26 U.S.C. § 172 — Net operating loss deduction

Page 876 TITLE 26—INTERNAL REVENUE CODE § 172 Treasury or his delegate) to have such election apply with respect to such obligations.’’ Pub. L. 99–514, title XVIII, § 1803(a)(12)(B), Oct. 22, 1986, 100 Stat. 2796, provided that: ‘‘The amendment made by subparagraph (A) [amending this section] shall apply to exchanges after May 6, 1986.’’ EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1901(b)(1)(E)(iii)–(v) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. Amendment by section 1951(b)(5)(A)(i) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1951(d) of Pub. L. 94–455, set out as a note under section 72 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Pub. L. 85–866, title I, § 13(b), Sept. 2, 1958, 72 Stat. 1611, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall apply with re- spect to taxable years ending after December 31, 1957.’’ SAVINGS PROVISION Pub. L. 94–455, title XIX, § 1951(b)(5)(B), Oct. 4, 1976, 90 Stat. 1838, provided that: ‘‘Notwithstanding the amend- ments made by subparagraph (A) [amending this sec- tion], in the case of a bond the interest on which is not excludable from gross income— ‘‘(i) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and ‘‘(ii) which was acquired by the taxpayer after Jan- uary 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under sec- tion 171(b)(1)(B)(i) but shall be determined with ref- erence to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be deter- mined in accordance with the provisions of section 171(b)(2).’’ 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 [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 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. § 172. Net operating loss deduction (a) Deduction allowed There shall be allowed as a deduction for the taxable year an amount equal to— (1) in the case of a taxable year beginning before January 1, 2021, the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and (2) in the case of a taxable year beginning after December 31, 2020, the sum of— (A) the aggregate amount of net operating losses arising in taxable years beginning be- fore January 1, 2018, carried to such taxable year, plus (B) the lesser of— (i) the aggregate amount of net oper- ating losses arising in taxable years begin- ning after December 31, 2017, carried to such taxable year, or (ii) 80 percent of the excess (if any) of— (I) taxable income computed without regard to the deductions under this sec- tion and sections 199A and 250, over (II) the amount determined under sub- paragraph (A). For purposes of this subtitle, the term ‘‘net op- erating loss deduction’’ means the deduction al- lowed by this subsection. (b) Net operating loss carrybacks and carryovers (1) Years to which loss may be carried (A) General rule A net operating loss for any taxable year— (i) shall be a net operating loss carryback to the extent provided in sub- paragraphs (B), (C)(i), and (D), and (ii) except as provided in subparagraph (C)(ii), shall be a net operating loss carry- over— (I) in the case of a net operating loss arising in a taxable year beginning be- fore January 1, 2018, to each of the 20 taxable years following the taxable year of the loss, and (II) in the case of a net operating loss arising in a taxable year beginning after December 31, 2017, to each taxable year following the taxable year of the loss. (B) Farming losses (i) In general In the case of any portion of a net oper- ating loss for the taxable year which is a farming loss with respect to the taxpayer, such loss shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss. (ii) Farming loss For purposes of this section, the term ‘‘farming loss’’ means the lesser of— (I) 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 sec- tion 263A(e)(4)) are taken into account, or (II) the amount of the net operating loss for such taxable year. (iii) Coordination with paragraph (2) For purposes of applying paragraph (2), a farming 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 op- erating loss for such taxable year. (iv) Election Any taxpayer entitled to a 2-year carryback under clause (i) from any loss year may elect not to have such clause apply to such loss year. Such election shall be made in such manner as prescribed by the Secretary and shall be made by the due date (including extensions of time) for fil- ing the taxpayer’s return for the taxable year of the net operating loss. Such elec- tion, once made for any taxable year, shall be irrevocable for such taxable year. (C) Insurance companies In the case of an insurance company (as defined in section 816(a)) other than a life in- Page 877 TITLE 26—INTERNAL REVENUE CODE § 172 surance company, the 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 carry- over to each of the 20 taxable years fol- lowing the taxable year of the loss. (D) Special rule for losses arising in 2018, 2019, and 2020 (i) In general In the case of any net operating loss arising in a taxable year beginning after December 31, 2017, and before January 1, 2021— (I) such loss shall be a net operating loss carryback to each of the 5 taxable years preceding the taxable year of such loss, and (II) subparagraphs (B) and (C)(i) shall not apply. (ii) Special rules for REITs For purposes of this subparagraph— (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 to any preceding 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 tax- payer. (iii) Special rule for life insurance compa- nies In the case of a life insurance company, if a net operating loss is carried pursuant to clause (i)(I) to a life insurance company taxable year beginning before January 1, 2018, such net operating loss carryback shall be treated in the same manner as an operations loss carryback (within the meaning of section 810 as in effect before its repeal) of such company to such tax- able year. (iv) Rule relating to carrybacks to years to which section 965 applies If a net operating loss of a taxpayer is carried pursuant to clause (i)(I) to any tax- able year in which an amount is includible in gross income by reason of section 965(a), the taxpayer shall be treated as having made the election under section 965(n) with respect to each such taxable year. (v) Special rules for elections under para- graph (3) (I) Special election to exclude section 965 years If the 5-year carryback period under clause (i)(I) with respect to any net oper- ating loss of a taxpayer includes 1 or more taxable years in which an amount is includible in gross income by reason of section 965(a), the taxpayer may, in lieu of the election otherwise available under paragraph (3), elect under such para- graph to exclude all such taxable years from such carryback period. (II) Time of elections An election under paragraph (3) (in- cluding an election described in sub- clause (I)) with respect to a net oper- ating loss arising in a taxable year be- ginning in 2018 or 2019 shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the first taxable year ending after the date of the enactment of this subpara- graph. (2) Amount of carrybacks and carryovers The entire amount of the net operating loss for any taxable year (hereinafter in this sec- tion 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 in- come 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— (A) be computed with the modifications specified in subsection (d) other than para- graphs (1), (4), and (5) thereof, and by deter- mining the amount of the net operating loss deduction without regard to the net oper- ating loss for the loss year or for any taxable year thereafter, (B) not be considered to be less than zero, and (C) for taxable years beginning after De- cember 31, 2020, be reduced by 20 percent of the excess (if any) described in subsection (a)(2)(B)(ii) for such taxable year. (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 elec- tion, 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 op- erating loss’’ means the excess of the deductions Page 878 TITLE 26—INTERNAL REVENUE CODE § 172 allowed by this chapter over the gross income. Such excess shall be computed with the modi- fications 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 al- lowed. (2) Capital gains and losses of taxpayers other than corporations In the case of a taxpayer other than a cor- poration— (A) the amount deductible on account of losses from sales or exchanges of capital as- sets 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 de- duction 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 cor- poration, the deductions allowable by this chapter which are not attributable to a tax- payer’s trade or business shall be allowed only to the extent of the amount of the gross in- come 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 busi- ness, of a character which is subject to the allowance for depreciation provided in sec- tion 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 para- graphs (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 contribu- tions which are made on behalf of an indi- vidual who is an employee within the mean- ing 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 re- ceived The deductions allowed by sections 243 (re- lating to dividends received by corporations) and 245 (relating to dividends received from certain foreign corporations) shall be com- puted without regard to section 246(b) (relat- ing to limitation on aggregate amount of de- ductions). (6) Modifications related to real estate invest- ment 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 ac- count the adjustments described in section 857(b)(2) (other than the deduction for divi- dends paid described in section 857(b)(2)(B)); (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 in- vestment trust taxable income’’ (as defined in section 857(b)(2)); and (C) subsection (a)(2)(B)(ii)(I) shall be ap- plied by substituting ‘‘real estate invest- ment trust taxable income (as defined in sec- tion 857(b)(2) but without regard to the de- duction for dividends paid (as defined in sec- tion 561))’’ for ‘‘taxable income’’. [(7) Repealed. Pub. L. 115–97, title I, § 13305(b)(3), Dec. 22, 2017, 131 Stat. 2126] (8) Qualified business income deduction Any deduction under section 199A shall not be allowed. (9) Deduction for foreign-derived intangible in- come The deduction under section 250 shall not be allowed. (e) Law applicable to computations In determining the amount of any net oper- ating 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) Special rule for insurance companies In the case of an insurance company (as de- fined in section 816(a)) other than a life insur- ance company— (1) the amount of the deduction allowed under subsection (a) shall be the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and (2) subparagraph (C) of subsection (b)(2) shall not apply. (g) 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 owner- ship, see section 382. (Aug. 16, 1954, ch. 736, 68A Stat. 63; Pub. L. 85–866, title I, §§ 14(a), (b), 64(b), title II, § 203(a), (b), Sept. 2, 1958, 72 Stat. 1611, 1656, 1678; Pub. L. 87–710, § 1, Sept. 27, 1962, 76 Stat. 648; Pub. L. 87–792, § 7(f), Oct. 10, 1962, 76 Stat. 829; Pub. L. 87–794, title III, § 317(b), Oct. 11, 1962, 76 Stat. 889; Pub. L. 88–272, title II, §§ 210(a), (b), 234(b)(5), Feb. 26, 1964, 78 Stat. 47, 48, 115; Pub. L. 90–225, § 3(a), Dec. 27, 1967, 81 Stat. 732; Pub. L. 91–172, title IV, § 431(b), Dec. 30, 1969, 83 Stat. 619; Pub. L. 91–677, § 2(a)–(c), Jan. 12, 1971, 84 Stat. 2061; Pub. L. 94–455, title VIII, § 806(a)–(c), title X, § 1052(c)(3), title XVI, § 1606(b), (c), title XIX, Page 879 TITLE 26—INTERNAL REVENUE CODE § 172 §§ 1901(a)(29), 1906(b)(13)(A), title XXI, § 2126, Oct. 4, 1976, 90 Stat. 1598, 1648, 1755, 1756, 1769, 1834, 1920; Pub. L. 95–30, title I, § 102(b)(2), May 23, 1977, 91 Stat. 137; Pub. L. 95–600, title III, § 371(a), (b), title VI, § 601(b)(1), title VII, §§ 701(d)(1), 703(p)(1), Nov. 6, 1978, 92 Stat. 2859, 2896, 2900, 2943; Pub. L. 96–222, title I, §§ 103(a)(15), 106(a)(1), (6), (7), Apr. 1, 1980, 94 Stat. 214, 221; Pub. L. 96–595, § 1(a), Dec. 24, 1980, 94 Stat. 3464; Pub. L. 97–34, title II, § 207(a), Aug. 13, 1981, 95 Stat. 225; Pub. L. 97–354, § 5(a)(22), Oct. 19, 1982, 96 Stat. 1694; Pub. L. 97–362, title I, § 102(a)–(c), Oct. 25, 1982, 96 Stat. 1727, 1728; Pub. L. 98–369, div. A, title I, §§ 91(d), 177(c), title IV, § 491(d)(5), title VII, § 722(a)(4), July 18, 1984, 98 Stat. 606, 710, 849, 973; Pub. L. 99–514, title I, § 104(b)(4), title III, § 301(b)(3), title IX, §§ 901(d)(4)(B), 903(a), (b), title XIII, § 1303(b)(1), (2), title XVIII, § 1899A(6), Oct. 22, 1986, 100 Stat. 2105, 2217, 2380, 2383, 2658, 2958; Pub. L. 100–647, title I, §§ 1003(a)(1), 1009(c), Nov. 10, 1988, 102 Stat. 3382, 3449; Pub. L. 101–239, title VII, § 7211(a), (b), Dec. 19, 1989, 103 Stat. 2342, 2343; Pub. L. 101–508, title XI, §§ 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, § 13113(d)(1), Aug. 10, 1993, 107 Stat. 429; Pub. L. 104–188, title I, §§ 1702(h)(2), (16), 1704(t)(5), (30), Aug. 20, 1996, 110 Stat. 1873, 1874, 1887, 1889; Pub. L. 105–34, title X, § 1082(a), (b), Aug. 5, 1997, 111 Stat. 950; Pub. L. 105–277, div. J, title II, § 2013(a)–(c), title III, § 3004(a), title IV, §§ 4003(h), 4004(a), Oct. 21, 1998, 112 Stat. 2681–902, 2681–905, 2681–910; Pub. L. 107–147, title I, § 102(a), (b), title IV, § 417(8), Mar. 9, 2002, 116 Stat. 25, 56; Pub. L. 108–311, title IV, § 403(b)(1), Oct. 4, 2004, 118 Stat. 1187; Pub. L. 109–58, title XIII, § 1311, Aug. 8, 2005, 119 Stat. 1009; Pub. L. 109–135, title IV, §§ 402(f), 403(a)(17), Dec. 21, 2005, 119 Stat. 2611, 2619; Pub. L. 110–343, div. C, title VII, §§ 706(a)(2)(D)(v), (vi), 708(a), (b), (d), Oct. 3, 2008, 122 Stat. 3922, 3924, 3925; Pub. L. 111–5, div. B, title I, § 1211(a), (b), Feb. 17, 2009, 123 Stat. 335, 336; Pub. L. 111–92, § 13(a), Nov. 6, 2009, 123 Stat. 2992; Pub. L. 113–295, div. A, title II, §§ 211(c)(1)(B), 221(a)(30)(A), (B), (41)(B), Dec. 19, 2014, 128 Stat. 4033, 4041, 4044; Pub. L. 115–97, title I, §§ 11011(d)(1), 13302(a)–(c)(2)(A), (d), 13305(b)(3), 14202(b)(1), Dec. 22, 2017, 131 Stat. 2071, 2121–2123, 2126, 2216; Pub. L. 115–141, div. T, § 101(a)(2)(B), div. U, title IV, § 401(a)(53), Mar. 23, 2018, 132 Stat. 1155, 1186; Pub. L. 116–136, div. A, title II, § 2303(a)(1)–(2)(B), (b), (c)(2), Mar. 27, 2020, 134 Stat. 352, 353, 355.) Editorial Notes REFERENCES IN TEXT The date of the enactment of this subparagraph, re- ferred to in subsec. (b)(1)(D)(v)(II), is the date of enact- ment of Pub. L. 116–136, which was approved Mar. 27, 2020. AMENDMENTS 2020—Subsec. (a). Pub. L. 116–136, § 2303(a)(1), sub- stituted ‘‘an amount equal to—’’ and pars. (1) and (2) for ‘‘an amount equal to the lesser of— ‘‘(1) the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, or ‘‘(2) 80 percent of taxable income computed without regard to the deduction allowable under this sec- tion.’’ Subsec. (b)(1)(A). Pub. L. 116–136, § 2303(c)(2), amended subpar. (A) generally. Prior to amendment, text read as follows: ‘‘Except as otherwise provided in this para- graph, a net operating loss for any taxable year— ‘‘(i) except as otherwise provided in this paragraph, shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss, and ‘‘(ii) shall be a net operating loss carryover to each taxable year following the taxable year of the loss.’’ Subsec. (b)(1)(A)(i). Pub. L. 116–136, § 2303(b)(2), sub- stituted ‘‘, (C)(i), and (D)’’ for ‘‘and (C)(i)’’. Subsec. (b)(1)(D). Pub. L. 116–136, § 2303(b)(1), added subpar. (D). Subsec. (b)(2)(C). Pub. L. 116–136, § 2303(a)(2)(A), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: ‘‘not exceed the amount de- termined under subsection (a)(2) for such prior taxable year.’’ Subsec. (d)(6)(C). Pub. L. 116–136, § 2303(a)(2)(B), sub- stituted ‘‘subsection (a)(2)(B)(ii)(I)’’ for ‘‘subsection (a)(2)’’. 2018—Subsec. (d)(5). Pub. L. 115–141, § 401(a)(53), sub- stituted ‘‘sections 243’’ for ‘‘section 243’’. Subsec. (d)(8). Pub. L. 115–141, § 101(a)(2)(B), sub- stituted ‘‘Any deduction’’ for ‘‘The deduction’’. 2017—Subsec. (a). Pub. L. 115–97, § 13302(a)(1), amended subsec. (a) generally. Prior to amendment, text read as follows: ‘‘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 sub- section.’’ Subsec. (b)(1)(A)(i). Pub. L. 115–97, § 13302(b)(1)(A), sub- stituted ‘‘except as otherwise provided in this para- graph, shall not be a net operating loss carryback to any taxable year’’ for ‘‘shall be a net operating loss carryback to each of the 2 taxable years’’. Subsec. (b)(1)(A)(ii). Pub. L. 115–97, § 13302(b)(1)(B), substituted ‘‘to each taxable year’’ for ‘‘to each of the 20 taxable years’’. Subsec. (b)(1)(B). Pub. L. 115–97, § 13302(b)(2), (c)(1), added subpar. (B) and struck out former subpar. (B). Prior to amendment, text read as follows: ‘‘(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.’’ Subsec. (b)(1)(C). Pub. L. 115–97, § 13302(b)(2), (d)(1), added subpar. (C) and struck out former subpar. (C). Prior to amendment, text read as follows: ‘‘In the case of a taxpayer which has a specified liability loss (as de- fined 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.’’ Subsec. (b)(1)(D) to (F). Pub. L. 115–97, § 13302(b)(2), struck out subpars. (D) to (F) which related to cor- porate equity reduction interest loss, retention of 3- year carryback in certain cases, and farming losses, re- spectively. Subsec. (b)(2). Pub. L. 115–97, § 13302(a)(2), substituted ‘‘shall—’’ and subpars. (A) to (C) for ‘‘shall be com- puted— ‘‘(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 oper- ating loss deduction without regard to the net oper- ating loss for the loss year or for any taxable year thereafter, and the taxable income so computed shall not be con- sidered to be less than zero.’’ Page 880 TITLE 26—INTERNAL REVENUE CODE § 172 Subsec. (d)(6)(C). Pub. L. 115–97, § 13302(a)(3), added subpar. (C). Subsec. (d)(7). Pub. L. 115–97, § 13305(b)(3), struck out par. (7). Text read as follows: ‘‘The deduction under sec- tion 199 shall not be allowed.’’ Subsec. (d)(8). Pub. L. 115–97, § 11011(d)(1), added par. (8). Subsec. (d)(9). Pub. L. 115–97, § 14202(b)(1), added par. (9). Subsecs. (f), (g). Pub. L. 115–97, § 13302(d)(2), added sub- sec. (f) and redesignated former subsec. (f) as (g). Pub. L. 115–97, § 13302(c)(2)(A), redesignated subsec. (i) as (f) and struck out former subsecs. (f) and (g) which related to rules relating to specified liability loss and corporate equity reduction interest losses, respec- tively. Subsecs. (h), (i). Pub. L. 115–97, § 13302(c)(2)(A), struck out subsec. (h) relating to farming loss rules and redes- ignated subsec. (i) as (f). 2014—Subsec. (b)(1)(D). Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (E) as (D) and struck out former subpar. (D). Prior to amendment, text of subpar. (D) read as follows: ‘‘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.’’ Subsec. (b)(1)(D)(i)(II). Pub. L. 113–295, § 221(a)(30)(B)(i), struck out ‘‘ending after August 2, 1989’’ after ‘‘loss limitation year’’. Subsec. (b)(1)(D)(ii). Pub. L. 113–295, § 221(a)(30)(B)(ii), substituted ‘‘subsection (g)’’ for ‘‘subsection (h)’’. Subsec. (b)(1)(E). Pub. L. 113–295, § 221(a)(30)(A)(i), re- designated subpar. (F) as (E). Former subpar. (E) redes- ignated (D). Subsec. (b)(1)(E)(ii). Pub. L. 113–295, § 221(a)(30)(B)(iv), substituted ‘‘subsection (h)).’’ for ‘‘subsection (i)) or qualified disaster loss (as defined in subsection (j)).’’ in concluding provisions. Subsec. (b)(1)(E)(ii)(II). Pub. L. 113–295, § 221(a)(30)(B)(iii), substituted ‘‘section 165(i)(5)’’ for ‘‘section 165(h)(3)(C)(i)’’. Subsec. (b)(1)(F). Pub. L. 113–295, § 221(a)(30)(B)(v), substituted ‘‘subsection (h)’’ for ‘‘subsection (i)’’. Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (G) as (F). Former subpar. (F) redesignated (E). Subsec. (b)(1)(F)(ii)(II). Pub. L. 113–295, § 211(c)(1)(B), substituted ‘‘section 165(h)(3)(C)(i)’’ for ‘‘subsection (h)(3)(C)(i)’’. Subsec. (b)(1)(G) to (J). Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (G) as (F) and struck out subpars. (H) to (J) which related to carryback for 2008 or 2009 net operating losses, trans- mission property and pollution control investment, and certain losses attributable to federally declared disas- ters, respectively. Subsec. (d)(5). Pub. L. 113–295, § 221(a)(41)(B), amended par. (5) generally. Prior to amendment, text read as fol- lows: ‘‘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 with- out regard to section 246(b) (relating to limitation on aggregate amount of deductions); and the deduction al- lowed by section 247 (relating to dividends paid on cer- tain preferred stock of public utilities) shall be com- puted without regard to subsection (a)(1)(B) of such sec- tion.’’ Subsec. (g). Pub. L. 113–295, § 221(a)(30)(A)(ii), redesig- nated subsec. (h) as (g) and struck out former subsec. (g) which related to rules relating to bad debt losses of commercial banks. Subsec. (g)(2)(F). Pub. L. 113–295, § 221(a)(30)(B)(vi), struck out subpar. (F). Text read as follows: ‘‘If any of the 3 taxable years described in subparagraph (C)(ii) end on or before August 2, 1989, the taxpayer may sub- stitute for the amount determined under such subpara- graph an amount equal to the interest paid or accrued (determined on an annualized basis) during the tax- payer’s taxable year which includes August 3, 1989, on indebtedness of the taxpayer outstanding on August 2, 1989.’’ Subsec. (g)(4)(B)(ii), (C). Pub. L. 113–295, § 221(a)(30)(B)(vii), substituted ‘‘subsection (b)(1)(D)’’ for ‘‘subsection (b)(1)(E)’’. Subsec. (h). Pub. L. 113–295, § 221(a)(30)(A)(ii), redesig- nated subsec. (i) as (h). Former subsec. (h) redesignated (g). Subsec. (h)(1). Pub. L. 113–295, § 221(a)(30)(B)(viii), struck out concluding provisions which read as follows: ‘‘Such term shall not include any qualified disaster loss (as defined in subsection (j)).’’ Subsec. (h)(3). Pub. L. 113–295, § 221(a)(30)(B)(ix), sub- stituted ‘‘subsection (b)(1)(F)’’ for ‘‘subsection (b)(1)(G)’’ in two places. Subsecs. (i) to (k). Pub. L. 113–295, § 221(a)(30)(A)(ii), redesignated subsecs. (i) and (k) as (h) and (i), respec- tively, and struck out subsec. (j) which related to rules relating to qualified disaster losses. 2009—Subsec. (b)(1)(H). Pub. L. 111–92 amended sub- par. (H) generally. Prior to amendment, subpar. (H) provided for carryback for 2008 net operating losses of small businesses. Pub. L. 111–5, § 1211(a), amended subpar. (H) generally. Prior to amendment, subpar. (H) read as follows: ‘‘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.’’ Subsecs. (k), (l). Pub. L. 111–5, § 1211(b), redesignated subsec. (l) as (k) and struck out former subsec. (k). Prior to amendment, text read as follows: ‘‘Any tax- payer 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 deter- mined without regard to subsection (b)(1)(H). Such election shall be made in such manner as may be pre- scribed by the Secretary and shall be made by the due date (including extensions of time) for filing the tax- payer’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.’’ 2008—Subsec. (b)(1)(F)(ii). Pub. L. 110–343, § 708(d)(1), inserted ‘‘or qualified disaster loss (as defined in sub- section (j))’’ before period at end of concluding provi- sions. Subsec. (b)(1)(F)(ii)(II). Pub. L. 110–343, § 706(a)(2)(D)(v), substituted ‘‘federally declared disas- ters (as defined by subsection (h)(3)(C)(i))’’ for ‘‘Presi- dentially declared disasters (as defined in section 1033(h)(3))’’. Subsec. (b)(1)(F)(ii)(III). Pub. L. 110–343, § 706(a)(2)(D)(vi), substituted ‘‘federally declared disas- ters’’ for ‘‘Presidentially declared disasters’’. Subsec. (b)(1)(J). Pub. L. 110–343, § 708(a), added sub- par. (J). Subsec. (i)(1). Pub. L. 110–343, § 708(d)(2), inserted con- cluding provisions. Subsecs. (j) to (l). Pub. L. 110–343, § 708(b), added sub- sec. (j) and redesignated former subsecs. (j) and (k) as (k) and (l), respectively. 2005—Subsec. (b)(1)(I). Pub. L. 109–58 added subpar. (I). Subsec. (b)(1)(I)(i). Pub. L. 109–135, § 402(f)(1), reen- acted heading without change and amended text gen- erally. Prior to amendment, text read as follows: ‘‘At the election of the taxpayer in any taxable year ending after December 31, 2005, and before January 1, 2009, in the case of a net operating loss in 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 years preceding the taxable year of such loss to the extent that such loss does not exceed 20 percent of the sum of electric transmission property capital ex- penditures and pollution control facility capital ex- penditures of the taxpayer for the taxable year pre- Page 881 TITLE 26—INTERNAL REVENUE CODE § 172 ceding the taxable year in which such election is made.’’ Subsec. (b)(1)(I)(ii)(I). Pub. L. 109–135, § 402(f)(2), sub- stituted ‘‘for a taxable year’’ for ‘‘in a taxable year’’. Subsec. (b)(1)(I)(iv) to (vi). Pub. L. 109–135, § 402(f)(3), added cl. (iv), redesignated cl. (vi) as (v), and struck out former cls. (iv) and (v) which read as follows: ‘‘(iv) APPLICATION FOR ADJUSTMENT.—In the case of any portion of a net operating loss to which an election under clause (i) applies, an application under section 6411(a) with respect to such loss shall not fail to be treated as timely filed if filed within 24 months after the due date specified under such section. ‘‘(v) SPECIAL RULES RELATING TO REFUND.—For pur- poses of a net operating loss to which an election under clause (i) applies, 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 result in a net loss carryback shall be treated as references to the taxable year in which such election occurs.’’ Subsec. (d)(7). Pub. L. 109–135, § 403(a)(17), added par. (7). 2004—Subsec. (b)(1)(H). Pub. L. 108–311 struck out ‘‘a taxpayer which has’’ after ‘‘In the case of’’. 2002—Subsec. (b)(1)(F)(i). Pub. L. 107–147, § 417(8), sub- stituted ‘‘3 taxable years’’ for ‘‘3 years’’ and ‘‘2 taxable years’’ for ‘2 years’’. Subsec. (b)(1)(H). Pub. L. 107–147, § 102(a), added sub- par. (H). Subsecs. (j), (k). Pub. L. 107–147, § 102(b), added subsec. (j) and redesignated former subsec. (j) as (k). 1998—Subsec. (b)(1)(F)(ii). Pub. L. 105–277, § 2013(c), in- serted concluding provisions. Subsec. (b)(1)(F)(iv). Pub. L. 105–277, § 4003(h), added cl. (iv). Subsec. (b)(1)(G). Pub. L. 105–277, § 2013(a), added sub- par. (G). Subsec. (d)(4)(C). Pub. L. 105–277, § 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, § 3004(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘Any amount (not described in sub- paragraph (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 Fed- eral 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 fail- ures to act) over an extended period of time a sub- stantial portion of which occurs at least 3 years be- fore the beginning of the taxable year. A liability shall not be taken into account under sub- paragraph (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, § 2013(b), added sub- sec. (i) and redesignated former subsec. (i) as (j). 1997—Subsec. (b)(1)(A)(i). Pub. L. 105–34, § 1082(a)(1), substituted ‘‘2’’ for ‘‘3’’. Subsec. (b)(1)(A)(ii). Pub. L. 105–34, § 1082(a)(2), sub- stituted ‘‘20’’ for ‘‘15’’. Subsec. (b)(1)(F). Pub. L. 105–34, § 1082(b), added sub- par. (F). 1996—Subsec. (b)(1)(E)(ii). Pub. L. 104–188, § 1702(h)(2), substituted ‘‘subsection (h)’’ for ‘‘subsection (m)’’. Subsec. (h)(3)(B)(i). Pub. L. 104–188, § 1704(t)(5), sub- stituted ‘‘corporation.’’ for ‘‘corporation,’’ at end. Subsec. (h)(4)(B). Pub. L. 104–188, § 1704(t)(30), sub- stituted ‘‘For purposes of subsection (b)(2)—’’ for ‘‘For purposes of subsection (b)(2)’’ in introductory provi- sions. Subsec. (h)(4)(C). Pub. L. 104–188, § 1702(h)(16), sub- stituted ‘‘(b)(1)(E)’’ for ‘‘(b)(1)(M)’’. 1993—Subsec. (d)(2). Pub. L. 103–66, § 13113(d)(1)(A), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: ‘‘In the case of a tax- payer 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 ac- count of gains from sales or exchanges of capital as- sets.’’ Subsec. (d)(4)(B). Pub. L. 103–66, § 13113(d)(1)(B), which directed the insertion of ‘‘, (2)(B),’’ after ‘‘paragraph (1)’’, was executed by making the insertion after ‘‘para- graphs (1)’’ to reflect the probable intent of Congress. 1990—Subsec. (b). Pub. L. 101–508, § 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, § 11701(d), struck out ‘‘a C corporation’’ after ‘‘means’’ in introductory provisions, substituted ‘‘a C corporation which ac- quires’’ for ‘‘which acquires’’ in subcl. (I), ‘‘a C corpora- tion’’ for ‘‘a corporation’’ in subcl. (II), and ‘‘any C cor- poration which is a successor’’ for ‘‘any successor cor- poration’’ in subcl. (III). Subsec. (f). Pub. L. 101–508, § 11811(b)(1), (2)(A), redes- ignated subsec. (j) as (f), substituted heading for one which read: ‘‘Rules relating to product liability losses’’, and amended text generally, substituting present provi- sions for provisions defining terms ‘‘product liability loss’’ and ‘‘product liability’’, and providing for an elec- tion with respect to carrybacks of such losses. Subsec. (g). Pub. L. 101–508, § 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, § 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 simi- lar to the manner in which a foreign expropriation loss is treated.’’ Subsec. (h). Pub. L. 101–508, § 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, § 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 fol- lows: ‘‘The term ‘major stock acquisition’ shall not in- clude— ‘‘(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 acquisi- tion in which a corporation acquires stock of another corporation which, immediately before the acquisi- tion, 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, § 11811(b)(4), amend- ed subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘In applying paragraph (2) of sub- section (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, § 11704(a)(2), substituted ‘‘subsection (b)(2)’’ for ‘‘subsection (B)(2)’’ in heading. Subsec. (i). Pub. L. 101–508, § 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, § 11811(b)(1), redesignated subsec. (j) as (f). Subsec. (k). Pub. L. 101–508, § 11811(b)(1), struck out subsec. (k) which related to definitions and special rules relating to deferred statutory or tort liability losses. Page 882 TITLE 26—INTERNAL REVENUE CODE § 172 Subsecs. (l) to (n). Pub. L. 101–508, § 11811(b)(1), redes- ignated subsecs. (l) to (n) as (g) to (i), respectively. 1989—Subsec. (b)(1)(M). Pub. L. 101–239, § 7211(a), added subpar. (M). Subsecs. (m), (n). Pub. L. 101–239, § 7211(b), added sub- sec. (m) and redesignated former subsec. (m) as (n). 1988—Subsec. (b)(1)(A). Pub. L. 100–647, § 1009(c)(2), substituted ‘‘Except as otherwise provided in this para- graph, 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, § 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 oper- ating loss carryover to each of the 5 taxable years fol- lowing 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, § 1009(c)(1), re- designated subpars. (L) and (M) as (K) and (L), respec- tively. Subsec. (d)(4)(B). Pub. L. 100–647, § 1003(a)(1), sub- stituted ‘‘paragraphs (1) and (3)’’ for ‘‘paragraphs (1), (2)(B), and (3)’’. 1986—Subsec. (b)(1)(A), (B). Pub. L. 99–514, § 903(b)(2)(A), (B), inserted reference to subpars. (L) and (M). Subsec. (b)(1)(F). Pub. L. 99–514, § 903(a)(1), inserted ‘‘and before January 1, 1987,’’. Pub. L. 99–514, § 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, § 903(a)(2), inserted ‘‘and before January 1, 1987,’’. Subsec. (b)(1)(H). Pub. L. 99–514, § 903(a)(3)(A), struck out ‘‘after December 31, 1981,’’ and inserted ‘‘after De- cember 31, 1981, and before January 1, 1987,’’. Pub. L. 99–514, § 903(a)(3)(B), which directed that sub- par. (H) be amended by striking out ‘‘after December 31, 1984,’’ and inserting ‘‘after December 31, 1984, and be- fore January 1, 1987,’’, was executed by striking out ‘‘after December 31, 1984’’ and inserting ‘‘after Decem- ber 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, § 1303(b)(1), redes- ignated 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, § 903(b)(1), added subpars. (L) and (M). Subsec. (d)(2). Pub. L. 99–514, § 301(b)(3), amended par. (2) generally. Prior to amendment, par. (2) read as fol- lows: ‘‘In the case of a taxpayer other than a corpora- tion— ‘‘(A) the amount deductible on account of losses from sales or exchanges of capital assets shall not ex- ceed the amount includible on account of gains from sales or exchanges of capital assets; and ‘‘(B) the deduction for long-term capital gains pro- vided by section 1202 shall not be allowed.’’ Subsec. (d)(6). Pub. L. 99–514, § 1899A(6), added head- ing. Subsec. (d)(7). Pub. L. 99–514, § 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 al- lowed by this chapter. For purposes of subsection (c)— ‘‘(A) the deduction provided by the preceding sen- tence 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, § 1303(b)(2), sub- stituted ‘‘subsection (b)(1)(J)’’ for ‘‘subsection (b)(1)(K)’’. Subsecs. (l), (m). Pub. L. 99–514, § 903(b)(2)(C), added subsec. (l) and redesignated former subsec. (l) as (m). 1984—Subsec. (b)(1)(A). Pub. L. 98–369, § 91(d)(3)(A), substituted ‘‘(J), and (K)’’ for ‘‘and (J)’’. Subsec. (b)(1)(H). Pub. L. 98–369, § 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, § 177(c)(1)(B), (C), struck out ‘‘FNMA’’ before ‘‘mortgage disposition loss’’. Subsec. (b)(1)(K). Pub. L. 98–369, § 91(d)(1), added sub- par. (K). Subsec. (b)(2)(A). Pub. L. 98–369, § 722(a)(4)(A), sub- stituted ‘‘and (5)’’ for ‘‘and (6)’’. Subsec. (d)(4)(D). Pub. L. 98–369, § 491(d)(5), struck out ‘‘or section 405(c)’’ after ‘‘section 404’’. Subsec. (d)(6) to (8). Pub. L. 98–369, § 722(a)(4)(B), re- designated pars. (7) and (8) as (6) and (7), respectively. Subsec. (h). Pub. L. 98–369, § 91(d)(3)(B), substituted ‘‘this section’’ for ‘‘subsection (b)’’ in introductory pro- visions. Subsec. (i). Pub. L. 98–369, § 177(c)(2), substituted ‘‘Mortgage disposition loss of the Federal National Mortgage Association or the Federal Home Loan Mort- gage Corporation’’ for ‘‘FNMA mortgage disposition loss’’ in heading and struck out ‘‘FNMA’’ before ‘‘mort- gage disposition loss’’ wherever appearing in text. Subsec. (j). Pub. L. 98–369, § 91(d)(3)(B), substituted ‘‘this section’’ for ‘‘subsection (b)’’ in introductory pro- visions. Subsecs. (k), (l). Pub. L. 98–369, § 91(d)(2), added sub- sec. (k) and redesignated former subsec. (k) as (l). 1982—Subsec. (b)(1)(A). Pub. L. 97–362, § 102(c)(1), sub- stituted ‘‘(H), (I), and (J)’’ for ‘‘(H), and (I)’’. Subsec. (b)(1)(B). Pub. L. 97–362, § 102(c)(2), substituted ‘‘(H), and (J)’’ for ‘‘and (I)’’. Subsec. (b)(1)(H). Pub. L. 97–362, § 102(a), added subpar. (H). Former subpar. (H) redesignated (I). Subsec. (b)(1)(I). Pub. L. 97–362, § 102(a), (c)(3), redesig- nated former subpar. (H) as (I) and substituted ‘‘sub- section (j)’’ for ‘‘subsection (i)’’. Former subpar. (I) re- designated (J). Subsec. (b)(1)(J). Pub. L. 97–362, § 102(a), redesignated former subpar. (I) as (J). Subsec. (f). Pub. L. 97–354 struck out subsec. (f) relat- ing to net operating loss of electing small business cor- poration. Subsec. (i). Pub. L. 97–362, § 102(b), added subsec. (i). Former subsec. (i) redesignated (j). Subsec. (j). Pub. L. 97–362, § 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 sub- sec. (j) redesignated (k). Subsec. (k). Pub. L. 97–362, § 102(b), redesignated former subsec. (j) as (k). 1981—Subsec. (b)(1)(B). Pub. L. 97–34, § 207(a)(1), sub- stituted ‘‘15 taxable years’’ for ‘‘7 taxable years’’. Subsec. (b)(1)(C). Pub. L. 97–34, § 207(a)(2)(A), sub- stituted ‘‘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 tax- able year ending after Dec. 31, 1975, the preceding sen- tence was to be applied by substituting ‘‘9 taxable years’’ for ‘‘7 taxable years’’. Subsec. (b)(1)(E)(i)(II). Pub. L. 97–34, § 207(a)(2)(B)(i), substituted ‘‘15’’ for ‘‘8’’. Subsec. (b)(1)(E)(ii). Pub. L. 97–34, § 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 des- ignated 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 Page 883 TITLE 26—INTERNAL REVENUE CODE § 172 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, § 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, § 106(a)(6), sub- stituted ‘‘, (H), and (I)’’ for ‘‘and (H)’’. Pub. L. 96–222, § 103(a)(15), amended directory lan- guage of Pub. L. 95–600, § 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, § 106(a)(7), substituted ‘‘(G), and (I)’’ for ‘‘and (G)’’. Subsec. (b)(1)(E). Pub. L. 96–595 generally revised sub- par. (E) to permit a trust which was formerly a real es- tate 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 re- moved the restriction that a net operating loss in- curred before 1976 can be carried forward to the 6th, 7th, or 8th year only if it qualified as a real estate in- vestment trust for all years from the loss year through the carryover year. Subsec. (b)(1)(I). Pub. L. 96–222, § 106(a)(1), redesig- nated 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, § 371(a)(2), as amended by Pub. L. 96–222, § 103(a)(15), substituted ‘‘(G), and (H)’’ for ‘‘and (G)’’. Pub. L. 95–600, § 703(p)(1)(A), struck out provisions re- lating 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, § 701(d)(1), inserted reference to subpar. (G). Subsec. (b)(1)(H). Pub. L. 95–600, § 371(a)(1), added sub- par. (H) relating to product liability losses. Pub. L. 95–600, § 601(b)(1), added subpar. (H) relating to an electing GSOC. Subsec. (b)(3)(A). Pub. L. 95–600, § 703(p)(1)(B), redesig- nated subpar. (C) as (A). Former subpar. (A), which re- lated to conditions for application of paragraph (1)(A)(ii), was struck out. Subsec. (b)(3)(B). Pub. L. 95–600, § 703(p)(1)(B), (C), re- designated subpar. (D) as (B) and substituted ‘‘subpara- graph (A)(iii)’’ for ‘‘subparagraph (C)(iii)’’. Former sub- par. (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, § 703(p)(1)(B), redesig- nated subpar. (E) as (C). Former subpar. (C) redesig- nated (A). Subsec. (b)(3)(D), (E). Pub. L. 95–600, § 703(p)(1)(B), re- designated subpars. (D) and (E) as (B) and (C), respec- tively. Subsecs. (i), (j). Pub. L. 95–600, § 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, § 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, §§ 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 ‘‘sub- section (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, §§ 1901(a)(29)(C)(iii), 2126, substituted ‘‘subsection (h)’’ for ‘‘subsection (k)’’ after ‘‘as defined in’’ and ‘‘20’’ for ‘‘15’’ after ‘‘expro- priation loss, to each of the’’. Subsec. (b)(1)(E). Pub. L. 94–455, § 1606(b), added sub- par. (E). Subsec. (b)(2). Pub. L. 94–455, § 1901(a)(29)(C)(iv), sub- stituted ‘‘subsection (g)’’ for ‘‘subsections (i) and (j)’’ after ‘‘provided in’’. Subsec. (b)(3). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (b)(3)(A)(i), (ii). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ in two places after ‘‘Sec- retary’’. Subsec. (b)(3)(C)(i). Pub. L. 94–455, § 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, § 1906(b)(13)(A), struck out ‘‘Or his delegate’’ in two places after ‘‘Secretary’’. Subsec. (b)(3)(E). Pub. L. 94–455, §§ 806(c), 1901(a)(29)(A)(ii), added subpar. (E). Former subpar. (E), which related to applicability of special rules in com- puting taxpayer’s net operating loss deduction, was struck out. Subsec. (b)(3)(F). Pub. L. 94–455, § 1901(a)(29)(A)(ii), struck out subpar. (F) which defined ‘‘class of prod- ucts’’ and provided for the use of information compiled or published by Secretary of Commerce or manufactur- ers 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, § 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, § 1052(c)(3), struck out par. (5) relating to special deductions for corpora- tions concerning partially tax-exempt interest and Western Hemisphere corporations, and redesignated par. (6) as (5). Subsec. (d)(7). Pub. L. 94–455, § 1606(c), added par. (7). Subsec. (e). Pub. L. 94–455, § 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, § 1901(a)(29)(C)(i), redesig- nated subsec. (h) as (f). Former subsec. (f), relating to net operating loss deduction for taxable years begin- ning in 1953 and ending in 1954, was struck out. Subsec. (g). Pub. L. 94–455, § 1901(a)(29)(C)(i), redesig- nated 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, § 806(b)(2), added sub- par. (C). Subsec. (g)(4). Pub. L. 94–455, § 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, § 1901(a)(29)(C)(i), redesig- nated subsec. (k) as (h). Former subsec. (h) redesig- nated (f). Subsec. (i). Pub. L. 94–455, § 1901(a)(29)(C)(i), redesig- nated subsec. (l) as (i). Former subsec. (i), relating to carryback of net operating loss for taxable years begin- ning in 1957 and ending in 1958, was struck out. Subsecs. (j) to (l). Pub. L. 94–455, § 1901(a)(29)(C)(i), re- designated subsecs. (j) to (l) as (g) to (i), respectively. 1971—Subsec. (b)(1)(D). Pub. L. 91–677, § 2(a), inserted ‘‘(or, with respect to that portion of the net operating loss for such year attributable to a Cuban expropria- tion 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, § 2(b), inserted provi- sions relating to treatment of Cuban expropriation losses. Subsec. (k)(3). Pub. L. 91–677, § 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). Page 884 TITLE 26—INTERNAL REVENUE CODE § 172 1967—Subsec. (b)(1). Pub. L. 90–225, § 3(a)(1)–(3), in- serted reference to subpar. (E) in subpars. (A)(i) and (B), and added subpar. (E). Subsec. (b)(3)(E), (F). Pub. L. 90–225, § 3(a)(4), added subpars. (E) and (F). 1964—Subsec. (b). Pub. L. 88–272, § 210(a)(1)–(4), (b), in- serted 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 por- tion of a net operating loss due to a foreign expropria- tion 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 for- eign 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 oper- ating loss. Subsec. (j)(1), (2), Pub. L. 88–272, § 234(b)(5), sub- stituted references to section 7701(a)(33) for references to section 1503(c)(1) or (2), wherever appearing. Subsecs. (k), (l). Pub. L. 88–272, § 210(a)(5), added sub- sec. (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 there- from which authorized a net operating loss for any tax- able year ending after Dec. 31, 1957, to be a net oper- ating loss carryover to each of the 5 taxable years fol- lowing 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 subpara- graphs (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, § 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 tax- able year of loss, or when such loss occurs in the case of regulated transportation corporation, except as pro- vided in subsec. (j), then to each of the 7 taxable years following the taxable year of loss, and struck out provi- sions 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, § 1(b), added subsec. (j) and redesignated former subsec. (j) as (k). 1958—Subsec. (b). Pub. L. 85–866, § 203(a), substituted ‘‘1957’’ for ‘‘1953’’, and ‘‘3’’ for ‘‘2’’ in par. (1), and sub- stituted ‘‘subsection (i)’’ for ‘‘subsection (f)’’, ‘‘8’’ for ‘‘7’’, and ‘‘7’’ for ‘‘6’’ in par. (2). Subsecs. (f)(3), (4). Pub. L. 85–866, § 14(a), added pars. (3) and (4). Subsec. (g)(3), (4). Pub. L. 85–866, § 14(b), added par. (3) and redesignated former par. (3) as (4). Subsecs. (h) to (j). Pub. L. 85–866, §§ 64(b), 203(b), added subsecs. (h) and (i) and redesignated former subsec. (h) as (j). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116–136, div. A, title II, § 2303(d), Mar. 27, 2020, 134 Stat. 355, provided that: ‘‘(1) NET OPERATING LOSS LIMITATION.—The amend- ments made by subsection (a) [amending this section and section 860E of this title] shall apply— ‘‘(A) to taxable years beginning after December 31, 2017, and ‘‘(B) to taxable years beginning on or before Decem- ber 31, 2017, to which net operating losses arising in taxable years beginning after December 31, 2017, are carried. ‘‘(2) CARRYOVERS AND CARRYBACKS.—The amendment made by subsection (b) [amending this section] shall apply to— ‘‘(A) net operating losses arising in taxable years beginning after December 31, 2017, and ‘‘(B) taxable years beginning before, on, or after such date to which such net operating losses are car- ried. ‘‘(3) TECHNICAL AMENDMENTS.—The amendments made by subsection (c) [amending this section and provisions set out as a note under this section] shall take effect as if included in the provisions of Public Law 115–97 to which they relate. ‘‘(4) SPECIAL RULE.—In the case of a net operating loss arising in a taxable year beginning before January 1, 2018, and ending after December 31, 2017— ‘‘(A) an application under section 6411(a) of the In- ternal Revenue Code of 1986 with respect to the carryback of such net operating loss shall not fail to be treated as timely filed if filed not later than the date which is 120 days after the date of the enactment of this Act [Mar. 27, 2020], and ‘‘(B) an election to— ‘‘(i) forgo any carryback of such net operating loss, ‘‘(ii) reduce any period to which such net oper- ating loss may be carried back, or ‘‘(iii) revoke any election made under section 172(b) to forgo any carryback of such net operating loss, shall not fail to be treated as timely made if made not later than the date which is 120 days after the date of the enactment of this Act.’’ EFFECTIVE DATE OF 2018 AMENDMENT Amendment by section 101(a)(2)(B) of Pub. L. 115–141 effective as if included in section 11011 of Pub. L. 115–97, see section 101(d) of Pub. L. 115–141, set out as a note under section 62 of this title. EFFECTIVE DATE OF 2017 AMENDMENT Amendment by section 11011(d)(1) of Pub. L. 115–97 ap- plicable to taxable years beginning after Dec. 31, 2017, see section 11011(e) of Pub. L. 115–97, set out as a note under section 62 of this title. Pub. L. 115–97, title I, § 13302(e), Dec. 22, 2017, 131 Stat. 21233, as amended by Pub. L. 116–136, div. A, title II, § 2303(c)(1), Mar. 27, 2020, 134 Stat. 354, provided that: ‘‘(1) NET OPERATING LOSS LIMITATION.—The amend- ments made by subsections (a) and (d)(2) [amending this section] shall apply to— ‘‘(A) taxable years beginning after December 31, 2017, and ‘‘(B) taxable years beginning on or before such date to which net operating losses arising in taxable years beginning after such date are carried. ‘‘(2) CARRYOVERS AND CARRYBACKS.—The amendments made by subsections (b), (c), and (d)(1) [amending this section and section 537 of this title] shall apply to net operating losses arising in taxable years beginning after December 31, 2017.’’ Amendment by section 13305(b)(3) of Pub. L. 115–97 ap- plicable to taxable years beginning after Dec. 31, 2017, except as provided by transition rule, see section 13305(c) of Pub. L. 115–97, set out as a note under section 74 of this title. Pub. L. 115–97, title I, § 14202(c), Dec. 22, 2017, 131 Stat. 2216, provided that: ‘‘The amendments made by this section [enacting section 250 of this title and amending this section and sections 246 and 469 of this title] shall apply to taxable years beginning after December 31, 2017.’’ EFFECTIVE DATE OF 2014 AMENDMENT Amendment by section 211(c)(1)(B) of Pub. L. 113–295 effective as if included in the provisions of the Tax Ex- tenders and Alternative Minimum Tax Relief Act of 2008, Pub. L. 110–343, div. C, to which such amendment relates, see section 211(d) of Pub. L. 113–295, set out as a note under section 143 of this title. Page 885 TITLE 26—INTERNAL REVENUE CODE § 172 Pub. L. 113–295, div. A, title II, § 221(a)(41)(K), Dec. 19, 2014, 128 Stat. 4044, provided that: ‘‘The amendments made by this paragraph [amending this section and sec- tions 243, 246, 246A, 263, 277, 301, 469, 512, 805, 810, 812, 815, 832, 833, 1059, and 1244 of this title and repealing sec- tions 244 and 247 of this title] shall not apply to pre- ferred stock issued before October 1, 1942 (determined in the same manner as under section 247 of the Internal Revenue Code of 1986 as in effect before its repeal by such amendments).’’ Except as otherwise provided in section 221(a) of Pub. L. 113–295, amendment by section 221(a)(30)(A), (B), (41)(B) of Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–92 applicable to net oper- ating losses arising in taxable years ending after Dec. 31, 2007, with transition provisions and exception for TARP recipients, see section 13(e), (f) of Pub. L. 111–92, set out as a note under section 56 of this title. Pub. L. 111–5, div. B, title I, § 1211(d), Feb. 17, 2009, 123 Stat. 336, provided that: ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section] shall apply to net operating losses arising in taxable years ending after December 31, 2007. ‘‘(2) TRANSITIONAL RULE.—In the case of a net oper- ating loss for a taxable year ending before the date of the enactment of this Act [Feb. 17, 2009]— ‘‘(A) any election made under section 172(b)(3) of the Internal Revenue Code of 1986 with respect to such loss may (notwithstanding such section) be re- voked before the applicable date, ‘‘(B) any election made under [former] section 172(b)(1)(H) of such Code with respect to such loss shall (notwithstanding such section) be treated as timely made if made before the applicable date, and ‘‘(C) any application under section 6411(a) of such Code with respect to such loss shall be treated as timely filed if filed before the applicable date. For purposes of this paragraph, the term ‘applicable date’ means the date which is 60 days after the date of the enactment of this Act [Feb. 17, 2009].’’ EFFECTIVE DATE OF 2008 AMENDMENT Amendment by section 706(a)(2)(D)(v), (vi) of Pub. L. 110–343 applicable to disasters declared in taxable years beginning after Dec. 31, 2007, see section 706(d)(1) of Pub. L. 110–343, set out as a note under section 56 of this title. Amendment by section 708(a), (b), (d) of Pub. L. 110–343 applicable to losses arising in taxable years be- ginning after Dec. 31, 2007, in connection with disasters declared after such date, see section 708(e) of Pub. L. 110–343, set out as a note under section 56 of this title. EFFECTIVE DATE OF 2005 AMENDMENT Amendment by 402(f) of Pub. L. 109–135 effective as if included in the provision of the Energy Policy Act of 2005, Pub. L. 109–58, to which such amendment relates, see section 402(m)(1) of Pub. L. 109–135, set out as an Ef- fective and Termination Dates of 2005 Amendments note under section 23 of this title. Amendment by section 403(a)(17) of Pub. L. 109–135 ef- fective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title. EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–311 effective as if included in the provisions of the Job Creation and Worker As- sistance Act of 2002, Pub. L. 107–147, to which such amendment relates, see section 403(f) of Pub. L. 108–311, set out as a note under section 56 of this title. EFFECTIVE DATE OF 2002 AMENDMENT Pub. L. 107–147, title I, § 102(d), Mar. 9, 2002, 116 Stat. 26, provided that: ‘‘Except as provided in subsection (c) [amending section 56 of this title and enacting provi- sions set out as a note under section 56 of this title], the amendments made by this section [amending this section and section 56 of this title] shall apply to net operating losses for taxable years ending after Decem- ber 31, 2000.’’ EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–277, div. J, title II, § 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 begin- ning after December 31, 1997.’’ Pub. L. 105–277, div. J, title III, § 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 effec- tive as if included in the provision of the Taxpayer Re- lief Act of 1997, Pub. L. 105–34, to which such amend- ment 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, § 4004(c)(1), Oct. 21, 1998, 112 Stat. 2681–911, provided that: ‘‘The amend- ments 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 Pub. L. 105–34, title X, § 1082(c), Aug. 5, 1997, 111 Stat. 951, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply to net oper- ating 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 pro- vided, 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 Pub. L. 101–508, title XI, § 11324(b), Nov. 5, 1990, 104 Stat. 1388–465, 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 acquisi- tion 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 ef- fective, 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 re- lates, see section 11701(n) of Pub. L. 101–508, set out as a note under section 42 of this title. Pub. L. 101–508, title XI, § 11811(c), Nov. 5, 1990, 104 Stat. 1388–534, 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 Pub. L. 101–239, title VII, § 7211(c), Dec. 19, 1989, 103 Stat. 2345, provided that: Page 886 TITLE 26—INTERNAL REVENUE CODE § 172 ‘‘(1) IN GENERAL.—Except as provided in this sub- section, the amendments made by this section [amend- ing this section] shall apply to corporate equity reduc- tion transactions occurring after August 2, 1989, in tax- able years ending after August 2, 1989. ‘‘(2) EXCEPTIONS.—In determining whether a cor- porate equity reduction transaction has occurred after August 2, 1989, there shall not be taken into account— ‘‘(A) acquisitions or redemptions of stock, or dis- tributions with respect to stock, occurring on or be- fore August 2, 1989, ‘‘(B) acquisitions or redemptions of stock after Au- gust 2, 1989, pursuant to a binding written contract (or tender offer filed with the Securities and Ex- change Commission) in effect on August 2, 1989, and at all times thereafter before such acquisition or re- demption, or ‘‘(C) any distribution with respect to stock after August 2, 1989, which was declared on or before Au- gust 2, 1989. Any distribution to which the preceding sentence ap- plies 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 ap- plicable 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 ap- plicable 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. Pub. L. 99–514, title IX, § 903(c), Oct. 22, 1986, 100 Stat. 2384, 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 tax- able 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; Tran- sitional Rules note under section 141 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 91(d) of Pub. L. 98–369 applica- ble 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. Pub. L. 98–369, div. A, title I, § 177(d), July 18, 1984, 98 Stat. 711, as amended by Pub. L. 99–514, § 2, title XVIII, § 1812(d)(2), Oct. 22, 1986, 100 Stat. 2095, 2836, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [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 PROP- ERTY.—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 mort- gage pool participation certificate or other similar interest in any mortgage (not including any mort- gage). ‘‘(B) TREATMENT OF CERTAIN SALES AFTER MARCH 15, 1984, AND BEFORE JANUARY 1, 1985.—If any gain is real- ized on the sale or exchange of any right described in subparagraph (A) after March 15, 1984, and before Jan- uary 1, 1985, the gain shall not be recognized when re- alized but shall be recognized on January 1, 1985. ‘‘(4) CLARIFICATION OF EARNINGS AND PROFITS OF FED- ERAL 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 distrib- uted). 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 Mort- gage Corporation out of earnings and profits accumu- lated 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 Corpora- tion during 1985 out of earnings and profits accumu- lated after December 31, 1984. ‘‘(5) ADJUSTED BASIS.—For purposes of this sub- section, the adjusted basis of any asset shall be deter- mined 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 Fed- eral 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 RE- PLACEMENT OBLIGATIONS.— ‘‘(A) IN GENERAL.—The Federal Home Loan Mort- gage Corporation shall not be allowed any deduction for interest accruing after December 31, 1984, on any replacement obligation. ‘‘(B) REPLACEMENT OBLIGATION DEFINED.—For pur- poses of subparagraph (A), the term ‘replacement ob- ligation’ means any obligation to any person created after March 15, 1984, which the Secretary of the Treasury or his delegate determines replaces any eq- uity 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 sen- tence shall not apply to any obligation with respect Page 887 TITLE 26—INTERNAL REVENUE CODE § 172 to which the Federal Home Loan Mortgage Corpora- tion establishes that there is no tax avoidance ef- fect.’’ Amendment by section 491(d)(5) of Pub. L. 98–369 ap- plicable to obligations issued after Dec. 31, 1983, see sec- tion 491(f)(1) of Pub. L. 98–369, set out as a note under section 62 of this title. Pub. L. 98–369, div. A, title VII, § 722(a)(6), July 18, 1984, 98 Stat. 973, 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 Correc- tions Act of 1982 [Pub. L. 97–448] to which such amend- ment relates.’’ EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–362, title I, § 102(d), Oct. 25, 1982, 96 Stat. 1728, provided that: ‘‘The amendments made by this section [amending this section] shall apply to net oper- ating 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 oper- ating losses in taxable years ending after Dec. 31, 1975, with special effective date for the amendment by sec- tion 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 AMENDMENT Pub. L. 96–595, § 1(b), Dec. 24, 1980, 94 Stat. 3464, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendment made by sub- section (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 [former] section 172(b)(1)(E)(ii) of the Internal Rev- enue 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 [former] 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 ben- efit of the allowance of a net operating loss carryover under [former] section 172(b)(1)(B) of such Code.’’ Amendment by Pub. L. 96–222 effective, except as oth- erwise provided, as if it had been included in the provi- sions 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 Pub. L. 95–600, title III, § 371(d), Nov. 6, 1978, 92 Stat. 2860, provided that: ‘‘The amendments made by this section [amending this section and section 537 of this title] shall apply with respect to taxable years begin- ning after September 30, 1979.’’ Pub. L. 95–600, title VI, § 601(d), Nov. 6, 1978, 92 Stat. 2897, 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 corpora- tions chartered after December 31, 1978, and before Jan- uary 1, 1984.’’ Pub. L. 95–600, title VII, § 701(d)(2), Nov. 6, 1978, 92 Stat. 2900, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall apply to losses incurred in taxable years ending after December 31, 1975.’’ Pub. L. 95–600, title VII, § 703(p)(4), Nov. 6, 1978, 92 Stat. 2944, 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 Pub. L. 94–455, title VIII, § 806(g)(1), Oct. 4, 1976, 90 Stat. 1605, 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 ef- fective 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 ef- fective 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 ef- fective 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 Pub. L. 91–677, § 2(d), Jan. 12, 1971, 84 Stat. 2062, pro- vided 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 Pub. L. 90–225, § 3(b), Dec. 27, 1967, 81 Stat. 733, pro- vided 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].’’ Pub. L. 90–225, § 3(c), Dec. 27, 1967, 81 Stat. 733, pro- vided 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 Pub. L. 88–272, title II, § 210(c), Feb. 26, 1964, 78 Stat. 49, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendments made by this section [amending this section] shall apply in re- spect of foreign expropriation losses (as defined in sec- tion 172(k) of the Internal Revenue Code of 1986 [for- merly 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 ap- plicable 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. Page 888 TITLE 26—INTERNAL REVENUE CODE § 172 EFFECTIVE DATE OF 1962 AMENDMENT Pub. L. 87–794, title III, § 317(b), Oct. 11, 1962, 76 Stat. 889, provided that the amendment made by that section is effective with respect to net operating losses for tax- able 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. Pub. L. 87–710, § 2, Sept. 27, 1962, 76 Stat. 649, 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 Pub. L. 85–866, title II, § 203(c), Sept. 2, 1958, 72 Stat. 1679, provided that: ‘‘The amendments made by sub- sections (a) and (b) [amending this section] shall apply in respect of net operating losses for taxable years end- ing after December 31, 1957.’’ Amendment by section 14(a), (b) of Pub. L. 85–866 ap- plicable 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. Pub. L. 85–866, title I, § 64(e), Sept. 2, 1958, 72 Stat. 1657, 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 be- ginning after December 31, 1957’’. ANTI-ABUSE RULES Pub. L. 111–92, § 13(d), Nov. 6, 2009, 123 Stat. 2994, pro- vided that: ‘‘The Secretary of [the] Treasury or the Secretary’s designee shall prescribe such rules as are necessary to prevent the abuse of the purposes of the amendments made by this section [amending this sec- tion and sections 56 and 810 of this title], including anti-stuffing rules, anti-churning rules (including rules relating to sale-leasebacks), and rules similar to the rules under section 1091 of the Internal Revenue Code of 1986 relating to losses from wash sales.’’ Pub. L. 111–5, div. B, title I, § 1211(c), Feb. 17, 2009, 123 Stat. 336, provided that: ‘‘The Secretary of [the] Treas- ury or the Secretary’s designee shall prescribe such rules as are necessary to prevent the abuse of the pur- poses of the amendments made by this section [amend- ing this section], including anti-stuffing rules, anti- churning rules (including rules relating to sale-lease- backs), and rules similar to the rules under section 1091 of the Internal Revenue Code of 1986 relating to losses from wash sales.’’ 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 deter- mining 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 45K of this title. SPECIAL RULES WITH RESPECT TO FARMING LOSSES Pub. L. 116–136, div. A, title II, § 2303(e), as added by Pub. L. 116–260, div. N, title II, § 281(a), Dec. 27, 2020, 134 Stat. 1983, provided that: ‘‘(1) ELECTION TO DISREGARD APPLICATION OF AMEND- MENTS MADE BY SUBSECTIONS (a) AND (b).— ‘‘(A) IN GENERAL.—If a taxpayer who has a farming loss (within the meaning of section 172(b)(1)(B)(ii) of the Internal Revenue Code of 1986) for any taxable year beginning in 2018, 2019, or 2020 makes an election under this paragraph, then— ‘‘(i) the amendments made by subsection (a) [amending this section and section 860E of this title] shall not apply to any taxable year beginning in 2018, 2019, or 2020, and ‘‘(ii) the amendments made by subsection (b) [amending this section] shall not apply to any net operating loss arising in any taxable year beginning in 2018, 2019, or 2020. ‘‘(B) ELECTION.— ‘‘(i) IN GENERAL.—Except as provided in clause (ii)(II), an election under this paragraph shall be made in such manner as may be prescribed by the Secretary. Such election, once made, shall be irrev- ocable. ‘‘(ii) TIME FOR MAKING ELECTION.— ‘‘(I) IN GENERAL.—An election under this para- graph shall be made by the due date (including extensions of time) for filing the taxpayer’s re- turn for the taxpayer’s first taxable year ending after the date of the enactment of the COVID-re- lated Tax Relief Act of 2020 [subtitle B of title II of div. N of Pub. L. 116–260, approved Dec. 27, 2020]. ‘‘(II) PREVIOUSLY FILED RETURNS.—In the case of any taxable year for which the taxpayer has filed a return of Federal income tax before the date of the enactment of the COVID-related Tax Relief Act of 2020 which disregards the amendments made by subsections (a) and (b), such taxpayer shall be treated as having made an election under this paragraph unless the taxpayer amends such return to reflect such amendments by the due date (including extensions of time) for filing the taxpayer’s return for the first taxable year ending after the date of the enactment of the COVID-re- lated Tax Relief Act of 2020. ‘‘(C) REGULATIONS.—The Secretary of the Treasury (or the Secretary’s delegate) shall issue such regula- tions and other guidance as may be necessary to carry out the purposes of this paragraph, including regulations and guidance relating to the application of the rules of section 172(a) of the Internal Revenue Code of 1986 (as in effect before the date of the enact- ment of the CARES Act [Pub. L. 116–136, approved Mar. 27, 2020]) to taxpayers making an election under this paragraph. ‘‘(2) REVOCATION OF ELECTION TO WAIVE CARRYBACK.— The last sentence of section 172(b)(3) of the Internal Revenue Code of 1986 and the last sentence of section 172(b)(1)(B) of such Code shall not apply to any elec- tion— ‘‘(A) which was made before the date of the enact- ment of the COVID-related Tax Relief Act of 2020, and ‘‘(B) which relates to the carryback period provided under section 172(b)(1)(B) of such Code with respect to any net operating loss arising in taxable years begin- ning in 2018 or 2019.’’ [Pub. L. 116–260, div. N, title II, § 281(b), Dec. 27, 2020, 134 Stat. 1984, provided that: ‘‘The amendment made by this section [enacting section 2303(e) of Pub. L. 116–136, set out above] shall take effect as if included in section 2303 of the CARES Act [Pub. L. 116–136].’’] NET OPERATING LOSS CARRYBACK FOR TAXABLE YEAR ENDING DURING 2001 OR 2002 Pub. L. 108–311, title IV, § 403(b)(2), Oct. 4, 2004, 118 Stat. 1187, provided that: ‘‘In the case of a net oper- ating loss for a taxable year ending during 2001 or 2002— ‘‘(A) an application under section 6411(a) of the In- ternal Revenue Code of 1986 with respect to such loss shall not fail to be treated as timely filed if filed be- fore November 1, 2002, ‘‘(B) any election made under section 172(b)(3) of such Code may (notwithstanding such section) be re- voked before November 1, 2002, and ‘‘(C) any election made under [former] section 172(j) of such Code shall (notwithstanding such section) be treated as timely made if made before November 1, 2002.’’ AMTRAK REFORM LEGISLATION Pub. L. 105–134, title III, § 301(b), Dec. 2, 1997, 111 Stat. 2585, provided that: ‘‘This Act [see Short Title of 1997 Page 889 TITLE 26—INTERNAL REVENUE CODE § 172 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 Pub. L. 105–34, title IX, § 977, Aug. 5, 1997, 111 Stat. 899, as amended by Pub. L. 105–178, title IX, § 9007(a), June 9, 1998, 112 Stat. 506; Pub. L. 105–206, title VI, § 6009(e), July 22, 1998, 112 Stat. 812, provided that: ‘‘(a) ELECTIVE CARRYBACK.— ‘‘(1) IN GENERAL.—If the National Railroad Pas- senger 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 para- graph (2), then the Corporation shall be treated as having made a payment of the tax imposed by chapter 1 of the In- ternal 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 (with- out 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 re- fund of the payment described in paragraph (1) (and any interest thereon) solely to finance quali- fied 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 ac- cordance with this paragraph and any amount re- maining 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 ex- ceed $2,323,000,000. ‘‘(b) EXISTING QUALIFIED CARRYOVERS; NET TAX LI- ABILITY.—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 li- ability for the carryback period is the aggregate of the net tax liability of the Corporation’s railroad predecessors for taxable years in the carryback pe- riod. ‘‘(B) NET TAX LIABILITY.—The term ‘net tax liabil- ity’ means, with respect to any taxable year, the amount of the tax imposed by chapter 1 of the In- ternal Revenue Code of 1986 (or any corresponding provision of prior law) for such taxable year, re- duced 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 pe- riod’ means the period— ‘‘(i) which begins with the first taxable year of any railroad predecessor beginning before Janu- ary 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 Janu- ary 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 de- scribed in subparagraph (A) was a member of an af- filiated 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 ex- penses 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 there- on) which is used for a purpose other than to fi- nance qualified expenses of the State or which re- mains 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 inter- est thereon) remaining as of the date of the ces- sation. 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 Corpora- tion’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 PREDE- CESSORS.— ‘‘(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 Page 890 TITLE 26—INTERNAL REVENUE CODE § 173 shall be waived solely for purposes of making such adjustment. ‘‘(3) TAX TREATMENT OF EXPENDITURES.—With re- spect 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 Cor- poration with respect to any amount paid or in- curred 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 at- tributable to such amount. ‘‘(4) PAYMENTS TO A NON-AMTRAK STATE.—No deduc- tion shall be allowed to the Corporation under chap- ter 1 of the Internal Revenue Code of 1986 for any pay- ment to a non-Amtrak State required under sub- section (a)(2)(A)(ii). ‘‘(e) DEFINITIONS.—For purposes of this section— ‘‘(1) QUALIFIED EXPENSES.—The term ‘qualified ex- penses’ 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, upgrad- ing, 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 up- grading of maintenance facilities, and the main- tenance 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 fund- ing under section 5309, 5310, or 5311 of title 49, United States Code, ‘‘(vi) any project that is eligible to receive fund- ing under section 103, 130, 133, 144, 149, or 152 of title 23, United States Code, ‘‘(vii) the upgrading and maintenance of inter- city primary and rural air service facilities, and the purchase of intercity air service between pri- mary and rural airports and regional hubs, ‘‘(viii) the provision of passenger ferryboat serv- ice 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, upgrad- ing, maintenance, purchase, expenditures, provi- sion, 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], sub- paragraph (B) shall be applied by only taking into ac- count clauses (i) and (iv). ‘‘(2) NON-AMTRAK STATE.—The term ‘non-Amtrak State’ means any State which is not receiving inter- city 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 pay- ment described in subsection (a)(1) earlier than the date of the enactment of Federal legislation, other than legislation included in this section, which is en- acted after July 29, 1997, and which authorizes re- forms of the National Railroad Passenger Corpora- tion. ‘‘(2) NO INTEREST.—Notwithstanding any other pro- vision 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 legis- lation described in paragraph (1). ‘‘(3) ESTIMATE OF REVENUE.—For purposes of esti- mating revenues under budget reconciliation, the im- pact of this section on Federal revenues shall be de- termined without regard to this subsection.’’ [Pub. L. 105–178, title IX, § 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 enact- ment 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 LIABIL- ITY LOSS TO TAXABLE YEAR BEGINNING BEFORE JAN- UARY 1, 1984 Pub. L. 101–508, title XI, § 11811(b)(2)(B), Nov. 5, 1990, 104 Stat. 1388–533, 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 In- ternal Revenue Code of 1986 as in effect on the day be- fore 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 [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 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 Pub. L. 85–866, title I, § 14, Sept. 2, 1958, 72 Stat. 1611, provided that if any refund or credit of any overpay- ment 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 with- in 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. § 173. Circulation expenditures (a) General rule Notwithstanding section 263, all expenditures (other than expenditures for the purchase of land or depreciable property or for the acquisi- tion of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical) to es- tablish, maintain, or increase the circulation of a newspaper, magazine, or other periodical shall be allowed as a deduction; except that the de-