Internal Revenue Code:Sec. 39. Carryback and carryforward of unused credits
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
Statute
Sec. 39. Carryback and carryforward of unused credits
(a) In general
(1) 1-year carryback and 20-year carryforward
If the sum of the business credit carryforwards to the taxable
year plus the amount of the current year business credit for the
taxable year exceeds the amount of the limitation imposed by
subsection (c) of section 38 for such taxable year (hereinafter
in this section referred to as the ''unused credit year''), such
excess (to the extent attributable to the amount of the current
year business credit) shall be -
(A) a business credit carryback to the taxable year (FOOTNOTE
1) preceding the unused credit year, and (FOOTNOTE 1) So in original.
(B) a business credit carryforward to each of the 20 taxable
years following the unused credit year,
and, subject to the limitations imposed by subsections (b) and
(c), shall be taken into account under the provisions of section
38(a) in the manner provided in section 38(a).
(2) Amount carried to each year
(A) Entire amount carried to first year
The entire amount of the unused credit for an unused credit
year shall be carried to the earliest of the 21 taxable years
to which (by reason of paragraph (1)) such credit may be
carried.
(B) Amount carried to other 20 years
The amount of the unused credit for the unused credit year
shall be carried to each of the other 20 taxable years to the
extent that such unused credit may not be taken into account
under section 38(a) for a prior taxable year because of the
limitations of subsections (b) and (c).
(3) 5-year <<NOTE: Applicability.>> carryback for marginal
oil and gas well production credit.--Notwithstanding subsection
(d), in the case of the marginal oil and gas well production
credit--
(A) this section shall be applied separately from
the business credit (other than the marginal oil and gas
well production credit),
(B) paragraph (1) <<NOTE: Applicability.>> shall
be applied by substituting `each of the 5 taxable years'
for `the taxable year' in subparagraph (A) thereof,
and
(C) paragraph (2) shall be applied--
(i) by substituting `25 taxable years' for
`21 taxable years' in subparagraph (A) thereof,
and
(ii) by substituting `24 taxable years' for
`20 taxable years' in subparagraph (B) thereof.''.
(b) Limitation on carrybacks
The amount of the unused credit which may be taken into account
under section 38(a)(3) for any preceding taxable year shall not
exceed the amount by which the limitation imposed by section 38(c)
for such taxable year exceeds the sum of -
(1) the amounts determined under paragraphs (1) and (2) of
section 38(a) for such taxable year, plus
(2) the amounts which (by reason of this section) are carried
back to such taxable year and are attributable to taxable years
preceding the unused credit year.
(c) Limitation on carryforwards
The amount of the unused credit which may be taken into account
under section 38(a)(1) for any succeeding taxable year shall not
exceed the amount by which the limitation imposed by section 38(c)
for such taxable year exceeds the sum of the amounts which, by
reason of this section, are carried to such taxable year and are
attributable to taxable years preceding the unused credit year.
(d) Transitional rules.--No portion of the unused business credit
for any taxable year which is attributable to a credit specified in
section 38(b) or any portion thereof may be carried back to any
taxable year before the first taxable year for which such specified
credit or such portion is allowable (without regard to subsection
(a).
Sources
(Added Pub. L. 98-369, div. A, title IV, Sec. 473, July 18, 1984,
98 Stat. 828; amended Pub. L. 99-514, title II, Sec.
231(d)(3)(C)(i), title XVIII, Sec. 1846, Oct. 22, 1986, 100 Stat.
2179, 2856; Pub. L. 100-647, title I, Sec. 1002(l)(26), Nov. 10,
1988, 102 Stat. 3381; Pub. L. 101-508, title XI, Sec. 11511(b)(2),
11611(b)(2), 11801(a)(2), Nov. 5, 1990, 104 Stat. 1388-485,
1388-503, 1388-520; Pub. L. 102-486, title XIX, Sec. 1914(c), Oct.
24, 1992, 106 Stat. 3023; Pub. L. 103-66, title XIII, Sec.
13302(a)(2), 13322(d), 13443(b)(2), Aug. 10, 1993, 107 Stat. 555,
563, 569; Pub. L. 104-188, title I, Sec. 1205(c), 1703(n)(1), Aug.
20, 1996, 110 Stat. 1775, 1877; Pub. L. 105-34, title VII, Sec.
701(b)(1), title X, Sec. 1083(a), Aug. 5, 1997, 111 Stat. 869, 951;
Pub. L. 105-206, title VI, Sec. 6010(n), July 22, 1998, 112 Stat.
816; Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec. 121(b)(2)), Dec.
21, 2000, 114 Stat. 2763, 2763A-610; Pub. L. 107-16, title VI, Sec.
619(c)(1), June 7, 2001, 115 Stat. 110.)
Amendment of Section
AMENDMENT OF SECTION
2005 - P.L. 109-135, Section 412
(g)(1) Subparagraph (A) of section 39(a)(1) is amended by striking
``each of the 1 taxable years'' and inserting ``the taxable year''.
(2) Subparagraph (B) of section 39(a)(3) is amended to read as
follows:
``(B) paragraph (1) <<NOTE: Applicability.>> shall
be applied by substituting `each of the 5 taxable years'
for `the taxable year' in subparagraph (A) thereof,
and''.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
References in Text
REFERENCES IN TEXT
The date of the enactment of section 44, referred to in subsec.
(d)(2), means the date of the enactment of Pub. L. 101-508, which
was approved Nov. 5, 1990.
The date of the enactment of section 45A, referred to in subsec.
(d)(5), means the date of the enactment of Pub. L. 103-66, which
was approved Aug. 10, 1993.
The date of the enactment of section 45B, referred to in subsec.
(d)(6), means the date of the enactment of Pub. L. 103-66, which
was approved Aug. 10, 1993.
The date of the enactment of section 1400, referred to in subsec.
(d)(8), means the date of enactment of Pub. L. 105-34, which was
approved Aug. 5, 1997.
Miscellaneous
PRIOR PROVISIONS
A prior section 39 was renumbered section 34 of this title.
Another prior section 39 was renumbered section 35 of this title.
AMENDMENTS
2004 - Pub. L. 108-357, Sec 341(c). Subsection (a) of section 39
(relating to carryback and carryforward of unused credits generally)
is amended by adding at the end the following new paragraph:
"(3) 5-year carryback for marginal oil and gas well production credit."
2004 - Subsec.245(b)(1),Pub.L.108-357, amended Sec.39(d) by
redefining the "Transitional Rule".
2001 - Subsec. (d)(10). Pub. L. 107-16, Sec. 619(c)(1), 901,
temporarily added par. (10). See Effective and Termination Dates of
2001 Amendment note below.
2000 - Subsec. (d)(9). Pub. L. 106-554 added par. (9).
1998 - Subsec. (a)(2). Pub. L. 105-206 amended Pub. L. 105-34,
Sec. 1083(a)(2). See 1997 Amendment note below.
1997 - Subsec. (a)(1). Pub. L. 105-34, Sec. 1083(a)(1),
substituted ''1-year'' for ''3-year'' and ''20-year'' for
''15-year'' in heading, ''1 taxable'' for ''3 taxable'' in subpar.
(A), and ''20 taxable'' for ''15 taxable'' in subpar. (B).
Subsec. (a)(2). Pub. L. 105-34, Sec. 1083(a)(2), as amended by
Pub. L. 105-206, Sec. 6010(n), in subpar. (A), substituted ''21
taxable'' for ''18 taxable'', and in subpar. (B), substituted ''20
years'' for ''17 years'' in heading and ''20 taxable'' for ''17
taxable'' in text.
Subsec. (d)(8). Pub. L. 105-34, Sec. 701(b)(1), added par. (8).
1996 - Subsec. (d)(5). Pub. L. 104-188, Sec. 1703(n)(1)(A),
substituted ''45A'' for ''45'' in heading.
Subsec. (d)(6). Pub. L. 104-188, Sec. 1703(n)(1)(B), substituted
''45B'' for ''45'' in heading.
Subsec. (d)(7). Pub. L. 104-188, Sec. 1205(c), added par. (7).
1993 - Subsec. (d)(4). Pub. L. 103-66, Sec. 13302(a)(2), added
par. (4).
Subsec. (d)(5). Pub. L. 103-66, Sec. 13322(d), added par. (5).
Subsec. (d)(6). Pub. L. 103-66, Sec. 13443(b)(2), added par. (6).
1992 - Subsec. (d). Pub. L. 102-486 redesignated par. (5),
relating to carryback of enhanced oil recovery credit, as (1),
redesignated par. (5), relating to carryback of section 44 credit,
as (2), and added par. (3).
1990 - Subsec. (d)(1) to (4). Pub. L. 101-508, Sec. 11801(a)(2),
struck out par. (1) which related to carryforwards from an unused
credit year which did not expire before first taxable year
beginning after Dec. 31, 1983, par. (2) which related to carrybacks
in determining amount allowable as credit including net tax
liability, par. (3) which related to similar rules for research
credit under section 30, and par. (4) which provided for no
carryback of low-income housing credit before 1987.
Subsec. (d)(5). Pub. L. 101-508, Sec. 11611(b)(2), added par. (5)
relating to carryback of section 44 credit.
Pub. L. 101-508, Sec. 11511(b)(2), added par. (5) relating to
carryback of enhanced oil recovery credit.
1988 - Subsec. (d)(4). Pub. L. 100-647 added par. (4).
1986 - Subsec. (d)(1)(A). Pub. L. 99-514, Sec. 1846(1), inserted
''(as in effect before the enactment of the Tax Reform Act of
1984)''.
Subsec. (d)(2)(B). Pub. L. 99-514, Sec. 1846(2), substituted ''as
defined in section 26(b)'' for ''as so defined in section 25(b)''.
Subsec. (d)(3). Pub. L. 99-514, Sec. 231(d)(3)(C)(i), added par.
(3).
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Pub.L.108-357,Sec.245(b)(1), shall apply with
respect to taxable years ending after December 31, 2003.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to costs paid or incurred
in taxable years beginning after Dec. 31, 2001, with respect to
qualified employer plans established after such date, see section
619(d) of Pub. L. 107-16, set out as a note under section 38 of
this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2000 AMENDMENT
Amendment by Pub. L. 106-554 applicable to investments made after
Dec. 31, 2000, see Sec. 1(a)(7) (title I, Sec. 121(e)) of Pub. L.
106-554, set out as a note under section 38 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 701(d) of Pub. L. 105-34 provided that: ''Except as
provided in subsection (c) (amending table of subchapters for this
chapter), the amendments made by this section (enacting subchapter
W of this chapter and amending this section and section 1016 of
this title) shall take effect on the date of the enactment of this
Act (Aug. 5, 1997).''
Section 1083(b) of Pub. L. 105-34 provided that: ''The amendments
made by this section (amending this section) shall apply to credits
arising in taxable years beginning after December 31, 1997.''
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1205(c) of Pub. L. 104-188 applicable to
amounts paid or incurred in taxable years ending after June 30,
1996, see section 1205(e) of Pub. L. 104-188, set out as a note
under section 29 of this title.
Section 1703(o) of Pub. L. 104-188 provided that: ''Any amendment
made by this section (amending this section and sections 40, 59,
108, 117, 135, 143, 163, 904, 956A, 958, 1017, 1044, 1201, 1245,
1297, 1394, 1397B, 1561, 4001, 6033, 6427, 6501, 6655, and 9502 of
this title, renumbering section 6714 of this title as section 6715,
and amending provisions set out as notes under sections 38, 42,
197, and 1258 of this title and section 401 of Title 42, The Public
Health and Welfare) shall take effect as if included in the
provision of the Revenue Reconciliation Act of 1993 (Pub. L.
103-66, title XIII, ch. I, Sec. 13001-13444) to which such
amendment relates.''
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by section 13322(d) of Pub. L. 103-66 applicable to
wages paid or incurred after Dec. 31, 1993, see section 13322(f) of
Pub. L. 103-66, set out as a note under section 38 of this title.
Amendment by section 13443(b)(2) of Pub. L. 103-66 applicable
with respect to taxes paid after Dec. 31, 1993, with respect to
services performed before, on, or after such date, see section
13443(d) of Pub. L. 103-66, as amended, set out as a note under
section 38 of this title.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to taxable years ending
after Dec. 31, 1992, see section 1914(e) of Pub. L. 102-486, set
out as a note under section 38 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11511(b)(2) of Pub. L. 101-508 applicable to
costs paid or incurred in taxable years beginning after Dec. 31,
1990, see section 11511(d)(1) of Pub. L. 101-508, set out as an
Effective Date note under section 43 of this title.
Amendment by section 11611(b)(2) of Pub. L. 101-508 applicable to
expenditures paid or incurred after Nov. 5, 1990, see section
11611(e)(1) of Pub. L. 101-508, set out as a note under section 38
of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 231(d)(3)(C)(i) of Pub. L. 99-514 applicable
to taxable years beginning after Dec. 31, 1985, see section 231(g)
of Pub. L. 99-514, set out as a note under section 41 of this
title.
Amendment by section 1846 of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1983, and to carrybacks from such years, see section 475(a) of Pub.
L. 98-369, set out as an Effective Date of 1984 Amendment note
under section 21 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801(a)(2)
of Pub. L. 101-508 be construed to affect treatment of certain
transactions occurring, property acquired, or items of income,
loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to
any plan, such plan amendment shall not be required to be made
before the first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99-514, as amended, set out as a note under
section 401 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 40, 41, 42, 45A, 45D,
45F, 48, 50, 196, 383, 1374, 6411, 6511 of this title.
