corporation Income Tax Returns must also file a Nebraska Corporation Income Tax Return, Form 1120N. If, however, the LLC is taxed federally as a partnership, then it will file a Nebraska Partnership Return of Income, Form 1065N.

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How does a multistate business apportion its income?

When a group of corporations conducts a unitary business both within and without Nebraska, it will determine the income of the group attributable to its activities in Nebraska by use of an apportionment formula utilizing the combined income approach. Nebraska uses a single factor, sales-only formula to apportion income (Neb.Rev.Stat. Section 77-2734.05).

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What are the Nebraska net operating loss and capital loss provisions?

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

Loss Year

Carryback

Carryforward

1984 through 1986 3 years 15 years
1987 through current 0 years 5 years

For additional information, see Regulation 24-060.

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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 within 60 days of the determination by filing an Amended Nebraska Corporation Income Tax Return, Form 1120XN.

Any corporation which files an amended return with the IRS must file a Form 1120XN within 60 days of the filing of the amended federal return (Neb.Rev.Stat. Section 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 only be obtained in the following manner:

  • File a Nebraska Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004N, on or before the due date of the return;
     
  • Attach a copy of a timely filed Nebraska Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004N, to the Nebraska return when filed;
     
  • Attach a copy of the approved federal extension to the Nebraska return when filed; 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 such payment is made, Nebraska Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004N, must also be filed. When filing your Nebraska Corporation Income Tax Return, Form 1120N, claim the tentative payment on line 21 of Form 1120N (Neb.Rev.Stat. Section 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 the tax return?

United States interest and dividend income exempt from state taxation includes:

  • Series E, F, G, and H savings bonds
     
  • U.S. Treasury bills
     
  • U.S. Government notes and bonds
     
  • U.S. Government certificates
     
  • Interest on debentures issued to mortgagees of mortgages foreclosed under provisions of the National Housing Act, if insured after February 3, 1938
     
  • Retirement bonds as provided by I.R.C. section 409
     
  • Federal Farm Credit Bank Consolidated System-wide bonds
     
  • Federal Land Banks and Associations
     
  • Federal Intermediate Credit Bank
     
  • Commodity Credit Corporation
     
  • Federal Farm Mortgage Corporation
     
  • Federal Home Loan Banks
     
  • Reconstruction Finance Corporation
     
  • General Services Administration Participation Certificates
     
  • Central Bank for Cooperatives (interest only)
     
  • Federal Reserve Banks
     
  • Federal Savings and Loan Insurance Corporation
     
  • Production Credit Association (interest only)
     
  • Tennessee Valley Authority bonds
     
  • Postal Service bonds
     
  • Federal Deposit Insurance Corporation (interest only)
     
  • Student Loan Marketing Association (interest only)
     
  • Resolution Trust Corporation

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 2 of Nebraska Schedule A, Form 1120N. For additional information, see the Nebraska Corporation Income Tax Booklet, and Regulation 24-048.

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What is the penalty for filing the corporate income tax return late or 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 Nebraska 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. Section 77-2768).

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What are the current year corporate 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   2.56% of income
500 4,700 $12.80 + 3.57% of the excess over $500
4,700 15,150 $162.74 + 5.12% of the excess over $4,700
15,150 ----- $697.78 + 6.84% of the excess over $15,150

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