Internal Revenue Code:Sec. 172. Net operating loss deduction
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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 B - Computation of Taxable Income
PART VI - ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
Statute
Sec. 172. Net operating loss deduction
(a) Deduction allowed
There shall be allowed as a deduction for the taxable year an
amount equal to the aggregate of (1) the net operating loss
carryovers to such year, plus (2) the net operating loss carrybacks
to such year. For purposes of this subtitle, the term ''net
operating loss deduction'' means the deduction allowed by this
subsection.
(b) Net operating loss carrybacks and carryovers
(1) Years to which loss may be carried
(A) General rule
Except as otherwise provided in this paragraph, a net
operating loss for any taxable year -
(i) shall be a net operating loss carryback to each of the
2 taxable years preceding the taxable year of such loss, and
(ii) shall be a net operating loss carryover to each of the
20 taxable years following the taxable year of the loss.
(B) Special rules for REIT's
(i) In general
A net operating loss for a REIT year shall not be a net
operating loss carryback to any taxable year preceding the
taxable year of such loss.
(ii) Special rule
In the case of any net operating loss for a taxable year
which is not a REIT year, such loss shall not be carried back
to any taxable year which is a REIT year.
(iii) REIT year
For purposes of this subparagraph, the term ''REIT year''
means any taxable year for which the provisions of part II of
subchapter M (relating to real estate investment trusts)
apply to the taxpayer.
(C) Specified liability losses
In the case of a taxpayer which has a specified liability
loss (as defined in subsection (f)) for a taxable year, such
specified liability loss shall be a net operating loss
carryback to each of the 10 taxable years preceding the taxable
year of such loss.
(D) Bad debt losses of commercial banks
In the case of any bank (as defined in section 585(a)(2)),
the portion of the net operating loss for any taxable year
beginning after December 31, 1986, and before January 1, 1994,
which is attributable to the deduction allowed under section
166(a) shall be a net operating loss carryback to each of the
10 taxable years preceding the taxable year of the loss and a
net operating loss carryover to each of the 5 taxable years
following the taxable year of such loss.
(E) Excess interest loss
(i) In general
If -
(I) there is a corporate equity reduction transaction,
and
(II) an applicable corporation has a corporate equity
reduction interest loss for any loss limitation year ending
after August 2, 1989,
then the corporate equity reduction interest loss shall be a
net operating loss carryback and carryover to the taxable
years described in subparagraph (A), except that such loss
shall not be carried back to a taxable year preceding the
taxable year in which the corporate equity reduction
transaction occurs.
(ii) Loss limitation year
For purposes of clause (i) and subsection (h), the term
''loss limitation year'' means, with respect to any corporate
equity reduction transaction, the taxable year in which such
transaction occurs and each of the 2 succeeding taxable
years.
(iii) Applicable corporation
For purposes of clause (i), the term ''applicable
corporation'' means -
(I) a C corporation which acquires stock, or the stock of
which is acquired in a major stock acquisition,
(II) a C corporation making distributions with respect
to, or redeeming, its stock in connection with an excess
distribution, or
(III) a C corporation which is a successor of a
corporation described in subclause (I) or (II).
(iv) Other definitions
For definitions of terms used in this subparagraph, see
subsection (h).
(F) Retention of 3-year carryback in certain cases
(i) In general
Subparagraph (A)(i) shall be applied by substituting ''3
taxable years'' for ''2 taxable years'' (FOOTNOTE 1) with
respect to the portion of the net operating loss for the
taxable year which is an eligible loss with respect to the
taxpayer.
(FOOTNOTE 1) So in original. Probably should be '' '3 taxable
years' for '2 taxable years' ''.
(ii) Eligible loss
For purposes of clause (i), the term ''eligible loss''
means -
(I) in the case of an individual, losses of property
arising from fire, storm, shipwreck, or other casualty, or
from theft,
(II) in the case of a taxpayer which is a small business,
net operating losses attributable to Presidentially
declared disasters (as defined in section 1033(h)(3)), and
(III) in the case of a taxpayer engaged in the trade or
business of farming (as defined in section 263A(e)(4)), net
operating losses attributable to such Presidentially
declared disasters.
Such term shall not include any farming loss (as defined in
subsection (i)).
(iii) Small business
For purposes of this subparagraph, the term ''small
business'' means a corporation or partnership which meets the
gross receipts test of section 448(c) for the taxable year in
which the loss arose (or, in the case of a sole
proprietorship, which would meet such test if such
proprietorship were a corporation).
(iv) Coordination with paragraph (2)
For purposes of applying paragraph (2), an eligible loss
for any taxable year shall be treated in a manner similar to
the manner in which a specified liability loss is treated.
(G) Farming losses
In the case of a taxpayer which has a farming loss (as
defined in subsection (i)) for a taxable year, such farming
loss shall be a net operating loss carryback to each of the 5
taxable years preceding the taxable year of such loss.
(H) In the case of a net
operating loss for any taxable year ending during 2001
or 2002, subparagraph (A)(i) shall be applied by
substituting `5' for `2' and subparagraph (F) shall not apply.
(I) TRANSMISSION PROPERTY AND POLLUTION CONTROL INVESTMENT-
(i) In general.--At the election of the
taxpayer for any taxable year ending after
December 31, 2005, and before January 1, 2009, in
the case of a net operating loss for a taxable
year ending after December 31, 2002, and before
January 1, 2006, there shall be a net operating
loss carryback to each of the 5 taxable years
preceding the taxable year of such loss to the
extent that such loss does not exceed 20 percent
of the sum of the electric transmission property
capital expenditures and the pollution control
facility capital expenditures of the taxpayer for
the taxable year preceding the taxable year for
which such election is made.
(ii) LIMITATIONS- For purposes of this subsection--
(I) not more than one election may be made under clause (i)
with respect to any net operating loss for a taxable year, and
(II) an election may not be made under clause (i) for more
than 1 taxable year beginning in any calendar year.
(iii) COORDINATION WITH ORDERING RULE- For purposes of applying
subsection (b)(2), the portion of any loss which is carried
back 5 years by reason of clause (i) shall be treated in a
manner similar to the manner in which a specified liability
loss is treated.
(iv) Special rules relating to credit or
refund.--In the case of the portion of the loss
which is carried back 5 years by reason of clause
(i)--
(I) an application under section
6411(a) with respect to such portion
shall not fail to be treated as timely
filed if filed within 24 months after
the due date specified under such
section, and
(II) references in sections
6501(h), 6511(d)(2)(A), and 6611(f)(1)
to the taxable year in which such net
operating loss arises or results in a
net operating loss carryback shall be
treated as references to the taxable
year for which such election is made.
(v) DEFINITIONS- For purposes of this subparagraph--
(I) ELECTRIC TRANSMISSION PROPERTY CAPITAL EXPENDITURES- The
term `electric transmission property capital expenditures'
means any expenditure, chargeable to capital account, made by
the taxpayer which is attributable to electric transmission
property used by the taxpayer in the transmission at 69 or
more kilovolts of electricity for sale. Such term shall not
include any expenditure which may be refunded or the purpose
of which may be modified at the option of the taxpayer so as
to cease to be treated as an expenditure within the meaning
of such term.
(II) POLLUTION CONTROL FACILITY CAPITAL EXPENDITURES- The term
`pollution control facility capital expenditures' means any
expenditure, chargeable to capital account, made by an
electric utility company (as defined in section 2(3) of the
Public Utility Holding Company Act (15 U.S.C. 79b(3)), as in
effect on the day before the date of the enactment of the
Energy Tax Incentives Act of 2005) which is attributable to a
facility which will qualify as a certified pollution control
facility as determined under section 169(d)(1) by striking
`before January 1, 1976,' and by substituting `an
identifiable' for `a new identifiable'. Such term shall not
include any expenditure which may be refunded or the purpose
of which may be modified at the option of the taxpayer so as
to cease to be treated as an expenditure within the meaning
of such term.
(2) Amount of carrybacks and carryovers
The entire amount of the net operating loss for any taxable
year (hereinafter in this section referred to as the ''loss
year'') shall be carried to the earliest of the taxable years to
which (by reason of paragraph (1)) such loss may be carried. The
portion of such loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of such
loss over the sum of the taxable income for each of the prior
taxable years to which such loss may be carried. For purposes of
the preceding sentence, the taxable income for any such prior
taxable year shall be computed -
(A) with the modifications specified in subsection (d) other
than paragraphs (1), (4), and (5) thereof, and
(B) by determining the amount of the net operating loss
deduction without regard to the net operating loss for the loss
year or for any taxable year thereafter,
and the taxable income so computed shall not be considered to be
less than zero.
(3) Election to waive carryback
Any taxpayer entitled to a carryback period under paragraph (1)
may elect to relinquish the entire carryback period with respect
to a net operating loss for any taxable year. Such election
shall be made in such manner as may be prescribed by the
Secretary, and shall be made by the due date (including
extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss for which the election is
to be in effect. Such election, once made for any taxable year,
shall be irrevocable for such taxable year.
(c) Net operating loss defined
For purposes of this section, the term ''net operating loss''
means the excess of the deductions allowed by this chapter over the
gross income. Such excess shall be computed with the modifications
specified in subsection (d).
(d) Modifications
The modifications referred to in this section are as follows:
(1) Net operating loss deduction
No net operating loss deduction shall be allowed.
(2) Capital gains and losses of taxpayers other than corporations
In the case of a taxpayer other than a corporation -
(A) the amount deductible on account of losses from sales or
exchanges of capital assets shall not exceed the amount
includable on account of gains from sales or exchanges of
capital assets; and
(B) the exclusion provided by section 1202 shall not be
allowed.
(3) Deduction for personal exemptions
No deduction shall be allowed under section 151 (relating to
personal exemptions). No deduction in lieu of any such deduction
shall be allowed.
(4) Nonbusiness deductions of taxpayers other than corporations
In the case of a taxpayer other than a corporation, the
deductions allowable by this chapter which are not attributable
to a taxpayer's trade or business shall be allowed only to the
extent of the amount of the gross income not derived from such
trade or business. For purposes of the preceding sentence -
(A) any gain or loss from the sale or other disposition of -
(i) property, used in the trade or business, of a character
which is subject to the allowance for depreciation provided
in section 167, or
(ii) real property used in the trade or business,
shall be treated as attributable to the trade or business;
(B) the modifications specified in paragraphs (1), (2)(B),
and (3) shall be taken into account;
(C) any deduction for casualty or theft losses allowable
under paragraph (2) or (3) of section 165(c) shall be treated
as attributable to the trade or business; and
(D) any deduction allowed under section 404 to the extent
attributable to contributions which are made on behalf of an
individual who is an employee within the meaning of section
401(c)(1) shall not be treated as attributable to the trade or
business of such individual.
(5) Computation of deduction for dividends received, etc.
The deductions allowed by sections 243 (relating to dividends
received by corporations), 244 (relating to dividends received on
certain preferred stock of public utilities), and 245 (relating
to dividends received from certain foreign corporations) shall be
computed without regard to section 246(b) (relating to limitation
on aggregate amount of deductions); and the deduction allowed by
section 247 (relating to dividends paid on certain preferred
stock of public utilities) shall be computed without regard to
subsection (a)(1)(B) of such section.
(6) Modifications related to real estate investment trusts
In the case of any taxable year for which part II of subchapter
M (relating to real estate investment trusts) applies to the
taxpayer -
(A) the net operating loss for such taxable year shall be
computed by taking into account the adjustments described in
section 857(b)(2) (other than the deduction for dividends paid
described in section 857(b)(2)(B)); and
(B) where such taxable year is a ''prior taxable year''
referred to in paragraph (2) of subsection (b), the term
''taxable income'' in such paragraph shall mean ''real estate
investment trust taxable income'' (as defined in section
857(b)(2)).
(7) Manufacturing deduction.--The deduction under section
199 shall not be allowed.
(e) Law applicable to computations
In determining the amount of any net operating loss carryback or
carryover to any taxable year, the necessary computations involving
any other taxable year shall be made under the law applicable to
such other taxable year.
(f) Rules relating to specified liability loss
For purposes of this section -
(1) In general
The term ''specified liability loss'' means the sum of the
following amounts to the extent taken into account in computing
the net operating loss for the taxable year:
(A) Any amount allowable as a deduction under section 162 or
165 which is attributable to -
(i) product liability, or
(ii) expenses incurred in the investigation or settlement
of, or opposition to, claims against the taxpayer on account
of product liability.
(B)(i) Any amount allowable as a deduction under this chapter
(other than section 468(a)(1) or 468A(a)) which is in
satisfaction of a liability under a Federal or State law
requiring -
(I) the reclamation of land,
(II) the decommissioning of a nuclear power plant (or any
unit thereof),
(III) the dismantlement of a drilling platform,
(IV) the remediation of environmental contamination, or
(V) a payment under any workers compensation act (within
the meaning of section 461(h)(2)(C)(i)).
(ii) A liability shall be taken into account under this
subparagraph only if -
(I) the act (or failure to act) giving rise to such
liability occurs at least 3 years before the beginning of the
taxable year, and
(II) the taxpayer used an accrual method of accounting
throughout the period or periods during which such act (or
failure to act) occurred.
(2) Limitation
The amount of the specified liability loss for any taxable year
shall not exceed the amount of the net operating loss for such
taxable year.
(3) Special rule for nuclear powerplants
Except as provided in regulations prescribed by the Secretary,
that portion of a specified liability loss which is attributable
to amounts incurred in the decommissioning of a nuclear
powerplant (or any unit thereof) may, for purposes of subsection
(b)(1)(C), be carried back to each of the taxable years during
the period -
(A) beginning with the taxable year in which such plant (or
unit thereof) was placed in service, and
(B) ending with the taxable year preceding the loss year.
(4) Product liability
The term ''product liability'' means -
(A) liability of the taxpayer for damages on account of
physical injury or emotional harm to individuals, or damage to
or loss of the use of property, on account of any defect in any
product which is manufactured, leased, or sold by the taxpayer,
but only if
(B) such injury, harm, or damage arises after the taxpayer
has completed or terminated operations with respect to, and has
relinquished possession of, such product.
(5) Coordination with subsection (b)(2)
For purposes of applying subsection (b)(2), a specified
liability loss for any taxable year shall be treated as a
separate net operating loss for such taxable year to be taken
into account after the remaining portion of the net operating
loss for such taxable year.
(6) Election
Any taxpayer entitled to a 10-year carryback under subsection
(b)(1)(C) from any loss year may elect to have the carryback
period with respect to such loss year determined without regard
to subsection (b)(1)(C). Such election shall be made in such
manner as may be prescribed by the Secretary and shall be made by
the due date (including extensions of time) for filing the
taxpayer's return for the taxable year of the net operating
loss. Such election, once made for any taxable year, shall be
irrevocable for that taxable year.
(g) Rules relating to bad debt losses of commercial banks
For purposes of this section -
(1) Portion attributable to deduction for bad debts
The portion of the net operating loss for any taxable year
which is attributable to the deduction allowed under section
166(a) shall be the excess of -
(i) the net operating loss for such taxable year, over
(ii) the net operating loss for such taxable year determined
without regard to the amount allowed as a deduction under
section 166(a) for such taxable year.
(2) Coordination with subsection (b)(2)
For purposes of subsection (b)(2), the portion of a net
operating loss for any taxable year which is attributable to the
deduction allowed under section 166(a) shall be treated in a
manner similar to the manner in which a specified liability loss
is treated.
(h) Corporate equity reduction interest losses
For purposes of this section -
(1) In general
The term ''corporate equity reduction interest loss'' means,
with respect to any loss limitation year, the excess (if any) of
-
(A) the net operating loss for such taxable year, over
(B) the net operating loss for such taxable year determined
without regard to any allocable interest deductions otherwise
taken into account in computing such loss.
(2) Allocable interest deductions
(A) In general
The term ''allocable interest deductions'' means deductions
allowed under this chapter for interest on the portion of any
indebtedness allocable to a corporate equity reduction
transaction.
(B) Method of allocation
Except as provided in regulations and subparagraph (E),
indebtedness shall be allocated to a corporate equity reduction
transaction in the manner prescribed under clause (ii) of
section 263A(f)(2)(A) (without regard to clause (i) thereof).
(C) Allocable deductions not to exceed interest increases
Allocable interest deductions for any loss limitation year
shall not exceed the excess (if any) of -
(i) the amount allowable as a deduction for interest paid
or accrued by the taxpayer during the loss limitation year,
over
(ii) the average of such amounts for the 3 taxable years
preceding the taxable year in which the corporate equity
reduction transaction occurred.
(D) De minimis rule
A taxpayer shall be treated as having no allocable interest
deductions for any taxable year if the amount of such
deductions (without regard to this subparagraph) is less than
$1,000,000.
(E) Special rule for certain unforeseeable events
If an unforeseeable extraordinary adverse event occurs during
a loss limitation year but after the corporate equity reduction
transaction -
(i) indebtedness shall be allocated in the manner described
in subparagraph (B) to unreimbursed costs paid or incurred in
connection with such event before being allocated to the
corporate equity reduction transaction, and
(ii) the amount determined under subparagraph (C)(i) shall
be reduced by the amount of interest on indebtedness
described in clause (i).
(F) Transition rule
If any of the 3 taxable years described in subparagraph
(C)(ii) end on or before August 2, 1989, the taxpayer may
substitute for the amount determined under such subparagraph an
amount equal to the interest paid or accrued (determined on an
annualized basis) during the taxpayer's taxable year which
includes August 3, 1989, on indebtedness of the taxpayer
outstanding on August 2, 1989.
(3) Corporate equity reduction transaction
(A) In general
The term ''corporate equity reduction transaction'' means -
(i) a major stock acquisition, or
(ii) an excess distribution.
(B) Major stock acquisition
(i) In general
The term ''major stock acquisition'' means the acquisition
by a corporation pursuant to a plan of such corporation (or
any group of persons acting in concert with such corporation)
of stock in another corporation representing 50 percent or
more (by vote or value) of the stock in such other
corporation.
(ii) Exception
The term ''major stock acquisition'' does not include a
qualified stock purchase (within the meaning of section 338)
to which an election under section 338 applies.
(C) Excess distribution
The term ''excess distribution'' means the excess (if any) of
-
(i) the aggregate distributions (including redemptions)
made during a taxable year by a corporation with respect to
its stock, over
(ii) the greater of -
(I) 150 percent of the average of such distributions
during the 3 taxable years immediately preceding such
taxable year, or
(II) 10 percent of the fair market value of the stock of
such corporation as of the beginning of such taxable year.
(D) Rules for applying subparagraph (B)
For purposes of subparagraph (B) -
(i) Plans to acquire stock
All plans referred to in subparagraph (B) by any
corporation (or group of persons acting in concert with such
corporation) with respect to another corporation shall be
treated as 1 plan.
(ii) Acquisitions during 24-month period
All acquisitions during any 24-month period shall be
treated as pursuant to 1 plan.
(E) Rules for applying subparagraph (C)
For purposes of subparagraph (C) -
(i) Certain preferred stock disregarded
Stock described in section 1504(a)(4), and distributions
(including redemptions) with respect to such stock, shall be
disregarded.
(ii) Issuance of stock
The amounts determined under clauses (i) and (ii)(I) of
subparagraph (C) shall be reduced by the aggregate amount of
stock issued by the corporation during the applicable period
in exchange for money or property other than stock in the
corporation.
(4) Other rules
(A) Ordering rule
For purposes of paragraph (1), in determining the allocable
interest deductions taken into account in computing the net
operating loss for any taxable year, taxable income for such
taxable year shall be treated as having been computed by taking
allocable interest deductions into account after all other
deductions.
(B) Coordination with subsection (b)(2)
For purposes of subsection (b)(2) -
(i) a corporate equity reduction interest loss shall be
treated in a manner similar to the manner in which a
specified liability loss is treated, and
(ii) in determining the net operating loss deduction for
any prior taxable year referred to in the 3rd sentence of
subsection (b)(2), the portion of any net operating loss
which may not be carried to such taxable year under
subsection (b)(1)(E) shall not be taken into account.
(C) Members of affiliated groups
Except as provided by regulations, all members of an
affiliated group filing a consolidated return under section
1501 shall be treated as 1 taxpayer for purposes of this
subsection and subsection (b)(1)(E).
(5) Regulations
The Secretary shall prescribe such regulations as may be
necessary to carry out the purposes of this subsection, including
regulations -
(A) for applying this subsection to successor corporations
and in cases where a taxpayer becomes, or ceases to be, a
member of an affiliated group filing a consolidated return
under section 1501,
(B) to prevent the avoidance of this subsection through
related parties, pass-through entities, and intermediaries, and
(C) for applying this subsection where more than 1
corporation is involved in a corporate equity reduction
transaction.
(i) Rules relating to farming losses
For purposes of this section -
(1) In general
The term ''farming loss'' means the lesser of -
(A) the amount which would be the net operating loss for the
taxable year if only income and deductions attributable to
farming businesses (as defined in section 263A(e)(4)) are taken
into account, or
(B) the amount of the net operating loss for such taxable
year.
(2) Coordination with subsection (b)(2)
For purposes of applying subsection (b)(2), a farming loss for
any taxable year shall be treated in a manner similar to the
manner in which a specified liability loss is treated.
(3) Election
Any taxpayer entitled to a 5-year carryback under subsection
(b)(1)(G) from any loss year may elect to have the carryback
period with respect to such loss year determined without regard
to subsection (b)(1)(G). Such election shall be made in such
manner as may be prescribed by the Secretary and shall be made by
the due date (including extensions of time) for filing the
taxpayer's return for the taxable year of the net operating
loss. Such election, once made for any taxable year, shall be
irrevocable for such taxable year.
(j) Election To Disregard 5-Year Carryback for Certain Net
Operating Losses.--Any taxpayer entitled to a 5-year carryback under
subsection (b)(1)(H) from any loss year may elect to have the carryback
period with respect to such loss year determined without regard to
subsection (b)(1)(H). Such election shall be made in such manner as may
be prescribed by the Secretary and shall be made by the due date
(including extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss. Such election, once made for any
taxable year, shall be irrevocable for such taxable year.
[NOTE: Applicability. 26 USC 172 note. --Effective Date.--
Except as provided in subsection (c), the the provisions of Subsec. (j)
shall apply to net operating losses for taxable years ending
after December 31, 2000.]
(k) Cross references
(1) For treatment of net operating loss carryovers in certain
corporate acquisitions, see section 381.
(2) For special limitation on net operating loss carryovers
in case of a corporate change of ownership, see section 382.
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Sec. 11324(a), 11701(d), 11704(a)(2), 11811(a)-(b)(2)(A), (3), (4),
Nov. 5, 1990, 104 Stat. 1388-465, 1388-507, 1388-518, 1388-530,
1388-532 to 1388-534; Pub. L. 103-66, title XIII, Sec. 13113(d)(1),
Aug. 10, 1993, 107 Stat. 429; Pub. L. 104-188, title I, Sec.
1702(h)(2), (16), 1704(t)(5), (30), Aug. 20, 1996, 110 Stat. 1873,
1874, 1887, 1889; Pub. L. 105-34, title X, Sec. 1082(a), (b), Aug.
5, 1997, 111 Stat. 950; Pub. L. 105-277, div. J, title II, Sec.
2013(a)-(c), title III, Sec. 3004(a), title IV, Sec. 4003(h),
4004(a), Oct. 21, 1998, 112 Stat. 2681-902, 2681-905, 2681-910.)
Miscellaneous
AMENDMENTS
2005 - P.L. 109-135
Section 403
(17) Subsection (d) of section 172 is amended by adding at
the end the following new paragraph:
``(7) Manufacturing deduction.--The deduction under section
199 shall not be allowed.''.
(f) Amendments Related to Section 1311.--
(1) Clause (i) of section 172(b)(1)(I) is amended to read as
follows:
(i) In general.--At the election of the
taxpayer for any taxable year ending after
December 31, 2005, and before January 1, 2009, in
the case of a net operating loss for a taxable
year ending after December 31, 2002, and before
January 1, 2006, there shall be a net operating
loss carryback to each of the 5 taxable years
preceding the taxable year of such loss to the
extent that such loss does not exceed 20 percent
of the sum of the electric transmission property
capital expenditures and the pollution control
facility capital expenditures of the taxpayer for
the taxable year preceding the taxable year for
which such election is made.
(2) Clause (ii) of section 172(b)(1)(I) is amended by
striking ``in a taxable year'' and inserting ``for a taxable
year''.
(3) Subparagraph (I) of section 172(b)(1) is amended by
striking clause (iv) and (v), by redesignating clause (vi) as
clause (v), and by inserting after clause (iii) the following:
(iv) Special rules relating to credit or
refund.--In the case of the portion of the loss
which is carried back 5 years by reason of clause
(i)--
(I) an application under section
6411(a) with respect to such portion
shall not fail to be treated as timely
filed if filed within 24 months after
the due date specified under such
section, and
(II) references in sections
6501(h), 6511(d)(2)(A), and 6611(f)(1)
to the taxable year in which such net
operating loss arises or results in a
net operating loss carryback shall be
treated as references to the taxable
year for which such election is made.
2005 - Energy Policy Act of 2005, PL109-058, Sec.1320; Paragraph (1)
of section 172(b)(relating to net operating loss carrybacks and
carryovers) is amended by adding at the end the following new
subparagraph:
"(I) TRANSMISSION PROPERTY AND POLLUTION CONTROL INVESTMENT...".
2004 - Pub.L. 108-311, Sec. 403(b)(1). Subparagraph (H) of
section 172(b)(1)is amended by striking ``a taxpayer which has''.
<<NOTE: 26 USC 172 note.>> In the case of a net
operating loss for a taxable year ending during 2001 or 2002--
(A) an application under section 6411(a) of the
Internal Revenue Code of 1986 with respect to such loss
shall not fail to be treated as timely filed if filed
before November 1, 2002,
(B) any election made under section 172(b)(3) of
such Code may (notwithstanding such section) be revoked
before November 1, 2002, and
(C) any election made under section 172(j) of such
Code shall (notwithstanding such section) be treated as
timely made if made before November 1, 2002.
2002 - Subsec. (b)(1)(H). Pub.L. 107-147, Sec. 102 (a), added new
subsec. (H) applicable to tax years ending in 2001 and 2002.
2002 - Subsec. (j)and (k). Pub.L. 107-147, Sec. 102 (b), amended by
redesignating sec. (j) as (k), and inserting new sec. (j) relating to
election to disregard 5-year carryback. Effective Date.--
Except as provided in subsection (c), the amendments made by this
section shall apply to net operating losses for taxable years ending
after December 31, 2000.
1998 - Subsec. (b)(1)(F)(ii). Pub. L. 105-277, Sec. 2013(c),
inserted concluding provisions.
Subsec. (b)(1)(F)(iv). Pub. L. 105-277, Sec. 4003(h), added cl.
(iv).
Subsec. (b)(1)(G). Pub. L. 105-277, Sec. 2013(a), added subpar.
(G).
Subsec. (d)(4)(C). Pub. L. 105-277, Sec. 4004(a), amended subpar.
(C) generally. Prior to amendment, subpar. (C) read as follows:
''any deduction allowable under section 165(c)(3) (relating to
casualty losses) shall not be taken into account; and''.
Subsec. (f)(1)(B). Pub. L. 105-277, Sec. 3004(a), amended subpar.
(B) generally. Prior to amendment, subpar. (B) read as follows:
''Any amount (not described in subparagraph (A)) allowable as a
deduction under this chapter with respect to a liability which
arises under a Federal or State law or out of any tort of the
taxpayer if -
''(i) in the case of a liability arising out of a Federal or
State law, the act (or failure to act) giving rise to such
liability occurs at least 3 years before the beginning of the
taxable year, or
''(ii) in the case of a liability arising out of a tort, such
liability arises out of a series of actions (or failures to act)
over an extended period of time a substantial portion of which
occurs at least 3 years before the beginning of the taxable year.
A liability shall not be taken into account under subparagraph (B)
unless the taxpayer used an accrual method of accounting throughout
the period or periods during which the acts or failures to act
giving rise to such liability occurred.''
Subsecs. (i), (j). Pub. L. 105-277, Sec. 2013(b), added subsec.
(i) and redesignated former subsec. (i) as (j).
1997 - Subsec. (b)(1)(A)(i). Pub. L. 105-34, Sec. 1082(a)(1),
substituted ''2'' for ''3''.
Subsec. (b)(1)(A)(ii). Pub. L. 105-34, Sec. 1082(a)(2),
substituted ''20'' for ''15''.
Subsec. (b)(1)(F). Pub. L. 105-34, Sec. 1082(b), added subpar.
(F).
1996 - Subsec. (b)(1)(E)(ii). Pub. L. 104-188, Sec. 1702(h)(2),
substituted ''subsection (h)'' for ''subsection (m)''.
Subsec. (h)(3)(B)(i). Pub. L. 104-188, Sec. 1704(t)(5),
substituted ''corporation.'' for ''corporation,'' at end.
Subsec. (h)(4)(B). Pub. L. 104-188, Sec. 1704(t)(30), substituted
''For purposes of subsection (b)(2) - '' for ''For purposes of
subsection (b)(2)'' in introductory provisions.
Subsec. (h)(4)(C). Pub. L. 104-188, Sec. 1702(h)(16), substituted
''(b)(1)(E)'' for ''(b)(1)(M)''.
1993 - Subsec. (d)(2). Pub. L. 103-66, Sec. 13113(d)(1)(A),
amended heading and text of par. (2) generally. Prior to
amendment, text read as follows: ''In the case of a taxpayer other
than a corporation, the amount deductible on account of losses from
sales or exchanges of capital assets shall not exceed the amount
includible on account of gains from sales or exchanges of capital
assets.''
Subsec. (d)(4)(B). Pub. L. 103-66, Sec. 13113(d)(1)(B), which
directed the insertion of '', (2)(B),'' after ''paragraph (1)'',
was executed by making the insertion after ''paragraphs (1)'' to
reflect the probable intent of Congress.
1990 - Subsec. (b). Pub. L. 101-508, Sec. 11811(a), amended
subsec. (b) generally, substituting present provisions for
provisions delineating years to which loss may be carried, relating
to amount of carrybacks and carryovers, and providing for special
rules for foreign expropriation losses.
Subsec. (b)(1)(M)(iii). Pub. L. 101-508, Sec. 11701(d), struck
out ''a C corporation'' after ''means'' in introductory provisions,
substituted ''a C corporation which acquires'' for ''which
acquires'' in subcl. (I), ''a C corporation'' for ''a corporation''
in subcl. (II), and ''any C corporation which is a successor'' for
''any successor corporation'' in subcl. (III).
Subsec. (f). Pub. L. 101-508, Sec. 11811(b)(1), (2)(A),
redesignated subsec. (j) as (f), substituted heading for one which
read: ''Rules relating to product liability losses'', and amended
text generally, substituting present provisions for provisions
defining terms ''product liability loss'' and ''product
liability'', and providing for an election with respect to
carrybacks of such losses.
Subsec. (g). Pub. L. 101-508, Sec. 11811(b)(1), redesignated
subsec. (l) as (g) and struck out former subsec. (g) which related
to carryover of net operating losses for certain regulated
transportation corporations.
Subsec. (g)(2). Pub. L. 101-508, Sec. 11811(b)(3), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: ''In
applying paragraph (2) of subsection (b), the portion of the net
operating loss for any taxable year which is attributable to the
deduction allowed under section 166(a) shall be treated in a manner
similar to the manner in which a foreign expropriation loss is
treated.''
Subsec. (h). Pub. L. 101-508, Sec. 11811(b)(1), redesignated
subsec. (m) as (h) and struck out former subsec. (h) which defined
''foreign expropriation loss''.
Subsec. (h)(3)(B)(ii). Pub. L. 101-508, Sec. 11324(a), in par.
(3)(B)(ii), formerly subsec. (m)(3)(B)(ii), substituted heading for
one which read: ''Exceptions'' and amended text generally. Prior
to amendment, text read as follows: ''The term 'major stock
acquisition' shall not include -
''(I) a qualified stock purchase (within the meaning of section
338) to which an election under section 338 applies, or
''(II) except as provided in regulations, an acquisition in
which a corporation acquires stock of another corporation which,
immediately before the acquisition, was a member of an affiliated
group (within the meaning of section 1504(a)) other than the
common parent of such group.''
Subsec. (h)(4)(B). Pub. L. 101-508, Sec. 11811(b)(4), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: ''In applying paragraph (2) of subsection (b), the
corporate equity reduction interest loss shall be treated in a
manner similar to the manner in which a foreign expropriation loss
is treated.''
Pub. L. 101-508, Sec. 11704(a)(2), substituted ''subsection
(b)(2)'' for ''subsection (B)(2)'' in heading.
Subsec. (i). Pub. L. 101-508, Sec. 11811(b)(1), redesignated
subsec. (n) as (i) and struck out former subsec. (i) which provided
for rules relating to mortgage disposition losses of the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation.
Subsec. (j). Pub. L. 101-508, Sec. 11811(b)(1), redesignated
subsec. (j) as (f).
Subsec. (k). Pub. L. 101-508, Sec. 11811(b)(1), struck out
subsec. (k) which related to definitions and special rules relating
to deferred statutory or tort liability losses.
Subsecs. (l) to (n). Pub. L. 101-508, Sec. 11811(b)(1),
redesignated subsecs. (l) to (n) as (g) to (i), respectively.
1989 - Subsec. (b)(1)(M). Pub. L. 101-239, Sec. 7211(a), added
subpar. (M).
Subsecs. (m), (n). Pub. L. 101-239, Sec. 7211(b), added subsec.
(m) and redesignated former subsec. (m) as (n).
1988 - Subsec. (b)(1)(A). Pub. L. 100-647, Sec. 1009(c)(2),
substituted ''Except as otherwise provided in this paragraph, a net
operating loss'' for ''Except as provided in subparagraphs (D),
(E), (F), (G), (H), (I), (J), (K), (L), and (M), a net operating
loss''.
Subsec. (b)(1)(B). Pub. L. 100-647, Sec. 1009(c)(3), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: ''Except as provided in subparagraphs (C), (D), and (E), a
net operating loss for any taxable year ending after December 31,
1955, shall be a net operating loss carryover to each of the 5
taxable years following the taxable year of such loss. Except as
provided in subparagraphs (C), (D), (E), (F), (G), (H), (J), (L),
and (M), a net operating loss for any taxable year ending after
December 31, 1975, shall be a net operating loss carryover to each
of the 15 taxable years following the taxable year of such loss.''
Subsec. (b)(1)(K) to (M). Pub. L. 100-647, Sec. 1009(c)(1),
redesignated subpars. (L) and (M) as (K) and (L), respectively.
Subsec. (d)(4)(B). Pub. L. 100-647, Sec. 1003(a)(1), substituted
''paragraphs (1) and (3)'' for ''paragraphs (1), (2)(B), and (3)''.
1986 - Subsec. (b)(1)(A), (B). Pub. L. 99-514, Sec. 903(b)(2)(A),
(B), inserted reference to subpars. (L) and (M).
Subsec. (b)(1)(F). Pub. L. 99-514, Sec. 903(a)(1), inserted ''and
before January 1, 1987,''.
Pub. L. 99-514, Sec. 901(d)(4)(B), substituted ''referred to in
section 582(c)(5)'' for ''to which section 585, 586, or 593
applies''.
Subsec. (b)(1)(G). Pub. L. 99-514, Sec. 903(a)(2), inserted ''and
before January 1, 1987,''.
Subsec. (b)(1)(H). Pub. L. 99-514, Sec. 903(a)(3)(A), struck out
''after December 31, 1981,'' and inserted ''after December 31,
1981, and before January 1, 1987,''.
Pub. L. 99-514, Sec. 903(a)(3)(B), which directed that subpar.
(H) be amended by striking out ''after December 31, 1984,'' and
inserting ''after December 31, 1984, and before January 1, 1987,'',
was executed by striking out ''after December 31, 1984'' and
inserting ''after December 31, 1984, and before January 1, 1987'',
to reflect the probable intent of Congress and the fact that no
comma appeared after ''1984'' and was not necessary after ''1987''.
Subsec. (b)(1)(J), (K). Pub. L. 99-514, Sec. 1303(b)(1),
redesignated subpar. (K) as (J) and struck out former subpar. (J)
which read as follows: ''In the case of an electing GSOC which has
a net operating loss for any taxable year such loss shall not be a
net operating loss carryback to any taxable year preceding the year
of such loss, but shall be a net operating loss carryover to each
of the 10 taxable years following the year of such loss.''
Subsec. (b)(1)(L), (M). Pub. L. 99-514, Sec. 903(b)(1), added
subpars. (L) and (M).
Subsec. (d)(2). Pub. L. 99-514, Sec. 301(b)(3), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: ''In the
case of a taxpayer other than a corporation -
''(A) the amount deductible on account of losses from sales or
exchanges of capital assets shall not exceed the amount
includible on account of gains from sales or exchanges of capital
assets; and
''(B) the deduction for long-term capital gains provided by
section 1202 shall not be allowed.''
Subsec. (d)(6). Pub. L. 99-514, Sec. 1899A(6), added heading.
Subsec. (d)(7). Pub. L. 99-514, Sec. 104(b)(4), struck out par.
(7), zero bracket amount, which read as follows: ''In the case of a
taxpayer other than a corporation, the zero bracket amount shall be
treated as a deduction allowed by this chapter. For purposes of
subsection (c) -
''(A) the deduction provided by the preceding sentence shall be
in lieu of any itemized deductions of the taxpayer, and
''(B) such sentence shall not apply to an individual who elects
to itemize deductions.''
Subsec. (k)(2), (4). Pub. L. 99-514, Sec. 1303(b)(2), substituted
''subsection (b)(1)(J)'' for ''subsection (b)(1)(K)''.
Subsecs. (l), (m). Pub. L. 99-514, Sec. 903(b)(2)(C), added
subsec. (l) and redesignated former subsec. (l) as (m).
1984 - Subsec. (b)(1)(A). Pub. L. 98-369, Sec. 91(d)(3)(A),
substituted ''(J), and (K)'' for ''and (J)''.
Subsec. (b)(1)(H). Pub. L. 98-369, Sec. 177(c)(1)(A), inserted
'', or a net operating loss of the Federal Home Loan Mortgage
Corporation for any taxable year beginning after December 31,
1984'' in introductory provisions.
Subsec. (b)(1)(H)(i), (ii). Pub. L. 98-369, Sec. 177(c)(1)(B),
(C), struck out ''FNMA'' before ''mortgage disposition loss''.
Subsec. (b)(1)(K). Pub. L. 98-369, Sec. 91(d)(1), added subpar.
(K).
Subsec. (b)(2)(A). Pub. L. 98-369, Sec. 722(a)(4)(A), substituted
''and (5)'' for ''and (6)''.
Subsec. (d)(4)(D). Pub. L. 98-369, Sec. 491(d)(5), struck out
''or section 405(c)'' after ''section 404''.
Subsec. (d)(6) to (8). Pub. L. 98-369, Sec. 722(a)(4)(B),
redesignated pars. (7) and (8) as (6) and (7), respectively.
Subsec. (h). Pub. L. 98-369, Sec. 91(d)(3)(B), substituted ''this
section'' for ''subsection (b)'' in introductory provisions.
Subsec. (i). Pub. L. 98-369, Sec. 177(c)(2), substituted
''Mortgage disposition loss of the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation'' for
''FNMA mortgage disposition loss'' in heading and struck out
''FNMA'' before ''mortgage disposition loss'' wherever appearing in
text.
Subsec. (j). Pub. L. 98-369, Sec. 91(d)(3)(B), substituted ''this
section'' for ''subsection (b)'' in introductory provisions.
Subsecs. (k), (l). Pub. L. 98-369, Sec. 91(d)(2), added subsec.
(k) and redesignated former subsec. (k) as (l).
1982 - Subsec. (b)(1)(A). Pub. L. 97-362, Sec. 102(c)(1),
substituted ''(H), (I), and (J)'' for ''(H), and (I)''.
Subsec. (b)(1)(B). Pub. L. 97-362, Sec. 102(c)(2), substituted
''(H), and (J)'' for ''and (I)''.
Subsec. (b)(1)(H). Pub. L. 97-362, Sec. 102(a), added subpar.
(H). Former subpar. (H) redesignated (I).
Subsec. (b)(1)(I). Pub. L. 97-362, Sec. 102(a), (c)(3),
redesignated former subpar. (H) as (I) and substituted ''subsection
(j)'' for ''subsection (i)''. Former subpar. (I) redesignated (J).
Subsec. (b)(1)(J). Pub. L. 97-362, Sec. 102(a), redesignated
former subpar. (I) as (J).
Subsec. (f). Pub. L. 97-354 struck out subsec. (f) relating to
net operating loss of electing small business corporation.
Subsec. (i). Pub. L. 97-362, Sec. 102(b), added subsec. (i).
Former subsec. (i) redesignated (j).
Subsec. (j). Pub. L. 97-362, Sec. 102(b), (c)(4), redesignated
former subsec. (i) as (j) and, in par. (3) of subsec. (j) as so
redesignated, substituted ''subsection (b)(1)(I)'' for ''subsection
(b)(1)(H)'' wherever appearing. Former subsec. (j) redesignated
(k).
Subsec. (k). Pub. L. 97-362, Sec. 102(b), redesignated former
subsec. (j) as (k).
1981 - Subsec. (b)(1)(B). Pub. L. 97-34, Sec. 207(a)(1),
substituted ''15 taxable years'' for ''7 taxable years''.
Subsec. (b)(1)(C). Pub. L. 97-34, Sec. 207(a)(2)(A), substituted
''ending after December 31, 1955, and before January 1, 1976,
shall'' for ''ending after December 31, 1955, shall'' and struck
out provision that, for any taxable year ending after Dec. 31,
1975, the preceding sentence was to be applied by substituting ''9
taxable years'' for ''7 taxable years''.
Subsec. (b)(1)(E)(i)(II). Pub. L. 97-34, Sec. 207(a)(2)(B)(i),
substituted ''15'' for ''8''.
Subsec. (b)(1)(E)(ii). Pub. L. 97-34, Sec. 207(a)(2)(B)(ii),
struck out designation subclause ''(I)'' for provisions prohibiting
a loss carryback to any taxable year which is a REIT year and
struck out provision formerly designated as subclause (II)
directing that the number of taxable years to which a loss could be
a net operating loss carryover under subparagraph (B) be increased
(to a number not greater than 8) by the number of taxable years to
which such loss could not be a net operating loss carryback by
reason of subclause (I).
Subsec. (g)(3)(C). Pub. L. 97-34, Sec. 207(a)(2)(C), struck out
subpar. (C) which provided that, in the case of a net operating
loss carryover from a loss year ending after Dec. 31, 1975,
subpars. (A) and (B) were to be applied by substituting ''8th
taxable year'' for ''6th taxable year'' and ''9th taxable year''
for ''7th taxable year''.
1980 - Subsec. (b)(1)(A). Pub. L. 96-222, Sec. 106(a)(6),
substituted '', (H), and (I)'' for ''and (H)''.
Pub. L. 96-222, Sec. 103(a)(15), amended directory language of
Pub. L. 95-600, Sec. 371(a)(2), to correct an error, and did not
involve any change in text. See 1978 Amendment note for subsec.
(b)(1)(A) below.
Subsec. (b)(1)(B). Pub. L. 96-222, Sec. 106(a)(7), substituted
''(G), and (I)'' for ''and (G)''.
Subsec. (b)(1)(E). Pub. L. 96-595 generally revised subpar. (E)
to permit a trust which was formerly a real estate investment trust
an additional year of carryforward of net operating losses for each
year it was denied a net operating loss carryback because of its
status as a real estate investment trust, and removed the
restriction that a net operating loss incurred before 1976 can be
carried forward to the 6th, 7th, or 8th year only if it qualified
as a real estate investment trust for all years from the loss year
through the carryover year.
Subsec. (b)(1)(I). Pub. L. 96-222, Sec. 106(a)(1), redesignated
former subpar. (H), added by section 601(b) of Pub. L. 95-600
relating to an electing GSOC, as (I).
1978 - Subsec. (b)(1)(A). Pub. L. 95-600, Sec. 371(a)(2), as
amended by Pub. L. 96-222, Sec. 103(a)(15), substituted ''(G), and
(H)'' for ''and (G)''.
Pub. L. 95-600, Sec. 703(p)(1)(A), struck out provisions relating
to net operating loss carryback with respect to a taxable year
ending on or after Dec. 31, 1962, for which a certification has
been issued under section 317 of the Trade Expansion Act of 1962.
Subsec. (b)(1)(B). Pub. L. 95-600, Sec. 701(d)(1), inserted
reference to subpar. (G).
Subsec. (b)(1)(H). Pub. L. 95-600, Sec. 371(a)(1), added subpar.
(H) relating to product liability losses.
Pub. L. 95-600, Sec. 601(b)(1), added subpar. (H) relating to an
electing GSOC.
Subsec. (b)(3)(A). Pub. L. 95-600, Sec. 703(p)(1)(B),
redesignated subpar. (C) as (A). Former subpar. (A), which related
to conditions for application of paragraph (1)(A)(ii), was struck
out.
Subsec. (b)(3)(B). Pub. L. 95-600, Sec. 703(p)(1)(B), (C),
redesignated subpar. (D) as (B) and substituted ''subparagraph
(A)(iii)'' for ''subparagraph (C)(iii)''. Former subpar. (B), which
related to the applicability of paragraph (1)(A)(ii) to
partnerships and electing small business corporations, was struck
out.
Subsec. (b)(3)(C). Pub. L. 95-600, Sec. 703(p)(1)(B),
redesignated subpar. (E) as (C). Former subpar. (C) redesignated
(A).
Subsec. (b)(3)(D), (E). Pub. L. 95-600, Sec. 703(p)(1)(B),
redesignated subpars. (D) and (E) as (B) and (C), respectively.
Subsecs. (i), (j). Pub. L. 95-600, Sec. 371(b), added subsec. (i)
and redesignated former subsec. (i) as (j).
1977 - Subsec. (d)(8). Pub. L. 95-30 added par. (8).
1976 - Subsec. (b)(1)(B). Pub. L. 94-455, Sec. 806(a), inserted
''Except as provided in subparagraphs (C), (D), (E), and (F), a net
operating loss for any taxable year ending after December 31, 1975,
shall be a net operating loss carryover to each of the 7 taxable
years following the taxable year of such loss'' after ''year of
such loss''.
Subsec. (b)(1)(C). Pub. L. 94-455, Sec. 806(b)(1),
1901(a)(29)(C)(ii), inserted ''For any taxable year ending after
December 31, 1975, the preceding sentence shall be applied by
substituting '9 taxable years' for '7 taxable years' '' after
''year of such loss'', substituted ''subsection (g)(1)'' for
''subsection (j)(1)'' after ''as defined in'' and ''subsection
(g)'' for ''subsection (j)'' after ''as provided in''.
Subsec. (b)(1)(D). Pub. L. 94-455, Sec. 1901(a)(29)(C)(iii),
2126, substituted ''subsection (h)'' for ''subsection (k)'' after
''as defined in'' and ''20'' for ''15'' after ''expropriation loss,
to each of the''.
Subsec. (b)(1)(E). Pub. L. 94-455, Sec. 1606(b), added subpar.
(E).
Subsec. (b)(2). Pub. L. 94-455, Sec. 1901(a)(29)(C)(iv),
substituted ''subsection (g)'' for ''subsections (i) and (j)''
after ''provided in''.
Subsec. (b)(3). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (b)(3)(A)(i), (ii). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out ''or his delegate'' in two places after ''Secretary''.
Subsec. (b)(3)(C)(i). Pub. L. 94-455, Sec. 1901(a)(29)(C)(iii),
substituted ''subsection (h)'' for ''subsection (k)'' after ''as
defined in''.
Subsec. (b)(3)(C)(ii), (iii). Pub. L. 94-455, Sec.
1906(b)(13)(A), struck out ''Or his delegate'' in two places after
''Secretary''.
Subsec. (b)(3)(E). Pub. L. 94-455, Sec. 806(c),
1901(a)(29)(A)(ii), added subpar. (E). Former subpar. (E), which
related to applicability of special rules in computing taxpayer's
net operating loss deduction, was struck out.
Subsec. (b)(3)(F). Pub. L. 94-455, Sec. 1901(a)(29)(A)(ii),
struck out subpar. (F) which defined ''class of products'' and
provided for the use of information compiled or published by
Secretary of Commerce or manufacturers as prima facie evidence of
the total number of units of such class of products manufactured
and produced in the United States in a calendar year.
Subsec. (c). Pub. L. 94-455, Sec. 1901(a)(29)(B), struck out
''(for any taxable year ending after December 31, 1953)'' after
''means''.
Subsec. (d)(5), (6). Pub. L. 94-455, Sec. 1052(c)(3), struck out
par. (5) relating to special deductions for corporations concerning
partially tax-exempt interest and Western Hemisphere corporations,
and redesignated par. (6) as (5).
Subsec. (d)(7). Pub. L. 94-455, Sec. 1606(c), added par. (7).
Subsec. (e). Pub. L. 94-455, Sec. 1901(a)(29)(D), struck out
''The preceding sentence shall apply with respect to all taxable
years, whether they begin before, on, or after January 1, 1954''
after ''applicable to such other taxable year''.
Subsec. (f). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated
subsec. (h) as (f). Former subsec. (f), relating to net operating
loss deduction for taxable years beginning in 1953 and ending in
1954, was struck out.
Subsec. (g). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated
subsec. (j) as (g). Former subsec. (g), relating to special
transitional rules to be applied to net operating loss deductions,
was struck out.
Subsec. (g)(3)(C). Pub. L. 94-455, Sec. 806(b)(2), added subpar.
(C).
Subsec. (g)(4). Pub. L. 94-455, Sec. 1901(a)(29)(E), struck out
par. (4) relating to carryover of net operating loss for certain
regulated transportation corporations for taxable years beginning
in 1955 and ending in 1956.
Subsec. (h). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated
subsec. (k) as (h). Former subsec. (h) redesignated (f).
Subsec. (i). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated
subsec. (l) as (i). Former subsec. (i), relating to carryback of
net operating loss for taxable years beginning in 1957 and ending
in 1958, was struck out.
Subsecs. (j) to (l). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i),
redesignated subsecs. (j) to (l) as (g) to (i), respectively.
1971 - Subsec. (b)(1)(D). Pub. L. 91-677, Sec. 2(a), inserted
''(or, with respect to that portion of the net operating loss for
such year attributable to a Cuban expropriation loss, to each of
the 15 taxable years following the taxable year of such loss)''
after ''the 10 taxable years following the taxable year of such
loss''.
Subsec. (b)(2). Pub. L. 91-677, Sec. 2(b), inserted provisions
relating to treatment of Cuban expropriation losses.
Subsec. (k)(3). Pub. L. 91-677, Sec. 2(c), added par. (3).
1969 - Subsec. (b)(1). Pub. L. 91-172 substituted ''(E), (F), and
(G)'', for ''and (E)'' in subpar. (A)(i) and added subpars. (F) and
(G).
1967 - Subsec. (b)(1). Pub. L. 90-225, Sec. 3(a)(1)-(3), inserted
reference to subpar. (E) in subpars. (A)(i) and (B), and added
subpar. (E).
Subsec. (b)(3)(E), (F). Pub. L. 90-225, Sec. 3(a)(4), added
subpars. (E) and (F).
1964 - Subsec. (b). Pub. L. 88-272, Sec. 210(a)(1)-(4), (b),
inserted subpar. (D) in par. (1), references to such subpar. (D) in
par. (1)(A)(i) and (1)(B), subpars. (C) and (D) in par. (3),
provided that the net operating loss deduction in par. (2)(B) be
determined without regard to that portion of a net operating loss
due to a foreign expropriation loss, if such portion may not, under
par. (1)(D), be carried back to such prior taxable year, and that
if a portion of the net operating loss is attributable to foreign
expropriation to which par. (1)(D) applied, such portion shall be
considered a separate loss for such year to be applied after the
other portion of such net operating loss.
Subsec. (j)(1), (2), Pub. L. 88-272, Sec. 234(b)(5), substituted
references to section 7701(a)(33) for references to section
1503(c)(1) or (2), wherever appearing.
Subsecs. (k), (l). Pub. L. 88-272, Sec. 210(a)(5), added subsec.
(k) and redesignated former subsec. (k) as (l).
1962 - Subsec. (b)(1). Pub. L. 87-794 designated existing
provisions as cl. (A)(i) and struck out provisions therefrom which
authorized a net operating loss for any taxable year ending after
Dec. 31, 1957, to be a net operating loss carryover to each of the
5 taxable years following the taxable year of such loss, and added
cls. (A)(ii), (B), and (C).
Subsec. (b)(2). Pub. L. 87-794 inserted reference to subsection
(j), and substituted ''shall be carried to the earliest of the
taxable years to which (by reason of paragraph (1))'' for ''shall
be carried to the earliest of the 8 taxable years to which (by
reason of subparagraphs (A) and (B) of paragraph (1))'', and ''each
of the other taxable years'' for ''each of the other 7 taxable
years''.
Subsec. (b)(3). Pub. L. 87-794 added par. (3).
Pub. L. 87-710, Sec. 1(a), authorized a carryover of a net
operating loss for any taxable year ending after Dec. 31, 1955, to
each of the 5 taxable years following the taxable year of loss, or
when such loss occurs in the case of regulated transportation
corporation, except as provided in subsec. (j), then to each of the
7 taxable years following the taxable year of loss, and struck out
provisions authorizing a net operating loss for any taxable years
ending Dec. 31, 1957, to be carried over to each of the 5 taxable
years following the taxable year of such loss, in par. (1), and
inserted reference to subsec. (j) in par. (2).
Subsec. (d)(4)(D). Pub. L. 87-792 added subpar. (D).
Subsecs. (j), (k). Pub. L. 87-710, Sec. 1(b), added subsec. (j)
and redesignated former subsec. (j) as (k).
1958 - Subsec. (b). Pub. L. 85-866, Sec. 203(a), substituted
''1957'' for ''1953'', and ''3'' for ''2'' in par. (1), and
substituted ''subsection (i)'' for ''subsection (f)'', ''8'' for
''7'', and ''7'' for ''6'' in par. (2).
Subsecs. (f)(3), (4). Pub. L. 85-866, Sec. 14(a), added pars. (3)
and (4).
Subsec. (g)(3), (4). Pub. L. 85-866, Sec. 14(b), added par. (3)
and redesignated former par. (3) as (4).
Subsecs. (h) to (j). Pub. L. 85-866, Sec. 64(b), 203(b), added
subsecs. (h) and (i) and redesignated former subsec. (h) as (j).
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-277, div. J, title II, Sec. 2013(d), Oct. 21, 1998,
112 Stat. 2681-903, provided that: ''The amendments made by this
section (amending this section) shall apply to net operating losses
for taxable years beginning after December 31, 1997.''
Pub. L. 105-277, div. J, title III, Sec. 3004(b), Oct. 21, 1998,
112 Stat. 2681-906, provided that: ''The amendment made by this
section (amending this section) shall apply to net operating losses
arising in taxable years ending after the date of the enactment of
this Act (Oct. 21, 1998).''
Amendment by section 4003(h) of Pub. L. 105-277 effective as if
included in the provision of the Taxpayer Relief Act of 1997, Pub.
L. 105-34, to which such amendment relates, see section 4003(l) of
Pub. L. 105-277, set out as a note under section 86 of this title.
Pub. L. 105-277, div. J, title IV, Sec. 4004(c)(1), Oct. 21,
1998, 112 Stat. 2681-911, provided that: ''The amendments made by
subsections (a) and (b)(3) (amending this section and section 873
of this title) shall apply to taxable years beginning after
December 31, 1983.''
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1082(c) of Pub. L. 105-34 provided that: ''The amendments
made by this section (amending this section) shall apply to net
operating losses for taxable years beginning after the date of the
enactment of this Act (Aug. 5, 1997).''
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1702(h)(2), (16) of Pub. L. 104-188
effective, except as otherwise expressly provided, as if included
in the provision of the Revenue Reconciliation Act of 1990, Pub. L.
101-508, title XI, to which such amendment relates, see section
1702(i) of Pub. L. 104-188, set out as a note under section 38 of
this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to stock issued after Aug.
10, 1993, see section 13113(e) of Pub. L. 103-66, set out as a note
under section 53 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11324(b) of Pub. L. 101-508 provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendment made by subsection (a) (amending this section) shall
apply to acquisitions after October 9, 1990.
''(2) Binding contract exception. - The amendment made by
subsection (a) shall not apply to any acquisition pursuant to a
written binding contract in effect on October 9, 1990, and at all
times thereafter before such acquisition.''
Amendment by section 11701(d) of Pub. L. 101-508 effective,
except as otherwise provided, as if included in the provision of
the Revenue Reconciliation Act of 1989, Pub. L. 101-239, title VII,
to which such amendment relates, see section 11701(n) of Pub. L.
101-508, set out as a note under section 42 of this title.
Section 11811(c) of Pub. L. 101-508 provided that: ''The
amendments made by this section (amending this section) shall apply
to net operating losses for taxable years beginning after December
31, 1990.''
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7211(c) of Pub. L. 101-239 provided that:
''(1) In general. - Except as provided in this subsection, the
amendments made by this section (amending this section) shall apply
to corporate equity reduction transactions occurring after August
2, 1989, in taxable years ending after August 2, 1989.
''(2) Exceptions. - In determining whether a corporate equity
reduction transaction has occurred after August 2, 1989, there
shall not be taken into account -
''(A) acquisitions or redemptions of stock, or distributions
with respect to stock, occurring on or before August 2, 1989,
''(B) acquisitions or redemptions of stock after August 2,
1989, pursuant to a binding written contract (or tender offer
filed with the Securities and Exchange Commission) in effect on
August 2, 1989, and at all times thereafter before such
acquisition or redemption, or
''(C) any distribution with respect to stock after August 2,
1989, which was declared on or before August 2, 1989.
Any distribution to which the preceding sentence applies shall be
taken into account under section 172(m)(3)(C)(ii)(I) of the
Internal Revenue Code of 1986 (relating to base period for
distributions).''
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 104(b)(4) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 301(b)(3) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 301(c) of
Pub. L. 99-514, set out as a note under section 62 of this title.
Amendment by section 901(d)(4)(B) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 901(e) of
Pub. L. 99-514, set out as a note under section 166 of this title.
Section 903(c) of Pub. L. 99-514 provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendments made by this section (amending this section) shall apply
to losses incurred in taxable years beginning after December 31,
1986.
''(2) Additional carryforward period for losses of thrift
institutions. - Subparagraph (M) of section 172(b)(1) of the
Internal Revenue Code of 1986 (as added by this section) shall
apply to losses incurred in taxable years beginning after December
31, 1981.''
Amendment by section 1303(b)(1), (2) of Pub. L. 99-514 effective
Oct. 22, 1986, see section 1311(f) of Pub. L. 99-514, as amended,
set out as an Effective Date; Transitional Rules note under section
141 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 91(d) of Pub. L. 98-369 applicable to losses
for taxable years beginning after Dec. 31, 1983, see section
91(g)(6) of Pub. L. 98-369, as amended, set out as a note under
section 461 of this title.
Section 177(d) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, title XVIII, Sec. 1812(d)(2), Oct. 22, 1986, 100 Stat.
2095, 2836, provided that:
''(1) In general. - The amendments made by this section (amending
this section and section 246 of this title and section 1452 of
Title 12, Banks and Banking) shall take effect on January 1, 1985.
''(2) Adjusted basis of assets. -
''(A) In general. - Except as otherwise provided in
subparagraph (B), the adjusted basis of any asset of the Federal
Home Loan Mortgage Corporation held on January 1, 1985, shall -
''(i) for purposes of determining any loss, be equal to the
lesser of the adjusted basis of such asset or the fair market
value of such asset as of such date, and
''(ii) for purposes of determining any gain, be equal to the
higher of the adjusted basis of such asset or the fair market
value of such asset as of such date.
''(B) Special rule for tangible depreciable property. - In the
case of any tangible property which -
''(i) is of a character subject to the allowance for
depreciation provided by section 167 of the Internal Revenue
Code of 1986 (formerly I.R.C. 1954), and
''(ii) is held by the Federal Home Loan Mortgage Corporation
on January 1, 1985,
the adjusted basis of such property shall be equal to the lesser
of the basis of such property or the fair market value of such
property as of such date.
''(3) Treatment of participation certificates. -
''(A) In general. - Paragraph (2) shall not apply to any right
to receive income with respect to any mortgage pool participation
certificate or other similar interest in any mortgage (not
including any mortgage).
''(B) Treatment of certain sales after march 15, 1984, and
before january 1, 1985. - If any gain is realized on the sale or
exchange of any right described in subparagraph (A) after March
15, 1984, and before January 1, 1985, the gain shall not be
recognized when realized but shall be recognized on January 1,
1985.
''(4) Clarification of earnings and profits of federal home loan
mortgage corporation. -
''(A) Treatment of distribution of preferred stock, etc. - For
purposes of the Internal Revenue Code of 1986, the distribution
of preferred stock by the Federal Home Loan Mortgage Corporation
during December of 1984, and the other distributions of such
stock by Federal Home Loan Banks during January of 1985, shall be
treated as if they were distributions of money equal to the fair
market value of the stock on the date of the distribution by the
Federal Home Loan Banks (and such stock shall be treated as if it
were purchased with the money treated as so distributed). No
deduction shall be allowed under section 243 of the Internal
Revenue Code of 1986 with respect to any dividend paid by the
Federal Home Loan Mortgage Corporation out of earnings and
profits accumulated before January 1, 1985.
''(B) Section 246(a) not to apply to distributions out of
earnings and profits accumulated during 1985. - Subsection (a) of
section 246 of the Internal Revenue Code of 1986 shall not apply
to any dividend paid by the Federal Home Loan Mortgage
Corporation during 1985 out of earnings and profits accumulated
after December 31, 1984.
''(5) Adjusted basis. - For purposes of this subsection, the
adjusted basis of any asset shall be determined under part II of
subchapter O of the Internal Revenue Code of 1986.
''(6) No carrybacks for years before 1985. - No net operating
loss, capital loss, or excess credit of the Federal Home Loan
Mortgage Corporation for any taxable year beginning after December
31, 1984, shall be allowed as a carryback to any taxable year
beginning before January 1, 1985.
''(7) No deduction allowed for interest on replacement
obligations. -
''(A) In general. - The Federal Home Loan Mortgage Corporation
shall not be allowed any deduction for interest accruing after
December 31, 1984, on any replacement obligation.
''(B) Replacement obligation defined. - For purposes of
subparagraph (A), the term 'replacement obligation' means any
obligation to any person created after March 15, 1984, which the
Secretary of the Treasury or his delegate determines replaces any
equity or debt interest of a Federal Home Loan Bank or any other
person in the Federal Home Loan Mortgage Corporation existing on
such date. The preceding sentence shall not apply to any
obligation with respect to which the Federal Home Loan Mortgage
Corporation establishes that there is no tax avoidance effect.''
Amendment by section 491(d)(5) of Pub. L. 98-369 applicable to
obligations issued after Dec. 31, 1983, see section 491(f)(1) of
Pub. L. 98-369, set out as a note under section 62 of this title.
Section 722(a)(6) of Pub. L. 98-369 provided that: ''Any
amendment made by this subsection (amending this section and
sections 57, 1256, and 5684 of this title, and provisions set out
as a note under section 338 of this title) shall take effect as if
included in the provisions of the Technical Corrections Act of 1982
(Pub. L. 97-448) to which such amendment relates.''
EFFECTIVE DATE OF 1982 AMENDMENTS
Section 102(d) of Pub. L. 97-362 provided that: ''The amendments
made by this section (amending this section) shall apply to net
operating losses for taxable years beginning after December 31,
1981.''
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to net operating losses in
taxable years ending after Dec. 31, 1975, with special effective
date for the amendment by section 207(a)(2)(B)(i) of Pub. L. 97-34,
and net operating loss for any taxable year ending on or before
Dec. 31, 1975, which could be a net operating loss carryover to a
taxable year ending in 1981 by reason of subsec. (b)(1)(E)(ii) (as
in effect before the date of enactment of Pub. L. 97-34 and as
modified by section 1(b) of Pub. L. 96-595), to be a net operating
loss carryover under this section to each of the 15 taxable years
following the taxable year of such loss, see section 209(c)(1) of
Pub. L. 97-34, set out as an Effective Date note under section 168
of this title.
EFFECTIVE DATE OF 1980 AMENDMENTS
Section 1(b) of Pub. L. 96-595, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendment made by subsection (a) (amending this section) shall
apply to the determination of the net operating loss deduction for
taxable years ending after October 4, 1976. For purposes of
applying the preceding sentence to any net operating loss for a
taxable year which is not a REIT year and which ends on or before
October 4, 1976, subclause (II) of section 172(b)(1)(E)(ii) of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954) shall be
applied by substituting ''the number of REIT years to which such
loss was a net operating loss carryback'' for ''the number of
taxable years to which such loss may not be a net operating loss
carryback by reason of subclause (I)''. In the case of a net
operating loss for a taxable year described in the preceding
sentence, subclause (II) of section 172(b)(1)(E)(ii) of such Code
shall not apply to any taxpayer which acted so as to cause it to
cease to qualify as a ''real estate investment trust'' within the
meaning of section 856 of such Code if the principal purpose for
such action was to secure the benefit of the allowance of a net
operating loss carryover under section 172(b)(1)(B) of such Code.''
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 371(d) of Pub. L. 95-600 provided that: ''The amendments
made by this section (amending this section and section 537 of this
title) shall apply with respect to taxable years beginning after
September 30, 1979.''
Section 601(d) of Pub. L. 95-600 provided that: ''The amendments
made by this section (enacting sections 1391 to 1397 and 6039B of
this title and amending this section and sections 1016 and 3402 of
this title) shall apply with respect to corporations chartered
after December 31, 1978, and before January 1, 1984.''
Section 701(d)(2) of Pub. L. 95-600 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply
to losses incurred in taxable years ending after December 31,
1975.''
Section 703(p)(4) of Pub. L. 95-600 provided that: ''The
amendments made by this subsection (amending this section and
sections 6501 and 6511 of this title) shall apply with respect to
losses sustained in taxable years ending after the date of the
enactment of this Act (Nov. 6, 1978).''
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 806(g)(1) of Pub. L. 94-455 provided that: ''The
amendments made by subsections (a), (b), (c), and (d) (amending
this section and sections 812 and 825 of this title) shall apply to
losses incurred in taxable years ending after December 31, 1975.''
Amendment by section 1052(c)(3) of Pub. L. 94-455 effective with
respect to taxable years beginning after December 31, 1979, see
section 1052(d) of Pub. L. 94-455, set out as a note under section
170 of this title.
Amendment by section 1606(b), (c) of Pub. L. 94-455 effective for
taxable years ending after Oct. 4, 1976, see section 1608(c) of
Pub. L. 94-455, set out as a note under section 857 of this title.
Amendment by section 1901(a)(29) of Pub. L. 94-455 effective for
taxable years ending after Oct. 4, 1976, see section 1901(d) of
Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT
Section 2(d) of Pub. L. 91-677 provided that: ''The amendments
made by this section (amending this section) shall apply in respect
of foreign expropriation losses sustained in taxable years ending
after December 31, 1958.''
EFFECTIVE DATE OF 1967 AMENDMENT
Section 3(b) of Pub. L. 90-225 provided that: ''No interest shall
be paid or allowed with respect to any overpayment of tax resulting
from the application of the amendments made by subsection (a)
(amending this section) for any period prior to the date of the
enactment of this Act (Dec. 27, 1967).''
Section 3(c) of Pub. L. 90-225 provided that: ''The amendments
made by subsection (a) (amending this section) shall apply with
respect to net operating losses sustained in taxable years ending
after December 31, 1966.''
EFFECTIVE DATE OF 1964 AMENDMENT
Section 210(c) of Pub. L. 88-272, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendments made by this section (amending this section) shall apply
in respect of foreign expropriation losses (as defined in section
172(k) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954),
as amended by subsection (a)(5) of this section), sustained in
taxable years ending after December 31, 1958.''
Amendment by section 234(b)(5) of Pub. L. 88-272 applicable to
taxable years beginning after Dec. 31, 1963, see section 234(c) of
Pub. L. 88-272, set out as a note under section 1503 of this title.
EFFECTIVE DATE OF 1962 AMENDMENTS
Section 317(b) of Pub. L. 87-794 provided that the amendment made
by that section is effective with respect to net operating losses
for taxable years ending after Dec. 31, 1955.
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
Section 2 of Pub. L. 87-710 provided that: ''The amendments made
by the first section of this Act (amending this section) shall
apply only with respect to net operating losses for taxable years
ending after December 31, 1955.''
EFFECTIVE DATE OF 1958 AMENDMENT
Section 203(c) of Pub. L. 85-866 provided that: ''The amendments
made by subsections (a) and (b) (amending this section) shall apply
in respect of net operating losses for taxable years ending after
December 31, 1957.''
Amendment by section 14(a), (b) of Pub. L. 85-866 applicable to
taxable years beginning after Dec. 31, 1953, and ending after Aug.
16, 1954, see section 1(c)(1) of Pub. L. 85-866, set out as a note
under section 165 of this title.
Section 64(e) of Pub. L. 85-866 provided that: ''The amendments
made by this section (enacting sections 1371 to 1377 and 6037 of
this title, amending this section and sections 1016 and 1504, and
renumbering former section 6037 as 6038 of this title) shall apply
only with respect to taxable years beginning after December 31,
1957''.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11811 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.
AMTRAK REFORM LEGISLATION
Pub. L. 105-134, title III, Sec. 301(b), Dec. 2, 1997, 111 Stat.
2585, provided that: ''This Act (see Short Title of 1997 Amendment
note set out under section 20101 of Title 49, Transportation)
constitutes Amtrak reform legislation within the meaning of section
977(f)(1) of the Taxpayer Relief Act of 1997 (Pub. L. 105-34, set
out as a note below).''
ELECTIVE CARRYBACK OF EXISTING CARRYOVERS OF NATIONAL RAILROAD
PASSENGER CORPORATION
Section 977 of Pub. L. 105-34, as amended by Pub. L. 105-178,
title IX, Sec. 9007(a), June 9, 1998, 112 Stat. 506; Pub. L.
105-206, title VI, Sec. 6009(e), July 22, 1998, 112 Stat. 812,
provided that:
''(a) Elective Carryback. -
''(1) In general. - If the National Railroad Passenger
Corporation (in this section referred to as the 'Corporation') -
''(A) makes an election under this section for its first
taxable year ending after September 30, 1997, and
''(B) agrees to the conditions specified in paragraph (2),
then the Corporation shall be treated as having made a payment of
the tax imposed by chapter 1 of the Internal Revenue Code of 1986
for such first taxable year and the succeeding taxable year in an
amount (for each such taxable year) equal to 50 percent of the
amount determined under paragraph (3). Each such payment shall be
treated as having been made by the Corporation on the last day
prescribed by law (without regard to extensions) for filing its
return of tax under chapter 1 of such Code for the taxable year
to which such payment relates.
''(2) Conditions. -
''(A) In general. - This section shall only apply to the
Corporation if it agrees (in such manner as the Secretary of
the Treasury or his delegate may prescribe) to -
''(i) except as provided in clause (ii), use any refund of
the payment described in paragraph (1) (and any interest
thereon) solely to finance qualified expenses of the
Corporation, and
''(ii) make the payments to non-Amtrak States as described
in subsection (c).
''(B) Repayment. -
''(i) In general. - The Corporation shall repay to the
United States any amount not used in accordance with this
paragraph and any amount remaining unused as of January 1,
2010.
''(ii) Special rules. - For purposes of clause (i) -
''(I) no amount shall be treated as remaining unused as of January
1, 2010, if it is obligated as of such date for a qualified
expense, and
''(II) the Corporation shall not be treated as failing to meet the
requirements of clause (i) by reason of investing any
amount for a temporary period.
''(3) Amount. - For purposes of paragraph (1) -
''(A) In general. - The amount determined under this
paragraph shall be the lesser of -
''(i) 35 percent of the Corporation's existing qualified
carryovers, or
''(ii) the Corporation's net tax liability for the
carryback period.
''(B) Dollar limit. - Such amount shall not exceed
$2,323,000,000.
''(b) Existing Qualified Carryovers; Net Tax Liability. - For
purposes of this section -
''(1) Existing qualified carryovers. - The term 'existing
qualified carryovers' means the aggregate of the amounts which
are net operating loss carryovers under section 172(b) of the
Internal Revenue Code of 1986 to the Corporation's first taxable
year ending after September 30, 1997.
''(2) Net tax liability for carryback period. -
''(A) In general. - The Corporation's net tax liability for
the carryback period is the aggregate of the net tax liability
of the Corporation's railroad predecessors for taxable years in
the carryback period.
''(B) Net tax liability. - The term 'net tax liability'
means, with respect to any taxable year, the amount of the tax
imposed by chapter 1 of the Internal Revenue Code of 1986 (or
any corresponding provision of prior law) for such taxable
year, reduced by the sum of the credits allowable against such
tax under such Code (or any corresponding provision of prior
law).
''(C) Carryback period. - The term 'carryback period' means
the period -
''(i) which begins with the first taxable year of any
railroad predecessor beginning before January 1, 1971, for
which there is a net tax liability, and
''(ii) which ends with the last taxable year of any
railroad predecessor beginning before January 1, 1971.
''(3) Railroad predecessor. -
''(A) In general. - The term 'railroad predecessor' means -
''(i) any railroad which entered into a contract under
section 401 or 404(a) of the Rail Passenger Service Act of
1970 (former sections 561 and 564(a) of Title 45, Railroads)
relieving the railroad of its entire responsibility for the
provision of intercity rail passenger service, and
''(ii) any predecessor thereof.
''(B) Consolidated returns. - If any railroad described in
subparagraph (A) was a member of an affiliated group which
filed a consolidated return for any taxable year in the
carryback period, each member of such group shall be treated as
a railroad predecessor for such year.
''(c) Payments to Non-Amtrak States. -
''(1) In general. - Within 30 days after receipt of any refund
of any payment described in subsection (a)(1), the Corporation
shall pay to each non-Amtrak State an amount equal to 1 percent
of the amount of such refund.
''(2) Use of payment. - Each non-Amtrak State shall use the
payment described in paragraph (1) (and any interest thereon)
solely to finance qualified expenses of the State.
''(3) Repayment. - A non-Amtrak State shall pay to the United
States -
''(A) any portion of the payment received by the State under
paragraph (1) (and any interest thereon) which is used for a
purpose other than to finance qualified expenses of the State
or which remains unused as of January 1, 2010, or
''(B) if such State ceases to be a non-Amtrak State, the
portion of such payment (and any interest thereon) remaining as
of the date of the cessation.
Rules similar to the rules of subsection (a)(2)(B) shall apply
for purposes of this paragraph.
''(d) Tax Consequences. -
''(1) Reduction in carryovers. - If the Corporation elects the
application of this section, the Corporation's existing qualified
carryovers shall be reduced by an amount equal to the amount
determined under subsection (a)(3) divided by 0.35.
''(2) Reduction in tax paid by railroad predecessors. -
''(A) In general. - The Secretary of the Treasury or his
delegate shall appropriately adjust the tax account of each
railroad predecessor to reduce the net tax liability of such
predecessor for taxable years beginning in the carryback period
which is offset by reason of the application of this section.
''(B) FIFO ordering rule. - The Secretary shall make the
adjustments under subparagraph (A) first for the earliest year
in the carryback period and then for each subsequent year in
such period.
''(C) No effect on other taxpayers. - In no event shall any
taxpayer other than the Corporation be allowed a refund or
credit by reason of this section.
''(D) Waiver of limitations. - If the adjustment under
subparagraph (A) is barred by the operation of any law or rule
of law, such law or rule of law shall be waived solely for
purposes of making such adjustment.
''(3) Tax treatment of expenditures. - With respect to any
payment by the Corporation of qualified expenses described in
subsection (e)(1)(A) during any taxable year from the amount of
any refund of the payment described in subsection (a)(1) -
''(A) no deduction shall be allowed to the Corporation with
respect to any amount paid or incurred which is attributable to
such amount, and
''(B) the basis of any property shall be reduced by the
portion of the cost of such property which is attributable to
such amount.
''(4) Payments to a non-amtrak state. - No deduction shall be
allowed to the Corporation under chapter 1 of the Internal
Revenue Code of 1986 for any payment to a non-Amtrak State
required under subsection (a)(2)(A)(ii).
''(e) Definitions. - For purposes of this section -
''(1) Qualified expenses. - The term 'qualified expenses' means
expenses incurred for -
''(A) in the case of the Corporation -
''(i) the acquisition of equipment, rolling stock, and
other capital improvements, the upgrading of maintenance
facilities, and the maintenance of existing equipment, in
intercity passenger rail service, and
''(ii) the payment of interest and principal on obligations
incurred for such acquisition, upgrading, and maintenance,
and
''(B) in the case of a non-Amtrak State -
''(i) the acquisition of equipment, rolling stock, and
other capital improvements, the upgrading of maintenance
facilities, and the maintenance of existing equipment, in
intercity passenger rail service,
''(ii) the acquisition of equipment, rolling stock, and
other capital improvements, the upgrading of maintenance
facilities, and the maintenance of existing equipment, in
intercity bus service,
''(iii) the purchase of intercity passenger rail services
from the Corporation,
''(iv) capital expenditures related to State-owned rail
operations in the State,
''(v) any project that is eligible to receive funding under
section 5309, 5310, or 5311 of title 49, United States Code,
''(vi) any project that is eligible to receive funding
under section 103, 130, 133, 144, 149, or 152 of title 23,
United States Code,
''(vii) the upgrading and maintenance of intercity primary
and rural air service facilities, and the purchase of
intercity air service between primary and rural airports and
regional hubs,
''(viii) the provision of passenger ferryboat service
within the State,
''(ix) the provision of harbor improvements within the
State, and
''(x) the payment of interest and principal on obligations
incurred for such acquisition, upgrading, maintenance,
purchase, expenditures, provision, and projects.
In the case of a non-Amtrak State which provides its own
intercity passenger rail service on the date of the enactment of
this paragraph (Aug. 5, 1997), subparagraph (B) shall be applied
by only taking into account clauses (i) and (iv).
''(2) Non-amtrak state. - The term 'non-Amtrak State' means any
State which is not receiving intercity passenger rail service
from the Corporation as of the date of the enactment of this Act
(Aug. 5, 1997).
''(f) Authorizing Reform Required. -
''(1) In general. - The Secretary of the Treasury shall not
make payment of any refund of any payment described in subsection
(a)(1) earlier than the date of the enactment of Federal
legislation, other than legislation included in this section,
which is enacted after July 29, 1997, and which authorizes
reforms of the National Railroad Passenger Corporation.
''(2) No interest. - Notwithstanding any other provision of
law, if the payment of any refund is delayed by reason of
paragraph (1), no interest shall accrue with respect to such
payment prior to the 45th day following the date of the enactment
of Federal legislation described in paragraph (1).
''(3) Estimate of revenue. - For purposes of estimating
revenues under budget reconciliation, the impact of this section
on Federal revenues shall be determined without regard to this
subsection.''
(Pub. L. 105-178, title IX, Sec. 9007(b), June 9, 1998, 112 Stat.
506, provided that: ''The amendments made by this section (amending
section 977 of Pub. L. 105-34, set out above) shall take effect as
if included in the enactment of section 977 of the Taxpayer Relief
Act of 1997 (Pub. L. 105-34).'')
DEDUCTION FOR SPECIAL ASSESSMENTS
Subsec. (f) of this section not applicable to deduction for
special assessments, see section 2711(2) of Pub. L. 104-208, set
out as a note under section 162 of this title.
CARRYBACK OF DEFERRED STATUTORY OR TORT LIABILITY LOSS TO TAXABLE
YEAR BEGINNING BEFORE JANUARY 1, 1984
Section 11811(b)(2)(B) of Pub. L. 101-508 provided that: ''The
portion of any loss which is attributable to a deferred statutory
or tort liability loss (as defined in section 172(k) of the
Internal Revenue Code of 1986 as in effect on the day before the
date of the enactment of this Act (Nov. 5, 1990)) may not be
carried back to any taxable year beginning before January 1, 1984,
by reason of the amendment made by subparagraph (A) (amending this
section).''
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.
REFUND OR CREDIT OF OVERPAYMENT; LIMITATIONS; INTEREST
Section 14 of Pub. L. 85-866 provided that if any refund or
credit of any overpayment resulting from application of subsecs.
(a) and (b) of Pub. L. 85-866, amending former subsecs. (f)(3), (4)
and (g)(3), (4), was prevented on Sept. 2, 1958 or 6 months
thereafter, by operation of any law or rule of law, refund was to
be allowed if a claim was filed within six months of the date of
such date but such refund was to be without interest.
INTEREST ATTRIBUTABLE TO NET OPERATING LOSS CARRYBACK FOR CERTAIN
TAXABLE YEARS ENDING IN 1954
For payment of interest attributable to net operating loss
carryback, see section 83(e) of Pub. L. 85-866, set out as a note
under section 6601 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 56, 72, 163, 170, 186,
246, 381, 382, 384, 447, 481, 512, 527, 528, 535, 537, 545, 556,
584, 613A, 642, 703, 773, 805, 831, 834, 844, 852, 857, 860E, 860J,
904, 907, 1022, 1212, 1242, 1244, 1247, 1314, 1341, 1351, 1375,
1398, 1402, 1503, 6164, 6411, 6655, 7518 of this title; title 42
section 411; title 46 App. section 1177.
