
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC172]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
      PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
 
Sec. 172. Net operating loss deduction


(a) Deduction allowed

    There shall be allowed as a deduction for the taxable year an amount 
equal to the aggregate of (1) the net operating loss carryovers to such 
year, plus (2) the net operating loss carrybacks to such year. For 
purposes of this subtitle, the term ``net operating loss deduction'' 
means the deduction allowed by this subsection.

(b) Net operating loss carrybacks and carryovers

               (1) Years to which loss may be carried

        (A) General rule

            Except as otherwise provided in this paragraph, a net 
        operating loss for any taxable year--
                (i) shall be a net operating loss carryback to each of 
            the 2 taxable years preceding the taxable year of such loss, 
            and
                (ii) shall be a net operating loss carryover to each of 
            the 20 taxable years following the taxable year of the loss.

        (B) Special rules for REIT's

            (i) In general

                A net operating loss for a REIT year shall not be a net 
            operating loss carryback to any taxable year preceding the 
            taxable year of such loss.
            (ii) Special rule

                In the case of any net operating loss for a taxable year 
            which is not a REIT year, such loss shall not be carried 
            back to any taxable year which is a REIT year.
            (iii) REIT year

                For purposes of this subparagraph, the term ``REIT 
            year'' means any taxable year for which the provisions of 
            part II of subchapter M (relating to real estate investment 
            trusts) apply to the taxpayer.

        (C) Specified liability losses

            In the case of a taxpayer which has a specified liability 
        loss (as defined in subsection (f)) for a taxable year, such 
        specified liability loss shall be a net operating loss carryback 
        to each of the 10 taxable years preceding the taxable year of 
        such loss.

        (D) Bad debt losses of commercial banks

            In the case of any bank (as defined in section 585(a)(2)), 
        the portion of the net operating loss for any taxable year 
        beginning after December 31, 1986, and before January 1, 1994, 
        which is attributable to the deduction allowed under section 
        166(a) shall be a net operating loss carryback to each of the 10 
        taxable years preceding the taxable year of the loss and a net 
        operating loss carryover to each of the 5 taxable years 
        following the taxable year of such loss.

        (E) Excess interest loss

            (i) In general

                If--
                    (I) there is a corporate equity reduction 
                transaction, and
                    (II) an applicable corporation has a corporate 
                equity reduction interest loss for any loss limitation 
                year ending after August 2, 1989,

          then the corporate equity reduction interest loss shall be a 
            net operating loss carryback and carryover to the taxable 
            years described in subparagraph (A), except that such loss 
            shall not be carried back to a taxable year preceding the 
            taxable year in which the corporate equity reduction 
            transaction occurs.
            (ii) Loss limitation year

                For purposes of clause (i) and subsection (h), the term 
            ``loss limitation year'' means, with respect to any 
            corporate equity reduction transaction, the taxable year in 
            which such transaction occurs and each of the 2 succeeding 
            taxable years.
            (iii) Applicable corporation

                For purposes of clause (i), the term ``applicable 
            corporation'' means--
                    (I) a C corporation which acquires stock, or the 
                stock of which is acquired in a major stock acquisition,
                    (II) a C corporation making distributions with 
                respect to, or redeeming, its stock in connection with 
                an excess distribution, or
                    (III) a C corporation which is a successor of a 
                corporation described in subclause (I) or (II).
            (iv) Other definitions

            For definitions of terms used in this subparagraph, see 
        subsection (h).

        (F) Retention of 3-year carryback in certain cases

            (i) In general

                Subparagraph (A)(i) shall be applied by substituting ``3 
            years'' for ``2 years'' \1\ with respect to the portion of 
            the net operating loss for the taxable year which is an 
            eligible loss with respect to the taxpayer.
---------------------------------------------------------------------------
    \1\ So in original. Probably should be `` `3 taxable years' for `2 
taxable years' ''.
---------------------------------------------------------------------------
            (ii) Eligible loss

                For purposes of clause (i), the term ``eligible loss'' 
            means--
                    (I) in the case of an individual, losses of property 
                arising from fire, storm, shipwreck, or other casualty, 
                or from theft,
                    (II) in the case of a taxpayer which is a small 
                business, net operating losses attributable to 
                Presidentially declared disasters (as defined in section 
                1033(h)(3)), and
                    (III) in the case of a taxpayer engaged in the trade 
                or business of farming (as defined in section 
                263A(e)(4)), net operating losses attributable to such 
                Presidentially declared disasters.

          Such term shall not include any farming loss (as defined in 
            subsection (i)).
            (iii) Small business

                For purposes of this subparagraph, the term ``small 
            business'' means a corporation or partnership which meets 
            the gross receipts test of section 448(c) for the taxable 
            year in which the loss arose (or, in the case of a sole 
            proprietorship, which would meet such test if such 
            proprietorship were a corporation).
            (iv) Coordination with paragraph (2)

                For purposes of applying paragraph (2), an eligible loss 
            for any taxable year shall be treated in a manner similar to 
            the manner in which a specified liability loss is treated.

        (G) Farming losses

            In the case of a taxpayer which has a farming loss (as 
        defined in subsection (i)) for a taxable year, such farming loss 
        shall be a net operating loss carryback to each of the 5 taxable 
        years preceding the taxable year of such loss.

               (2) Amount of carrybacks and carryovers

        The entire amount of the net operating loss for any taxable year 
    (hereinafter in this section referred to as the ``loss year'') shall 
    be carried to the earliest of the taxable years to which (by reason 
    of paragraph (1)) such loss may be carried. The portion of such loss 
    which shall be carried to each of the other taxable years shall be 
    the excess, if any, of the amount of such loss over the sum of the 
    taxable income for each of the prior taxable years to which such 
    loss may be carried. For purposes of the preceding sentence, the 
    taxable income for any such prior taxable year shall be computed--
            (A) with the modifications specified in subsection (d) other 
        than paragraphs (1), (4), and (5) thereof, and
            (B) by determining the amount of the net operating loss 
        deduction without regard to the net operating loss for the loss 
        year or for any taxable year thereafter,

    and the taxable income so computed shall not be considered to be 
    less than zero.

                   (3) Election to waive carryback

        Any taxpayer entitled to a carryback period under paragraph (1) 
    may elect to relinquish the entire carryback period with respect to 
    a net operating loss for any taxable year. Such election shall be 
    made in such manner as may be prescribed by the Secretary, and shall 
    be made by the due date (including extensions of time) for filing 
    the taxpayer's return for the taxable year of the net operating loss 
    for which the election is to be in effect. Such election, once made 
    for any taxable year, shall be irrevocable for such taxable year.

(c) Net operating loss defined

    For purposes of this section, the term ``net operating loss'' means 
the excess of the deductions allowed by this chapter over the gross 
income. Such excess shall be computed with the modifications specified 
in subsection (d).

(d) Modifications

    The modifications referred to in this section are as follows:

                  (1) Net operating loss deduction

        No net operating loss deduction shall be allowed.

        (2) Capital gains and losses of taxpayers other than 
                                corporations

        In the case of a taxpayer other than a corporation--
            (A) the amount deductible on account of losses from sales or 
        exchanges of capital assets shall not exceed the amount 
        includable on account of gains from sales or exchanges of 
        capital assets; and
            (B) the exclusion provided by section 1202 shall not be 
        allowed.

                (3) Deduction for personal exemptions

        No deduction shall be allowed under section 151 (relating to 
    personal exemptions). No deduction in lieu of any such deduction 
    shall be allowed.

         (4) Nonbusiness deductions of taxpayers other than 
                                corporations

        In the case of a taxpayer other than a corporation, the 
    deductions allowable by this chapter which are not attributable to a 
    taxpayer's trade or business shall be allowed only to the extent of 
    the amount of the gross income not derived from such trade or 
    business. For purposes of the preceding sentence--
            (A) any gain or loss from the sale or other disposition of--
                (i) property, used in the trade or business, of a 
            character which is subject to the allowance for depreciation 
            provided in section 167, or
                (ii) real property used in the trade or business,

        shall be treated as attributable to the trade or business;
            (B) the modifications specified in paragraphs (1), (2)(B), 
        and (3) shall be taken into account;
            (C) any deduction for casualty or theft losses allowable 
        under paragraph (2) or (3) of section 165(c) shall be treated as 
        attributable to the trade or business; and
            (D) any deduction allowed under section 404 to the extent 
        attributable to contributions which are made on behalf of an 
        individual who is an employee within the meaning of section 
        401(c)(1) shall not be treated as attributable to the trade or 
        business of such individual.

      (5) Computation of deduction for dividends received, etc.

        The deductions allowed by sections 243 (relating to dividends 
    received by corporations), 244 (relating to dividends received on 
    certain preferred stock of public utilities), and 245 (relating to 
    dividends received from certain foreign corporations) shall be 
    computed without regard to section 246(b) (relating to limitation on 
    aggregate amount of deductions); and the deduction allowed by 
    section 247 (relating to dividends paid on certain preferred stock 
    of public utilities) shall be computed without regard to subsection 
    (a)(1)(B) of such section.

     (6) Modifications related to real estate investment trusts

        In the case of any taxable year for which part II of subchapter 
    M (relating to real estate investment trusts) applies to the 
    taxpayer--
            (A) the net operating loss for such taxable year shall be 
        computed by taking into account the adjustments described in 
        section 857(b)(2) (other than the deduction for dividends paid 
        described in section 857(b)(2)(B)); and
            (B) where such taxable year is a ``prior taxable year'' 
        referred to in paragraph (2) of subsection (b), the term 
        ``taxable income'' in such paragraph shall mean ``real estate 
        investment trust taxable income'' (as defined in section 
        857(b)(2)).

(e) Law applicable to computations

    In determining the amount of any net operating loss carryback or 
carryover to any taxable year, the necessary computations involving any 
other taxable year shall be made under the law applicable to such other 
taxable year.

(f) Rules relating to specified liability loss

    For purposes of this section--

                           (1) In general

        The term ``specified liability loss'' means the sum of the 
    following amounts to the extent taken into account in computing the 
    net operating loss for the taxable year:
            (A) Any amount allowable as a deduction under section 162 or 
        165 which is attributable to--
                (i) product liability, or
                (ii) expenses incurred in the investigation or 
            settlement of, or opposition to, claims against the taxpayer 
            on account of product liability.

            (B)(i) Any amount allowable as a deduction under this 
        chapter (other than section 468(a)(1) or 468A(a)) which is in 
        satisfaction of a liability under a Federal or State law 
        requiring--
                (I) the reclamation of land,
                (II) the decommissioning of a nuclear power plant (or 
            any unit thereof),
                (III) the dismantlement of a drilling platform,
                (IV) the remediation of environmental contamination, or
                (V) a payment under any workers compensation act (within 
            the meaning of section 461(h)(2)(C)(i)).

            (ii) A liability shall be taken into account under this 
        subparagraph only if--
                (I) the act (or failure to act) giving rise to such 
            liability occurs at least 3 years before the beginning of 
            the taxable year, and
                (II) the taxpayer used an accrual method of accounting 
            throughout the period or periods during which such act (or 
            failure to act) occurred.

                           (2) Limitation

        The amount of the specified liability loss for any taxable year 
    shall not exceed the amount of the net operating loss for such 
    taxable year.

              (3) Special rule for nuclear powerplants

        Except as provided in regulations prescribed by the Secretary, 
    that portion of a specified liability loss which is attributable to 
    amounts incurred in the decommissioning of a nuclear powerplant (or 
    any unit thereof) may, for purposes of subsection (b)(1)(C), be 
    carried back to each of the taxable years during the period--
            (A) beginning with the taxable year in which such plant (or 
        unit thereof) was placed in service, and
            (B) ending with the taxable year preceding the loss year.

                        (4) Product liability

        The term ``product liability'' means--
            (A) liability of the taxpayer for damages on account of 
        physical injury or emotional harm to individuals, or damage to 
        or loss of the use of property, on account of any defect in any 
        product which is manufactured, leased, or sold by the taxpayer, 
        but only if
            (B) such injury, harm, or damage arises after the taxpayer 
        has completed or terminated operations with respect to, and has 
        relinquished possession of, such product.

               (5) Coordination with subsection (b)(2)

        For purposes of applying subsection (b)(2), a specified 
    liability loss for any taxable year shall be treated as a separate 
    net operating loss for such taxable year to be taken into account 
    after the remaining portion of the net operating loss for such 
    taxable year.

                            (6) Election

        Any taxpayer entitled to a 10-year carryback under subsection 
    (b)(1)(C) from any loss year may elect to have the carryback period 
    with respect to such loss year determined without regard to 
    subsection (b)(1)(C). Such election shall be made in such manner as 
    may be prescribed by the Secretary and shall be made by the due date 
    (including extensions of time) for filing the taxpayer's return for 
    the taxable year of the net operating loss. Such election, once made 
    for any taxable year, shall be irrevocable for that taxable year.

(g) Rules relating to bad debt losses of commercial banks

    For purposes of this section--

         (1) Portion attributable to deduction for bad debts

        The portion of the net operating loss for any taxable year which 
    is attributable to the deduction allowed under section 166(a) shall 
    be the excess of--
            (i) the net operating loss for such taxable year, over
            (ii) the net operating loss for such taxable year determined 
        without regard to the amount allowed as a deduction under 
        section 166(a) for such taxable year.

               (2) Coordination with subsection (b)(2)

        For purposes of subsection (b)(2), the portion of a net 
    operating loss for any taxable year which is attributable to the 
    deduction allowed under section 166(a) shall be treated in a manner 
    similar to the manner in which a specified liability loss is 
    treated.

(h) Corporate equity reduction interest losses

    For purposes of this section--

                           (1) In general

        The term ``corporate equity reduction interest loss'' means, 
    with respect to any loss limitation year, the excess (if any) of--
            (A) the net operating loss for such taxable year, over
            (B) the net operating loss for such taxable year determined 
        without regard to any allocable interest deductions otherwise 
        taken into account in computing such loss.

                  (2) Allocable interest deductions

        (A) In general

            The term ``allocable interest deductions'' means deductions 
        allowed under this chapter for interest on the portion of any 
        indebtedness allocable to a corporate equity reduction 
        transaction.

        (B) Method of allocation

            Except as provided in regulations and subparagraph (E), 
        indebtedness shall be allocated to a corporate equity reduction 
        transaction in the manner prescribed under clause (ii) of 
        section 263A(f)(2)(A) (without regard to clause (i) thereof).

        (C) Allocable deductions not to exceed interest increases

            Allocable interest deductions for any loss limitation year 
        shall not exceed the excess (if any) of--
                (i) the amount allowable as a deduction for interest 
            paid or accrued by the taxpayer during the loss limitation 
            year, over
                (ii) the average of such amounts for the 3 taxable years 
            preceding the taxable year in which the corporate equity 
            reduction transaction occurred.

        (D) De minimis rule

            A taxpayer shall be treated as having no allocable interest 
        deductions for any taxable year if the amount of such deductions 
        (without regard to this subparagraph) is less than $1,000,000.

        (E) Special rule for certain unforeseeable events

            If an unforeseeable extraordinary adverse event occurs 
        during a loss limitation year but after the corporate equity 
        reduction transaction--
                (i) indebtedness shall be allocated in the manner 
            described in subparagraph (B) to unreimbursed costs paid or 
            incurred in connection with such event before being 
            allocated to the corporate equity reduction transaction, and
                (ii) the amount determined under subparagraph (C)(i) 
            shall be reduced by the amount of interest on indebtedness 
            described in clause (i).

        (F) Transition rule

            If any of the 3 taxable years described in subparagraph 
        (C)(ii) end on or before August 2, 1989, the taxpayer may 
        substitute for the amount determined under such subparagraph an 
        amount equal to the interest paid or accrued (determined on an 
        annualized basis) during the taxpayer's taxable year which 
        includes August 3, 1989, on indebtedness of the taxpayer 
        outstanding on August 2, 1989.

             (3) Corporate equity reduction transaction

        (A) In general

            The term ``corporate equity reduction transaction'' means--
                (i) a major stock acquisition, or
                (ii) an excess distribution.

        (B) Major stock acquisition

            (i) In general

                The term ``major stock acquisition'' means the 
            acquisition by a corporation pursuant to a plan of such 
            corporation (or any group of persons acting in concert with 
            such corporation) of stock in another corporation 
            representing 50 percent or more (by vote or value) of the 
            stock in such other corporation.
            (ii) Exception

                The term ``major stock acquisition'' does not include a 
            qualified stock purchase (within the meaning of section 338) 
            to which an election under section 338 applies.

        (C) Excess distribution

            The term ``excess distribution'' means the excess (if any) 
        of--
                (i) the aggregate distributions (including redemptions) 
            made during a taxable year by a corporation with respect to 
            its stock, over
                (ii) the greater of--
                    (I) 150 percent of the average of such distributions 
                during the 3 taxable years immediately preceding such 
                taxable year, or
                    (II) 10 percent of the fair market value of the 
                stock of such corporation as of the beginning of such 
                taxable year.

        (D) Rules for applying subparagraph (B)

            For purposes of subparagraph (B)--
            (i) Plans to acquire stock

                All plans referred to in subparagraph (B) by any 
            corporation (or group of persons acting in concert with such 
            corporation) with respect to another corporation shall be 
            treated as 1 plan.
            (ii) Acquisitions during 24-month period

                All acquisitions during any 24-month period shall be 
            treated as pursuant to 1 plan.

        (E) Rules for applying subparagraph (C)

            For purposes of subparagraph (C)--
            (i) Certain preferred stock disregarded

                Stock described in section 1504(a)(4), and distributions 
            (including redemptions) with respect to such stock, shall be 
            disregarded.
            (ii) Issuance of stock

                The amounts determined under clauses (i) and (ii)(I) of 
            subparagraph (C) shall be reduced by the aggregate amount of 
            stock issued by the corporation during the applicable period 
            in exchange for money or property other than stock in the 
            corporation.

                           (4) Other rules

        (A) Ordering rule

            For purposes of paragraph (1), in determining the allocable 
        interest deductions taken into account in computing the net 
        operating loss for any taxable year, taxable income for such 
        taxable year shall be treated as having been computed by taking 
        allocable interest deductions into account after all other 
        deductions.

        (B) Coordination with subsection (b)(2)

            For purposes of subsection (b)(2)--
                (i) a corporate equity reduction interest loss shall be 
            treated in a manner similar to the manner in which a 
            specified liability loss is treated, and
                (ii) in determining the net operating loss deduction for 
            any prior taxable year referred to in the 3rd sentence of 
            subsection (b)(2), the portion of any net operating loss 
            which may not be carried to such taxable year under 
            subsection (b)(1)(E) shall not be taken into account.

        (C) Members of affiliated groups

            Except as provided by regulations, all members of an 
        affiliated group filing a consolidated return under section 1501 
        shall be treated as 1 taxpayer for purposes of this subsection 
        and subsection (b)(1)(E).

                           (5) Regulations

        The Secretary shall prescribe such regulations as may be 
    necessary to carry out the purposes of this subsection, including 
    regulations--
            (A) for applying this subsection to successor corporations 
        and in cases where a taxpayer becomes, or ceases to be, a member 
        of an affiliated group filing a consolidated return under 
        section 1501,
            (B) to prevent the avoidance of this subsection through 
        related parties, pass-through entities, and intermediaries, and
            (C) for applying this subsection where more than 1 
        corporation is involved in a corporate equity reduction 
        transaction.

(i) Rules relating to farming losses

    For purposes of this section--

                           (1) In general

        The term ``farming loss'' means the lesser of--
            (A) the amount which would be the net operating loss for the 
        taxable year if only income and deductions attributable to 
        farming businesses (as defined in section 263A(e)(4)) are taken 
        into account, or
            (B) the amount of the net operating loss for such taxable 
        year.

               (2) Coordination with subsection (b)(2)

        For purposes of applying subsection (b)(2), a farming loss for 
    any taxable year shall be treated in a manner similar to the manner 
    in which a specified liability loss is treated.

                            (3) Election

        Any taxpayer entitled to a 5-year carryback under subsection 
    (b)(1)(G) from any loss year may elect to have the carryback period 
    with respect to such loss year determined without regard to 
    subsection (b)(1)(G). Such election shall be made in such manner as 
    may be prescribed by the Secretary and shall be made by the due date 
    (including extensions of time) for filing the taxpayer's return for 
    the taxable year of the net operating loss. Such election, once made 
    for any taxable year, shall be irrevocable for such taxable year.

(j) Cross references

            (1) For treatment of net operating loss carryovers in 
        certain corporate acquisitions, see section 381.
            (2) For special limitation on net operating loss carryovers 
        in case of a corporate change of ownership, see section 382.

(Aug. 16, 1954, ch. 736, 68A Stat. 63; Pub. L. 85-866, title I, 
Secs. 14(a), (b), 64(b), title II, Sec. 203(a), (b), Sept. 2, 1958, 72 
Stat. 1611, 1656, 1678; Pub. L. 87-710, Sec. 1, Sept. 27, 1962, 76 Stat. 
648; Pub. L. 87-792, Sec. 7(f), Oct. 10, 1962, 76 Stat. 829; Pub. L. 87-
794, title III, Sec. 317(b), Oct. 11, 1962, 76 Stat. 889; Pub. L. 88-
272, title II, Secs. 210(a), (b), 234(b)(5), Feb. 26, 1964, 78 Stat. 47, 
48, 115; Pub. L. 90-225, Sec. 3(a), Dec. 27, 1967, 81 Stat. 732; Pub. L. 
91-172, title IV, Sec. 431(b), Dec. 30, 1969, 83 Stat. 619; Pub. L. 91-
677, Sec. 2(a)-(c), Jan. 12, 1971, 84 Stat. 2061; Pub. L. 94-455, title 
VIII, Sec. 806(a)-(c), title X, Sec. 1052(c)(3), title XVI, 
Sec. 1606(b), (c), title XIX, Secs. 1901(a)(29), 1906(b)(13)(A), title 
XXI, Sec. 2126, Oct. 4, 1976, 90 Stat. 1598, 1648, 1755, 1756, 1769, 
1834, 1920; Pub. L. 95-30, title I, Sec. 102(b)(2), May 23, 1977, 91 
Stat. 137; Pub. L. 95-600, title III, Sec. 371(a), (b), title VI, 
Sec. 601(b)(1), title VII, Secs. 701(d)(1), 703(p)(1), Nov. 6, 1978, 92 
Stat. 2859, 2896, 2900, 2943; Pub. L. 96-222, title I, Secs. 103(a)(15), 
106(a)(1), (6), (7), Apr. 1, 1980, 94 Stat. 214, 221; Pub. L. 96-595, 
Sec. 1(a), Dec. 24, 1980, 94 Stat. 3464; Pub. L. 97-34, title II, 
Sec. 207(a), Aug. 13, 1981, 95 Stat. 225; Pub. L. 97-354, Sec. 5(a)(22), 
Oct. 19, 1982, 96 Stat. 1694; Pub. L. 97-362, title I, Sec. 102(a)-(c), 
Oct. 25, 1982, 96 Stat. 1727, 1728; Pub. L. 98-369, div. A, title I, 
Secs. 91(d), 177(c), title IV, Sec. 491(d)(5), title VII, 
Sec. 722(a)(4), July 18, 1984, 98 Stat. 606, 710, 849, 973; Pub. L. 99-
514, title I, Sec. 104(b)(4), title III, Sec. 301(b)(3), title IX, 
Secs. 901(d)(4)(B), 903(a), (b), title XIII, Sec. 1303(b)(1), (2), title 
XVIII, Sec. 1899A(6), Oct. 22, 1986, 100 Stat. 2105, 2217, 2380, 2383, 
2658, 2958; Pub. L. 100-647, title I, Secs. 1003(a)(1), 1009(c), Nov. 
10, 1988, 102 Stat. 3382, 3449; Pub. L. 101-239, title VII, 
Sec. 7211(a), (b), Dec. 19, 1989, 103 Stat. 2342, 2343; Pub. L. 101-508, 
title XI, Secs. 11324(a), 11701(d), 11704(a)(2), 11811(a)-(b)(2)(A), 
(3), (4), Nov. 5, 1990, 104 Stat. 1388-465, 1388-507, 1388-518, 1388-
530, 1388-532 to 1388-534; Pub. L. 103-66, title XIII, Sec. 13113(d)(1), 
Aug. 10, 1993, 107 Stat. 429; Pub. L. 104-188, title I, 
Secs. 1702(h)(2), (16), 1704(t)(5), (30), Aug. 20, 1996, 110 Stat. 1873, 
1874, 1887, 1889; Pub. L. 105-34, title X, Sec. 1082(a), (b), Aug. 5, 
1997, 111 Stat. 950; Pub. L. 105-277, div. J, title II, Sec. 2013(a)-
(c), title III, Sec. 3004(a), title IV, Secs. 4003(h), 4004(a), Oct. 21, 
1998, 112 Stat. 2681-902, 2681-905, 2681-910.)


                               Amendments

    1998--Subsec. (b)(1)(F)(ii). Pub. L. 105-277, Sec. 2013(c), inserted 
concluding provisions.
    Subsec. (b)(1)(F)(iv). Pub. L. 105-277, Sec. 4003(h), added cl. 
(iv).
    Subsec. (b)(1)(G). Pub. L. 105-277, Sec. 2013(a), added subpar. (G).
    Subsec. (d)(4)(C). Pub. L. 105-277, Sec. 4004(a), amended subpar. 
(C) generally. Prior to amendment, subpar. (C) read as follows: ``any 
deduction allowable under section 165(c)(3) (relating to casualty 
losses) shall not be taken into account; and''.
    Subsec. (f)(1)(B). Pub. L. 105-277, Sec. 3004(a), amended subpar. 
(B) generally. Prior to amendment, subpar. (B) read as follows: ``Any 
amount (not described in subparagraph (A)) allowable as a deduction 
under this chapter with respect to a liability which arises under a 
Federal or State law or out of any tort of the taxpayer if--
        ``(i) in the case of a liability arising out of a Federal or 
    State law, the act (or failure to act) giving rise to such liability 
    occurs at least 3 years before the beginning of the taxable year, or
        ``(ii) in the case of a liability arising out of a tort, such 
    liability arises out of a series of actions (or failures to act) 
    over an extended period of time a substantial portion of which 
    occurs at least 3 years before the beginning of the taxable year.
A liability shall not be taken into account under subparagraph (B) 
unless the taxpayer used an accrual method of accounting throughout the 
period or periods during which the acts or failures to act giving rise 
to such liability occurred.''
    Subsecs. (i), (j). Pub. L. 105-277, Sec. 2013(b), added subsec. (i) 
and redesignated former subsec. (i) as (j).
    1997--Subsec. (b)(1)(A)(i). Pub. L. 105-34, Sec. 1082(a)(1), 
substituted ``2'' for ``3''.
    Subsec. (b)(1)(A)(ii). Pub. L. 105-34, Sec. 1082(a)(2), substituted 
``20'' for ``15''.
    Subsec. (b)(1)(F). Pub. L. 105-34, Sec. 1082(b), added subpar. (F).
    1996--Subsec. (b)(1)(E)(ii). Pub. L. 104-188, Sec. 1702(h)(2), 
substituted ``subsection (h)'' for ``subsection (m)''.
    Subsec. (h)(3)(B)(i). Pub. L. 104-188, Sec. 1704(t)(5), substituted 
``corporation.'' for ``corporation,'' at end.
    Subsec. (h)(4)(B). Pub. L. 104-188, Sec. 1704(t)(30), substituted 
``For purposes of subsection (b)(2)--'' for ``For purposes of subsection 
(b)(2)'' in introductory provisions.
    Subsec. (h)(4)(C). Pub. L. 104-188, Sec. 1702(h)(16), substituted 
``(b)(1)(E)'' for ``(b)(1)(M)''.
    1993--Subsec. (d)(2). Pub. L. 103-66, Sec. 13113(d)(1)(A), amended 
heading and text of par. (2) generally. Prior to amendment, text read as 
follows: ``In the case of a taxpayer other than a corporation, the 
amount deductible on account of losses from sales or exchanges of 
capital assets shall not exceed the amount includible on account of 
gains from sales or exchanges of capital assets.''
    Subsec. (d)(4)(B). Pub. L. 103-66, Sec. 13113(d)(1)(B), which 
directed the insertion of ``, (2)(B),'' after ``paragraph (1)'', was 
executed by making the insertion after ``paragraphs (1)'' to reflect the 
probable intent of Congress.
    1990--Subsec. (b). Pub. L. 101-508, Sec. 11811(a), amended subsec. 
(b) generally, substituting present provisions for provisions 
delineating years to which loss may be carried, relating to amount of 
carrybacks and carryovers, and providing for special rules for foreign 
expropriation losses.
    Subsec. (b)(1)(M)(iii). Pub. L. 101-508, Sec. 11701(d), struck out 
``a C corporation'' after ``means'' in introductory provisions, 
substituted ``a C corporation which acquires'' for ``which acquires'' in 
subcl. (I), ``a C corporation'' for ``a corporation'' in subcl. (II), 
and ``any C corporation which is a successor'' for ``any successor 
corporation'' in subcl. (III).
    Subsec. (f). Pub. L. 101-508, Sec. 11811(b)(1), (2)(A), redesignated 
subsec. (j) as (f), substituted heading for one which read: ``Rules 
relating to product liability losses'', and amended text generally, 
substituting present provisions for provisions defining terms ``product 
liability loss'' and ``product liability'', and providing for an 
election with respect to carrybacks of such losses.
    Subsec. (g). Pub. L. 101-508, Sec. 11811(b)(1), redesignated subsec. 
(l) as (g) and struck out former subsec. (g) which related to carryover 
of net operating losses for certain regulated transportation 
corporations.
    Subsec. (g)(2). Pub. L. 101-508, Sec. 11811(b)(3), amended par. (2) 
generally. Prior to amendment, par. (2) read as follows: ``In applying 
paragraph (2) of subsection (b), the portion of the net operating loss 
for any taxable year which is attributable to the deduction allowed 
under section 166(a) shall be treated in a manner similar to the manner 
in which a foreign expropriation loss is treated.''
    Subsec. (h). Pub. L. 101-508, Sec. 11811(b)(1), redesignated subsec. 
(m) as (h) and struck out former subsec. (h) which defined ``foreign 
expropriation loss''.
    Subsec. (h)(3)(B)(ii). Pub. L. 101-508, Sec. 11324(a), in par. 
(3)(B)(ii), formerly subsec. (m)(3)(B)(ii), substituted heading for one 
which read: ``Exceptions'' and amended text generally. Prior to 
amendment, text read as follows: ``The term `major stock acquisition' 
shall not include--
        ``(I) a qualified stock purchase (within the meaning of section 
    338) to which an election under section 338 applies, or
        ``(II) except as provided in regulations, an acquisition in 
    which a corporation acquires stock of another corporation which, 
    immediately before the acquisition, was a member of an affiliated 
    group (within the meaning of section 1504(a)) other than the common 
    parent of such group.''
    Subsec. (h)(4)(B). Pub. L. 101-508, Sec. 11811(b)(4), amended 
subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: 
``In applying paragraph (2) of subsection (b), the corporate equity 
reduction interest loss shall be treated in a manner similar to the 
manner in which a foreign expropriation loss is treated.''
    Pub. L. 101-508, Sec. 11704(a)(2), substituted ``subsection (b)(2)'' 
for ``subsection (B)(2)'' in heading.
    Subsec. (i). Pub. L. 101-508, Sec. 11811(b)(1), redesignated subsec. 
(n) as (i) and struck out former subsec. (i) which provided for rules 
relating to mortgage disposition losses of the Federal National Mortgage 
Association or the Federal Home Loan Mortgage Corporation.
    Subsec. (j). Pub. L. 101-508, Sec. 11811(b)(1), redesignated subsec. 
(j) as (f).
    Subsec. (k). Pub. L. 101-508, Sec. 11811(b)(1), struck out subsec. 
(k) which related to definitions and special rules relating to deferred 
statutory or tort liability losses.
    Subsecs. (l) to (n). Pub. L. 101-508, Sec. 11811(b)(1), redesignated 
subsecs. (l) to (n) as (g) to (i), respectively.
    1989--Subsec. (b)(1)(M). Pub. L. 101-239, Sec. 7211(a), added 
subpar. (M).
    Subsecs. (m), (n). Pub. L. 101-239, Sec. 7211(b), added subsec. (m) 
and redesignated former subsec. (m) as (n).
    1988--Subsec. (b)(1)(A). Pub. L. 100-647, Sec. 1009(c)(2), 
substituted ``Except as otherwise provided in this paragraph, a net 
operating loss'' for ``Except as provided in subparagraphs (D), (E), 
(F), (G), (H), (I), (J), (K), (L), and (M), a net operating loss''.
    Subsec. (b)(1)(B). Pub. L. 100-647, Sec. 1009(c)(3), amended subpar. 
(B) generally. Prior to amendment, subpar. (B) read as follows: ``Except 
as provided in subparagraphs (C), (D), and (E), a net operating loss for 
any taxable year ending after December 31, 1955, shall be a net 
operating loss carryover to each of the 5 taxable years following the 
taxable year of such loss. Except as provided in subparagraphs (C), (D), 
(E), (F), (G), (H), (J), (L), and (M), a net operating loss for any 
taxable year ending after December 31, 1975, shall be a net operating 
loss carryover to each of the 15 taxable years following the taxable 
year of such loss.''
    Subsec. (b)(1)(K) to (M). Pub. L. 100-647, Sec. 1009(c)(1), 
redesignated subpars. (L) and (M) as (K) and (L), respectively.
    Subsec. (d)(4)(B). Pub. L. 100-647, Sec. 1003(a)(1), substituted 
``paragraphs (1) and (3)'' for ``paragraphs (1), (2)(B), and (3)''.
    1986--Subsec. (b)(1)(A), (B). Pub. L. 99-514, Sec. 903(b)(2)(A), 
(B), inserted reference to subpars. (L) and (M).
    Subsec. (b)(1)(F). Pub. L. 99-514, Sec. 903(a)(1), inserted ``and 
before January 1, 1987,''.
    Pub. L. 99-514, Sec. 901(d)(4)(B), substituted ``referred to in 
section 582(c)(5)'' for ``to which section 585, 586, or 593 applies''.
    Subsec. (b)(1)(G). Pub. L. 99-514, Sec. 903(a)(2), inserted ``and 
before January 1, 1987,''.
    Subsec. (b)(1)(H). Pub. L. 99-514, Sec. 903(a)(3)(A), struck out 
``after December 31, 1981,'' and inserted ``after December 31, 1981, and 
before January 1, 1987,''.
    Pub. L. 99-514, Sec. 903(a)(3)(B), which directed that subpar. (H) 
be amended by striking out ``after December 31, 1984,'' and inserting 
``after December 31, 1984, and before January 1, 1987,'', was executed 
by striking out ``after December 31, 1984'' and inserting ``after 
December 31, 1984, and before January 1, 1987'', to reflect the probable 
intent of Congress and the fact that no comma appeared after ``1984'' 
and was not necessary after ``1987''.
    Subsec. (b)(1)(J), (K). Pub. L. 99-514, Sec. 1303(b)(1), 
redesignated subpar. (K) as (J) and struck out former subpar. (J) which 
read as follows: ``In the case of an electing GSOC which has a net 
operating loss for any taxable year such loss shall not be a net 
operating loss carryback to any taxable year preceding the year of such 
loss, but shall be a net operating loss carryover to each of the 10 
taxable years following the year of such loss.''
    Subsec. (b)(1)(L), (M). Pub. L. 99-514, Sec. 903(b)(1), added 
subpars. (L) and (M).
    Subsec. (d)(2). Pub. L. 99-514, Sec. 301(b)(3), amended par. (2) 
generally. Prior to amendment, par. (2) read as follows: ``In the case 
of a taxpayer other than a corporation--
        ``(A) the amount deductible on account of losses from sales or 
    exchanges of capital assets shall not exceed the amount includible 
    on account of gains from sales or exchanges of capital assets; and
        ``(B) the deduction for long-term capital gains provided by 
    section 1202 shall not be allowed.''
    Subsec. (d)(6). Pub. L. 99-514, Sec. 1899A(6), added heading.
    Subsec. (d)(7). Pub. L. 99-514, Sec. 104(b)(4), struck out par. (7), 
zero bracket amount, which read as follows: ``In the case of a taxpayer 
other than a corporation, the zero bracket amount shall be treated as a 
deduction allowed by this chapter. For purposes of subsection (c)--
        ``(A) the deduction provided by the preceding sentence shall be 
    in lieu of any itemized deductions of the taxpayer, and
        ``(B) such sentence shall not apply to an individual who elects 
    to itemize deductions.''
    Subsec. (k)(2), (4). Pub. L. 99-514, Sec. 1303(b)(2), substituted 
``subsection (b)(1)(J)'' for ``subsection (b)(1)(K)''.
    Subsecs. (l), (m). Pub. L. 99-514, Sec. 903(b)(2)(C), added subsec. 
(l) and redesignated former subsec. (l) as (m).
    1984--Subsec. (b)(1)(A). Pub. L. 98-369, Sec. 91(d)(3)(A), 
substituted ``(J), and (K)'' for ``and (J)''.
    Subsec. (b)(1)(H). Pub. L. 98-369, Sec. 177(c)(1)(A), inserted ``, 
or a net operating loss of the Federal Home Loan Mortgage Corporation 
for any taxable year beginning after December 31, 1984'' in introductory 
provisions.
    Subsec. (b)(1)(H)(i), (ii). Pub. L. 98-369, Sec. 177(c)(1)(B), (C), 
struck out ``FNMA'' before ``mortgage disposition loss''.
    Subsec. (b)(1)(K). Pub. L. 98-369, Sec. 91(d)(1), added subpar. (K).
    Subsec. (b)(2)(A). Pub. L. 98-369, Sec. 722(a)(4)(A), substituted 
``and (5)'' for ``and (6)''.
    Subsec. (d)(4)(D). Pub. L. 98-369, Sec. 491(d)(5), struck out ``or 
section 405(c)'' after ``section 404''.
    Subsec. (d)(6) to (8). Pub. L. 98-369, Sec. 722(a)(4)(B), 
redesignated pars. (7) and (8) as (6) and (7), respectively.
    Subsec. (h). Pub. L. 98-369, Sec. 91(d)(3)(B), substituted ``this 
section'' for ``subsection (b)'' in introductory provisions.
    Subsec. (i). Pub. L. 98-369, Sec. 177(c)(2), substituted ``Mortgage 
disposition loss of the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation'' for ``FNMA mortgage disposition 
loss'' in heading and struck out ``FNMA'' before ``mortgage disposition 
loss'' wherever appearing in text.
    Subsec. (j). Pub. L. 98-369, Sec. 91(d)(3)(B), substituted ``this 
section'' for ``subsection (b)'' in introductory provisions.
    Subsecs. (k), (l). Pub. L. 98-369, Sec. 91(d)(2), added subsec. (k) 
and redesignated former subsec. (k) as (l).
    1982--Subsec. (b)(1)(A). Pub. L. 97-362, Sec. 102(c)(1), substituted 
``(H), (I), and (J)'' for ``(H), and (I)''.
    Subsec. (b)(1)(B). Pub. L. 97-362, Sec. 102(c)(2), substituted 
``(H), and (J)'' for ``and (I)''.
    Subsec. (b)(1)(H). Pub. L. 97-362, Sec. 102(a), added subpar. (H). 
Former subpar. (H) redesignated (I).
    Subsec. (b)(1)(I). Pub. L. 97-362, Sec. 102(a), (c)(3), redesignated 
former subpar. (H) as (I) and substituted ``subsection (j)'' for 
``subsection (i)''. Former subpar. (I) redesignated (J).
    Subsec. (b)(1)(J). Pub. L. 97-362, Sec. 102(a), redesignated former 
subpar. (I) as (J).
    Subsec. (f). Pub. L. 97-354 struck out subsec. (f) relating to net 
operating loss of electing small business corporation.
    Subsec. (i). Pub. L. 97-362, Sec. 102(b), added subsec. (i). Former 
subsec. (i) redesignated (j).
    Subsec. (j). Pub. L. 97-362, Sec. 102(b), (c)(4), redesignated 
former subsec. (i) as (j) and, in par. (3) of subsec. (j) as so 
redesignated, substituted ``subsection (b)(1)(I)'' for ``subsection 
(b)(1)(H)'' wherever appearing. Former subsec. (j) redesignated (k).
    Subsec. (k). Pub. L. 97-362, Sec. 102(b), redesignated former 
subsec. (j) as (k).
    1981--Subsec. (b)(1)(B). Pub. L. 97-34, Sec. 207(a)(1), substituted 
``15 taxable years'' for ``7 taxable years''.
    Subsec. (b)(1)(C). Pub. L. 97-34, Sec. 207(a)(2)(A), substituted 
``ending after December 31, 1955, and before January 1, 1976, shall'' 
for ``ending after December 31, 1955, shall'' and struck out provision 
that, for any taxable year ending after Dec. 31, 1975, the preceding 
sentence was to be applied by substituting ``9 taxable years'' for ``7 
taxable years''.
    Subsec. (b)(1)(E)(i)(II). Pub. L. 97-34, Sec. 207(a)(2)(B)(i), 
substituted ``15'' for ``8''.
    Subsec. (b)(1)(E)(ii). Pub. L. 97-34, Sec. 207(a)(2)(B)(ii), struck 
out designation subclause ``(I)'' for provisions prohibiting a loss 
carryback to any taxable year which is a REIT year and struck out 
provision formerly designated as subclause (II) directing that the 
number of taxable years to which a loss could be a net operating loss 
carryover under subparagraph (B) be increased (to a number not greater 
than 8) by the number of taxable years to which such loss could not be a 
net operating loss carryback by reason of subclause (I).
    Subsec. (g)(3)(C). Pub. L. 97-34, Sec. 207(a)(2)(C), struck out 
subpar. (C) which provided that, in the case of a net operating loss 
carryover from a loss year ending after Dec. 31, 1975, subpars. (A) and 
(B) were to be applied by substituting ``8th taxable year'' for ``6th 
taxable year'' and ``9th taxable year'' for ``7th taxable year''.
    1980--Subsec. (b)(1)(A). Pub. L. 96-222, Sec. 106(a)(6), substituted 
``, (H), and (I)'' for ``and (H)''.
    Pub. L. 96-222, Sec. 103(a)(15), amended directory language of Pub. 
L. 95-600, Sec. 371(a)(2), to correct an error, and did not involve any 
change in text. See 1978 Amendment note for subsec. (b)(1)(A) below.
    Subsec. (b)(1)(B). Pub. L. 96-222, Sec. 106(a)(7), substituted 
``(G), and (I)'' for ``and (G)''.
    Subsec. (b)(1)(E). Pub. L. 96-595 generally revised subpar. (E) to 
permit a trust which was formerly a real estate investment trust an 
additional year of carryforward of net operating losses for each year it 
was denied a net operating loss carryback because of its status as a 
real estate investment trust, and removed the restriction that a net 
operating loss incurred before 1976 can be carried forward to the 6th, 
7th, or 8th year only if it qualified as a real estate investment trust 
for all years from the loss year through the carryover year.
    Subsec. (b)(1)(I). Pub. L. 96-222, Sec. 106(a)(1), redesignated 
former subpar. (H), added by section 601(b) of Pub. L. 95-600 relating 
to an electing GSOC, as (I).
    1978--Subsec. (b)(1)(A). Pub. L. 95-600, Sec. 371(a)(2), as amended 
by Pub. L. 96-222, Sec. 103(a)(15), substituted ``(G), and (H)'' for 
``and (G)''.
    Pub. L. 95-600, Sec. 703(p)(1)(A), struck out provisions relating to 
net operating loss carryback with respect to a taxable year ending on or 
after Dec. 31, 1962, for which a certification has been issued under 
section 317 of the Trade Expansion Act of 1962.
    Subsec. (b)(1)(B). Pub. L. 95-600, Sec. 701(d)(1), inserted 
reference to subpar. (G).
    Subsec. (b)(1)(H). Pub. L. 95-600, Sec. 371(a)(1), added subpar. (H) 
relating to product liability losses.
    Pub. L. 95-600, Sec. 601(b)(1), added subpar. (H) relating to an 
electing GSOC.
    Subsec. (b)(3)(A). Pub. L. 95-600, Sec. 703(p)(1)(B), redesignated 
subpar. (C) as (A). Former subpar. (A), which related to conditions for 
application of paragraph (1)(A)(ii), was struck out.
    Subsec. (b)(3)(B). Pub. L. 95-600, Sec. 703(p)(1)(B), (C), 
redesignated subpar. (D) as (B) and substituted ``subparagraph 
(A)(iii)'' for ``subparagraph (C)(iii)''. Former subpar. (B), which 
related to the applicability of paragraph (1)(A)(ii) to partnerships and 
electing small business corporations, was struck out.
    Subsec. (b)(3)(C). Pub. L. 95-600, Sec. 703(p)(1)(B), redesignated 
subpar. (E) as (C). Former subpar. (C) redesignated (A).
    Subsec. (b)(3)(D), (E). Pub. L. 95-600, Sec. 703(p)(1)(B), 
redesignated subpars. (D) and (E) as (B) and (C), respectively.
    Subsecs. (i), (j). Pub. L. 95-600, Sec. 371(b), added subsec. (i) 
and redesignated former subsec. (i) as (j).
    1977--Subsec. (d)(8). Pub. L. 95-30 added par. (8).
    1976--Subsec. (b)(1)(B). Pub. L. 94-455, Sec. 806(a), inserted 
``Except as provided in subparagraphs (C), (D), (E), and (F), a net 
operating loss for any taxable year ending after December 31, 1975, 
shall be a net operating loss carryover to each of the 7 taxable years 
following the taxable year of such loss'' after ``year of such loss''.
    Subsec. (b)(1)(C). Pub. L. 94-455, Secs. 806(b)(1), 
1901(a)(29)(C)(ii), inserted ``For any taxable year ending after 
December 31, 1975, the preceding sentence shall be applied by 
substituting `9 taxable years' for `7 taxable years' '' after ``year of 
such loss'', substituted ``subsection (g)(1)'' for ``subsection (j)(1)'' 
after ``as defined in'' and ``subsection (g)'' for ``subsection (j)'' 
after ``as provided in''.
    Subsec. (b)(1)(D). Pub. L. 94-455, Secs. 1901(a)(29)(C)(iii), 2126, 
substituted ``subsection (h)'' for ``subsection (k)'' after ``as defined 
in'' and ``20'' for ``15'' after ``expropriation loss, to each of the''.
    Subsec. (b)(1)(E). Pub. L. 94-455, Sec. 1606(b), added subpar. (E).
    Subsec. (b)(2). Pub. L. 94-455, Sec. 1901(a)(29)(C)(iv), substituted 
``subsection (g)'' for ``subsections (i) and (j)'' after ``provided 
in''.
    Subsec. (b)(3). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or 
his delegate'' after ``Secretary''.
    Subsec. (b)(3)(A)(i), (ii). Pub. L. 94-455, Sec. 1906(b)(13)(A), 
struck out ``or his delegate'' in two places after ``Secretary''.
    Subsec. (b)(3)(C)(i). Pub. L. 94-455, Sec. 1901(a)(29)(C)(iii), 
substituted ``subsection (h)'' for ``subsection (k)'' after ``as defined 
in''.
    Subsec. (b)(3)(C)(ii), (iii). Pub. L. 94-455, Sec. 1906(b)(13)(A), 
struck out ``Or his delegate'' in two places after ``Secretary''.
    Subsec. (b)(3)(E). Pub. L. 94-455, Secs. 806(c), 1901(a)(29)(A)(ii), 
added subpar. (E). Former subpar. (E), which related to applicability of 
special rules in computing taxpayer's net operating loss deduction, was 
struck out.
    Subsec. (b)(3)(F). Pub. L. 94-455, Sec. 1901(a)(29)(A)(ii), struck 
out subpar. (F) which defined ``class of products'' and provided for the 
use of information compiled or published by Secretary of Commerce or 
manufacturers as prima facie evidence of the total number of units of 
such class of products manufactured and produced in the United States in 
a calendar year.
    Subsec. (c). Pub. L. 94-455, Sec. 1901(a)(29)(B), struck out ``(for 
any taxable year ending after December 31, 1953)'' after ``means''.
    Subsec. (d)(5), (6). Pub. L. 94-455, Sec. 1052(c)(3), struck out 
par. (5) relating to special deductions for corporations concerning 
partially tax-exempt interest and Western Hemisphere corporations, and 
redesignated par. (6) as (5).
    Subsec. (d)(7). Pub. L. 94-455, Sec. 1606(c), added par. (7).
    Subsec. (e). Pub. L. 94-455, Sec. 1901(a)(29)(D), struck out ``The 
preceding sentence shall apply with respect to all taxable years, 
whether they begin before, on, or after January 1, 1954'' after 
``applicable to such other taxable year''.
    Subsec. (f). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated 
subsec. (h) as (f). Former subsec. (f), relating to net operating loss 
deduction for taxable years beginning in 1953 and ending in 1954, was 
struck out.
    Subsec. (g). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated 
subsec. (j) as (g). Former subsec. (g), relating to special transitional 
rules to be applied to net operating loss deductions, was struck out.
    Subsec. (g)(3)(C). Pub. L. 94-455, Sec. 806(b)(2), added subpar. 
(C).
    Subsec. (g)(4). Pub. L. 94-455, Sec. 1901(a)(29)(E), struck out par. 
(4) relating to carryover of net operating loss for certain regulated 
transportation corporations for taxable years beginning in 1955 and 
ending in 1956.
    Subsec. (h). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated 
subsec. (k) as (h). Former subsec. (h) redesignated (f).
    Subsec. (i). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), redesignated 
subsec. (l) as (i). Former subsec. (i), relating to carryback of net 
operating loss for taxable years beginning in 1957 and ending in 1958, 
was struck out.
    Subsecs. (j) to (l). Pub. L. 94-455, Sec. 1901(a)(29)(C)(i), 
redesignated subsecs. (j) to (l) as (g) to (i), respectively.
    1971--Subsec. (b)(1)(D). Pub. L. 91-677, Sec. 2(a), inserted ``(or, 
with respect to that portion of the net operating loss for such year 
attributable to a Cuban expropriation loss, to each of the 15 taxable 
years following the taxable year of such loss)'' after ``the 10 taxable 
years following the taxable year of such loss''.
    Subsec. (b)(2). Pub. L. 91-677, Sec. 2(b), inserted provisions 
relating to treatment of Cuban expropriation losses.
    Subsec. (k)(3). Pub. L. 91-677, Sec. 2(c), added par. (3).
    1969--Subsec. (b)(1). Pub. L. 91-172 substituted ``(E), (F), and 
(G)'', for ``and (E)'' in subpar. (A)(i) and added subpars. (F) and (G).
    1967--Subsec. (b)(1). Pub. L. 90-225, Sec. 3(a)(1)-(3), inserted 
reference to subpar. (E) in subpars. (A)(i) and (B), and added subpar. 
(E).
    Subsec. (b)(3)(E), (F). Pub. L. 90-225, Sec. 3(a)(4), added subpars. 
(E) and (F).
    1964--Subsec. (b). Pub. L. 88-272, Sec. 210(a)(1)-(4), (b), inserted 
subpar. (D) in par. (1), references to such subpar. (D) in par. 
(1)(A)(i) and (1)(B), subpars. (C) and (D) in par. (3), provided that 
the net operating loss deduction in par. (2)(B) be determined without 
regard to that portion of a net operating loss due to a foreign 
expropriation loss, if such portion may not, under par. (1)(D), be 
carried back to such prior taxable year, and that if a portion of the 
net operating loss is attributable to foreign expropriation to which 
par. (1)(D) applied, such portion shall be considered a separate loss 
for such year to be applied after the other portion of such net 
operating loss.
    Subsec. (j)(1), (2), Pub. L. 88-272, Sec. 234(b)(5), substituted 
references to section 7701(a)(33) for references to section 1503(c)(1) 
or (2), wherever appearing.
    Subsecs. (k), (l). Pub. L. 88-272, Sec. 210(a)(5), added subsec. (k) 
and redesignated former subsec. (k) as (l).
    1962--Subsec. (b)(1). Pub. L. 87-794 designated existing provisions 
as cl. (A)(i) and struck out provisions therefrom which authorized a net 
operating loss for any taxable year ending after Dec. 31, 1957, to be a 
net operating loss carryover to each of the 5 taxable years following 
the taxable year of such loss, and added cls. (A)(ii), (B), and (C).
    Subsec. (b)(2). Pub. L. 87-794 inserted reference to subsection (j), 
and substituted ``shall be carried to the earliest of the taxable years 
to which (by reason of paragraph (1))'' for ``shall be carried to the 
earliest of the 8 taxable years to which (by reason of subparagraphs (A) 
and (B) of paragraph (1))'', and ``each of the other taxable years'' for 
``each of the other 7 taxable years''.
    Subsec. (b)(3). Pub. L. 87-794 added par. (3).
    Pub. L. 87-710, Sec. 1(a), authorized a carryover of a net operating 
loss for any taxable year ending after Dec. 31, 1955, to each of the 5 
taxable years following the taxable year of loss, or when such loss 
occurs in the case of regulated transportation corporation, except as 
provided in subsec. (j), then to each of the 7 taxable years following 
the taxable year of loss, and struck out provisions authorizing a net 
operating loss for any taxable years ending Dec. 31, 1957, to be carried 
over to each of the 5 taxable years following the taxable year of such 
loss, in par. (1), and inserted reference to subsec. (j) in par. (2).
    Subsec. (d)(4)(D). Pub. L. 87-792 added subpar. (D).
    Subsecs. (j), (k). Pub. L. 87-710, Sec. 1(b), added subsec. (j) and 
redesignated former subsec. (j) as (k).
    1958--Subsec. (b). Pub. L. 85-866, Sec. 203(a), substituted ``1957'' 
for ``1953'', and ``3'' for ``2'' in par. (1), and substituted 
``subsection (i)'' for ``subsection (f)'', ``8'' for ``7'', and ``7'' 
for ``6'' in par. (2).
    Subsecs. (f)(3), (4). Pub. L. 85-866, Sec. 14(a), added pars. (3) 
and (4).
    Subsec. (g)(3), (4). Pub. L. 85-866, Sec. 14(b), added par. (3) and 
redesignated former par. (3) as (4).
    Subsecs. (h) to (j). Pub. L. 85-866, Secs. 64(b), 203(b), added 
subsecs. (h) and (i) and redesignated former subsec. (h) as (j).


                    Effective Date of 1998 Amendment

    Pub. L. 105-277, div. J, title II, Sec. 2013(d), Oct. 21, 1998, 112 
Stat. 2681-903, provided that: ``The amendments made by this section 
[amending this section] shall apply to net operating losses for taxable 
years beginning after December 31, 1997.''
    Pub. L. 105-277, div. J, title III, Sec. 3004(b), Oct. 21, 1998, 112 
Stat. 2681-906, provided that: ``The amendment made by this section 
[amending this section] shall apply to net operating losses arising in 
taxable years ending after the date of the enactment of this Act [Oct. 
21, 1998].''
    Amendment by section 4003(h) of Pub. L. 105-277 effective as if 
included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 
105-34, to which such amendment relates, see section 4003(l) of Pub. L. 
105-277, set out as a note under section 86 of this title.
    Pub. L. 105-277, div. J, title IV, Sec. 4004(c)(1), Oct. 21, 1998, 
112 Stat. 2681-911, provided that: ``The amendments made by subsections 
(a) and (b)(3) [amending this section and section 873 of this title] 
shall apply to taxable years beginning after December 31, 1983.''


                    Effective Date of 1997 Amendment

    Section 1082(c) of Pub. L. 105-34 provided that: ``The amendments 
made by this section [amending this section] shall apply to net 
operating losses for taxable years beginning after the date of the 
enactment of this Act [Aug. 5, 1997].''


                    Effective Date of 1996 Amendment

    Amendment by section 1702(h)(2), (16) of Pub. L. 104-188 effective, 
except as otherwise expressly provided, as if included in the provision 
of the Revenue Reconciliation Act of 1990, Pub. L. 101-508, title XI, to 
which such amendment relates, see section 1702(i) of Pub. L. 104-188, 
set out as a note under section 38 of this title.


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-66 applicable to stock issued after Aug. 
10, 1993, see section 13113(e) of Pub. L. 103-66, set out as a note 
under section 53 of this title.


                    Effective Date of 1990 Amendment

    Section 11324(b) of Pub. L. 101-508 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendment made by subsection (a) [amending this section] shall apply to 
acquisitions after October 9, 1990.
    ``(2) Binding contract exception.--The amendment made by subsection 
(a) shall not apply to any acquisition pursuant to a written binding 
contract in effect on October 9, 1990, and at all times thereafter 
before such acquisition.''
    Amendment by section 11701(d) of Pub. L. 101-508 effective, except 
as otherwise provided, as if included in the provision of the Revenue 
Reconciliation Act of 1989, Pub. L. 101-239, title VII, to which such 
amendment relates, see section 11701(n) of Pub. L. 101-508, set out as a 
note under section 42 of this title.
    Section 11811(c) of Pub. L. 101-508 provided that: ``The amendments 
made by this section [amending this section] shall apply to net 
operating losses for taxable years beginning after December 31, 1990.''


                    Effective Date of 1989 Amendment

    Section 7211(c) of Pub. L. 101-239 provided that:
    ``(1) In general.--Except as provided in this subsection, the 
amendments made by this section [amending this section] shall apply to 
corporate equity reduction transactions occurring after August 2, 1989, 
in taxable years ending after August 2, 1989.
    ``(2) Exceptions.--In determining whether a corporate equity 
reduction transaction has occurred after August 2, 1989, there shall not 
be taken into account--
        ``(A) acquisitions or redemptions of stock, or distributions 
    with respect to stock, occurring on or before August 2, 1989,
        ``(B) acquisitions or redemptions of stock after August 2, 1989, 
    pursuant to a binding written contract (or tender offer filed with 
    the Securities and Exchange Commission) in effect on August 2, 1989, 
    and at all times thereafter before such acquisition or redemption, 
    or
        ``(C) any distribution with respect to stock after August 2, 
    1989, which was declared on or before August 2, 1989.
Any distribution to which the preceding sentence applies shall be taken 
into account under section 172(m)(3)(C)(ii)(I) of the Internal Revenue 
Code of 1986 (relating to base period for distributions).''


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provision of the Tax Reform Act of 1986, 
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of 
Pub. L. 100-647, set out as a note under section 1 of this title.


                    Effective Date of 1986 Amendment

    Amendment by section 104(b)(4) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. 
L. 99-514, set out as a note under section 1 of this title.
    Amendment by section 301(b)(3) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1986, see section 301(c) of Pub. 
L. 99-514, set out as a note under section 62 of this title.
    Amendment by section 901(d)(4)(B) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1986, see section 901(e) of Pub. 
L. 99-514, set out as a note under section 166 of this title.
    Section 903(c) of Pub. L. 99-514 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section [amending this section] shall apply to 
losses incurred in taxable years beginning after December 31, 1986.
    ``(2) Additional carryforward period for losses of thrift 
institutions.--Subparagraph (M) of section 172(b)(1) of the Internal 
Revenue Code of 1986 (as added by this section) shall apply to losses 
incurred in taxable years beginning after December 31, 1981.''
    Amendment by section 1303(b)(1), (2) of Pub. L. 99-514 effective 
Oct. 22, 1986, see section 1311(f) of Pub. L. 99-514, as amended, set 
out as an Effective Date; Transitional Rules note under section 141 of 
this title.


                    Effective Date of 1984 Amendment

    Amendment by section 91(d) of Pub. L. 98-369 applicable to losses 
for taxable years beginning after Dec. 31, 1983, see section 91(g)(6) of 
Pub. L. 98-369, as amended, set out as a note under section 461 of this 
title.
    Section 177(d) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, title XVIII, Sec. 1812(d)(2), Oct. 22, 1986, 100 Stat. 2095, 
2836, provided that:
    ``(1) In general.--The amendments made by this section [amending 
this section and section 246 of this title and section 1452 of Title 12, 
Banks and Banking] shall take effect on January 1, 1985.
    ``(2) Adjusted basis of assets.--
        ``(A) In general.--Except as otherwise provided in subparagraph 
    (B), the adjusted basis of any asset of the Federal Home Loan 
    Mortgage Corporation held on January 1, 1985, shall--
            ``(i) for purposes of determining any loss, be equal to the 
        lesser of the adjusted basis of such asset or the fair market 
        value of such asset as of such date, and
            ``(ii) for purposes of determining any gain, be equal to the 
        higher of the adjusted basis of such asset or the fair market 
        value of such asset as of such date.
        ``(B) Special rule for tangible depreciable property.--In the 
    case of any tangible property which--
            ``(i) is of a character subject to the allowance for 
        depreciation provided by section 167 of the Internal Revenue 
        Code of 1986 [formerly I.R.C. 1954], and
            ``(ii) is held by the Federal Home Loan Mortgage Corporation 
        on January 1, 1985,
    the adjusted basis of such property shall be equal to the lesser of 
    the basis of such property or the fair market value of such property 
    as of such date.
    ``(3) Treatment of participation certificates.--
        ``(A) In general.--Paragraph (2) shall not apply to any right to 
    receive income with respect to any mortgage pool participation 
    certificate or other similar interest in any mortgage (not including 
    any mortgage).
        ``(B) Treatment of certain sales after march 15, 1984, and 
    before january 1, 1985.--If any gain is realized on the sale or 
    exchange of any right described in subparagraph (A) after March 15, 
    1984, and before January 1, 1985, the gain shall not be recognized 
    when realized but shall be recognized on January 1, 1985.
    ``(4) Clarification of earnings and profits of federal home loan 
mortgage corporation.--
        ``(A) Treatment of distribution of preferred stock, etc.--For 
    purposes of the Internal Revenue Code of 1986, the distribution of 
    preferred stock by the Federal Home Loan Mortgage Corporation during 
    December of 1984, and the other distributions of such stock by 
    Federal Home Loan Banks during January of 1985, shall be treated as 
    if they were distributions of money equal to the fair market value 
    of the stock on the date of the distribution by the Federal Home 
    Loan Banks (and such stock shall be treated as if it were purchased 
    with the money treated as so distributed). No deduction shall be 
    allowed under section 243 of the Internal Revenue Code of 1986 with 
    respect to any dividend paid by the Federal Home Loan Mortgage 
    Corporation out of earnings and profits accumulated before January 
    1, 1985.
        ``(B) Section 246(a) not to apply to distributions out of 
    earnings and profits accumulated during 1985.--Subsection (a) of 
    section 246 of the Internal Revenue Code of 1986 shall not apply to 
    any dividend paid by the Federal Home Loan Mortgage Corporation 
    during 1985 out of earnings and profits accumulated after December 
    31, 1984.
    ``(5) Adjusted basis.--For purposes of this subsection, the adjusted 
basis of any asset shall be determined under part II of subchapter O of 
the Internal Revenue Code of 1986.
    ``(6) No carrybacks for years before 1985.--No net operating loss, 
capital loss, or excess credit of the Federal Home Loan Mortgage 
Corporation for any taxable year beginning after December 31, 1984, 
shall be allowed as a carryback to any taxable year beginning before 
January 1, 1985.
    ``(7) No deduction allowed for interest on replacement 
obligations.--
        ``(A) In general.--The Federal Home Loan Mortgage Corporation 
    shall not be allowed any deduction for interest accruing after 
    December 31, 1984, on any replacement obligation.
        ``(B) Replacement obligation defined.--For purposes of 
    subparagraph (A), the term `replacement obligation' means any 
    obligation to any person created after March 15, 1984, which the 
    Secretary of the Treasury or his delegate determines replaces any 
    equity or debt interest of a Federal Home Loan Bank or any other 
    person in the Federal Home Loan Mortgage Corporation existing on 
    such date. The preceding sentence shall not apply to any obligation 
    with respect to which the Federal Home Loan Mortgage Corporation 
    establishes that there is no tax avoidance effect.''
    Amendment by section 491(d)(5) of Pub. L. 98-369 applicable to 
obligations issued after Dec. 31, 1983, see section 491(f)(1) of Pub. L. 
98-369, set out as a note under section 62 of this title.
    Section 722(a)(6) of Pub. L. 98-369 provided that: ``Any amendment 
made by this subsection [amending this section and sections 57, 1256, 
and 5684 of this title, and provisions set out as a note under section 
338 of this title] shall take effect as if included in the provisions of 
the Technical Corrections Act of 1982 [Pub. L. 97-448] to which such 
amendment relates.''


                    Effective Date of 1982 Amendments

    Section 102(d) of Pub. L. 97-362 provided that: ``The amendments 
made by this section [amending this section] shall apply to net 
operating losses for taxable years beginning after December 31, 1981.''
    Amendment by Pub. L. 97-354 applicable to taxable years beginning 
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an 
Effective Date note under section 1361 of this title.


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-34 applicable to net operating losses in 
taxable years ending after Dec. 31, 1975, with special effective date 
for the amendment by section 207(a)(2)(B)(i) of Pub. L. 97-34, and net 
operating loss for any taxable year ending on or before Dec. 31, 1975, 
which could be a net operating loss carryover to a taxable year ending 
in 1981 by reason of subsec. (b)(1)(E)(ii) (as in effect before the date 
of enactment of Pub. L. 97-34 and as modified by section 1(b) of Pub. L. 
96-595), to be a net operating loss carryover under this section to each 
of the 15 taxable years following the taxable year of such loss, see 
section 209(c)(1) of Pub. L. 97-34, set out as an Effective Date note 
under section 168 of this title.


                    Effective Date of 1980 Amendments

    Section 1(b) of Pub. L. 96-595, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to the 
determination of the net operating loss deduction for taxable years 
ending after October 4, 1976. For purposes of applying the preceding 
sentence to any net operating loss for a taxable year which is not a 
REIT year and which ends on or before October 4, 1976, subclause (II) of 
section 172(b)(1)(E)(ii) of the Internal Revenue Code of 1986 [formerly 
I.R.C. 1954] shall be applied by substituting ``the number of REIT years 
to which such loss was a net operating loss carryback'' for ``the number 
of taxable years to which such loss may not be a net operating loss 
carryback by reason of subclause (I)''. In the case of a net operating 
loss for a taxable year described in the preceding sentence, subclause 
(II) of section 172(b)(1)(E)(ii) of such Code shall not apply to any 
taxpayer which acted so as to cause it to cease to qualify as a ``real 
estate investment trust'' within the meaning of section 856 of such Code 
if the principal purpose for such action was to secure the benefit of 
the allowance of a net operating loss carryover under section 
172(b)(1)(B) of such Code.''
    Amendment by Pub. L. 96-222 effective, except as otherwise provided, 
as if it had been included in the provisions of the Revenue Act of 1978, 
Pub. L. 95-600, to which such amendment relates, see section 201 of Pub. 
L. 96-222, set out as a note under section 32 of this title.


                    Effective Date of 1978 Amendment

    Section 371(d) of Pub. L. 95-600 provided that: ``The amendments 
made by this section [amending this section and section 537 of this 
title] shall apply with respect to taxable years beginning after 
September 30, 1979.''
    Section 601(d) of Pub. L. 95-600 provided that: ``The amendments 
made by this section [enacting sections 1391 to 1397 and 6039B of this 
title and amending this section and sections 1016 and 3402 of this 
title] shall apply with respect to corporations chartered after December 
31, 1978, and before January 1, 1984.''
    Section 701(d)(2) of Pub. L. 95-600 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to losses 
incurred in taxable years ending after December 31, 1975.''
    Section 703(p)(4) of Pub. L. 95-600 provided that: ``The amendments 
made by this subsection [amending this section and sections 6501 and 
6511 of this title] shall apply with respect to losses sustained in 
taxable years ending after the date of the enactment of this Act [Nov. 
6, 1978].''


                    Effective Date of 1977 Amendment

    Amendment by Pub. L. 95-30 applicable to taxable years beginning 
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out as a 
note under section 1 of this title.


                    Effective Date of 1976 Amendment

    Section 806(g)(1) of Pub. L. 94-455 provided that: ``The amendments 
made by subsections (a), (b), (c), and (d) [amending this section and 
sections 812 and 825 of this title] shall apply to losses incurred in 
taxable years ending after December 31, 1975.''
    Amendment by section 1052(c)(3) of Pub. L. 94-455 effective with 
respect to taxable years beginning after December 31, 1979, see section 
1052(d) of Pub. L. 94-455, set out as a note under section 170 of this 
title.
    Amendment by section 1606(b), (c) of Pub. L. 94-455 effective for 
taxable years ending after Oct. 4, 1976, see section 1608(c) of Pub. L. 
94-455, set out as a note under section 857 of this title.
    Amendment by section 1901(a)(29) of Pub. L. 94-455 effective for 
taxable years ending after Oct. 4, 1976, see section 1901(d) of Pub. L. 
94-455, set out as a note under section 2 of this title.


                    Effective Date of 1971 Amendment

    Section 2(d) of Pub. L. 91-677 provided that: ``The amendments made 
by this section [amending this section] shall apply in respect of 
foreign expropriation losses sustained in taxable years ending after 
December 31, 1958.''


                    Effective Date of 1967 Amendment

    Section 3(b) of Pub. L. 90-225 provided that: ``No interest shall be 
paid or allowed with respect to any overpayment of tax resulting from 
the application of the amendments made by subsection (a) [amending this 
section] for any period prior to the date of the enactment of this Act 
[Dec. 27, 1967].''
    Section 3(c) of Pub. L. 90-225 provided that: ``The amendments made 
by subsection (a) [amending this section] shall apply with respect to 
net operating losses sustained in taxable years ending after December 
31, 1966.''


                    Effective Date of 1964 Amendment

    Section 210(c) of Pub. L. 88-272, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The amendments 
made by this section [amending this section] shall apply in respect of 
foreign expropriation losses (as defined in section 172(k) of the 
Internal Revenue Code of 1986 [formerly I.R.C. 1954], as amended by 
subsection (a)(5) of this section), sustained in taxable years ending 
after December 31, 1958.''
    Amendment by section 234(b)(5) of Pub. L. 88-272 applicable to 
taxable years beginning after Dec. 31, 1963, see section 234(c) of Pub. 
L. 88-272, set out as a note under section 1503 of this title.


                    Effective Date of 1962 Amendments

    Section 317(b) of Pub. L. 87-794 provided that the amendment made by 
that section is effective with respect to net operating losses for 
taxable years ending after Dec. 31, 1955.
    Amendment by Pub. L. 87-792 applicable to taxable years beginning 
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note 
under section 22 of this title.
    Section 2 of Pub. L. 87-710 provided that: ``The amendments made by 
the first section of this Act [amending this section] shall apply only 
with respect to net operating losses for taxable years ending after 
December 31, 1955.''


                    Effective Date of 1958 Amendment

    Section 203(c) of Pub. L. 85-866 provided that: ``The amendments 
made by subsections (a) and (b) [amending this section] shall apply in 
respect of net operating losses for taxable years ending after December 
31, 1957.''
    Amendment by section 14(a), (b) of Pub. L. 85-866 applicable to 
taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 
1954, see section 1(c)(1) of Pub. L. 85-866, set out as a note under 
section 165 of this title.
    Section 64(e) of Pub. L. 85-866 provided that: ``The amendments made 
by this section [enacting sections 1371 to 1377 and 6037 of this title, 
amending this section and sections 1016 and 1504, and renumbering former 
section 6037 as 6038 of this title] shall apply only with respect to 
taxable years beginning after December 31, 1957''.


                            Savings Provision

    For provisions that nothing in amendment by section 11811 of Pub. L. 
101-508 be construed to affect treatment of certain transactions 
occurring, property acquired, or items of income, loss, deduction, or 
credit taken into account prior to Nov. 5, 1990, for purposes of 
determining liability for tax for periods ending after Nov. 5, 1990, see 
section 11821(b) of Pub. L. 101-508, set out as a note under section 29 
of this title.


                        Amtrak Reform Legislation

    Pub. L. 105-134, title III, Sec. 301(b), Dec. 2, 1997, 111 Stat. 
2585, provided that: ``This Act [see Short Title of 1997 Amendment note 
set out under section 20101 of Title 49, Transportation] constitutes 
Amtrak reform legislation within the meaning of section 977(f)(1) of the 
Taxpayer Relief Act of 1997 [Pub. L. 105-34, set out as a note below].''


Elective Carryback of Existing Carryovers of National Railroad Passenger 
                               Corporation

    Section 977 of Pub. L. 105-34, as amended by Pub. L. 105-178, title 
IX, Sec. 9007(a), June 9, 1998, 112 Stat. 506; Pub. L. 105-206, title 
VI, Sec. 6009(e), July 22, 1998, 112 Stat. 812, provided that:
    ``(a) Elective Carryback.--
        ``(1) In general.--If the National Railroad Passenger 
    Corporation (in this section referred to as the `Corporation')--
            ``(A) makes an election under this section for its first 
        taxable year ending after September 30, 1997, and
            ``(B) agrees to the conditions specified in paragraph (2),
    then the Corporation shall be treated as having made a payment of 
    the tax imposed by chapter 1 of the Internal Revenue Code of 1986 
    for such first taxable year and the succeeding taxable year in an 
    amount (for each such taxable year) equal to 50 percent of the 
    amount determined under paragraph (3). Each such payment shall be 
    treated as having been made by the Corporation on the last day 
    prescribed by law (without regard to extensions) for filing its 
    return of tax under chapter 1 of such Code for the taxable year to 
    which such payment relates.
        ``(2) Conditions.--
            ``(A) In general.--This section shall only apply to the 
        Corporation if it agrees (in such manner as the Secretary of the 
        Treasury or his delegate may prescribe) to--
                ``(i) except as provided in clause (ii), use any refund 
            of the payment described in paragraph (1) (and any interest 
            thereon) solely to finance qualified expenses of the 
            Corporation, and
                ``(ii) make the payments to non-Amtrak States as 
            described in subsection (c).
            ``(B) Repayment.--
                ``(i) In general.--The Corporation shall repay to the 
            United States any amount not used in accordance with this 
            paragraph and any amount remaining unused as of January 1, 
            2010.
                ``(ii) Special rules.--For purposes of clause (i)--
          ``(I) no amount shall be treated as remaining unused as of 
                January 1, 2010, if it is obligated as of such date for 
                a qualified expense, and
          ``(II) the Corporation shall not be treated as failing to meet 
                the requirements of clause (i) by reason of investing 
                any amount for a temporary period.
        ``(3) Amount.--For purposes of paragraph (1)--
            ``(A) In general.--The amount determined under this 
        paragraph shall be the lesser of--
                ``(i) 35 percent of the Corporation's existing qualified 
            carryovers, or
                ``(ii) the Corporation's net tax liability for the 
            carryback period.
            ``(B) Dollar limit.--Such amount shall not exceed 
        $2,323,000,000.
    ``(b) Existing Qualified Carryovers; Net Tax Liability.--For 
purposes of this section--
        ``(1) Existing qualified carryovers.--The term `existing 
    qualified carryovers' means the aggregate of the amounts which are 
    net operating loss carryovers under section 172(b) of the Internal 
    Revenue Code of 1986 to the Corporation's first taxable year ending 
    after September 30, 1997.
        ``(2) Net tax liability for carryback period.--
            ``(A) In general.--The Corporation's net tax liability for 
        the carryback period is the aggregate of the net tax liability 
        of the Corporation's railroad predecessors for taxable years in 
        the carryback period.
            ``(B) Net tax liability.--The term `net tax liability' 
        means, with respect to any taxable year, the amount of the tax 
        imposed by chapter 1 of the Internal Revenue Code of 1986 (or 
        any corresponding provision of prior law) for such taxable year, 
        reduced by the sum of the credits allowable against such tax 
        under such Code (or any corresponding provision of prior law).
            ``(C) Carryback period.--The term `carryback period' means 
        the period--
                ``(i) which begins with the first taxable year of any 
            railroad predecessor beginning before January 1, 1971, for 
            which there is a net tax liability, and
                ``(ii) which ends with the last taxable year of any 
            railroad predecessor beginning before January 1, 1971.
        ``(3) Railroad predecessor.--
            ``(A) In general.--The term `railroad predecessor' means--
                ``(i) any railroad which entered into a contract under 
            section 401 or 404(a) of the Rail Passenger Service Act of 
            1970 [former sections 561 and 564(a) of Title 45, Railroads] 
            relieving the railroad of its entire responsibility for the 
            provision of intercity rail passenger service, and
                ``(ii) any predecessor thereof.
            ``(B) Consolidated returns.--If any railroad described in 
        subparagraph (A) was a member of an affiliated group which filed 
        a consolidated return for any taxable year in the carryback 
        period, each member of such group shall be treated as a railroad 
        predecessor for such year.
    ``(c) Payments to Non-Amtrak States.--
        ``(1) In general.--Within 30 days after receipt of any refund of 
    any payment described in subsection (a)(1), the Corporation shall 
    pay to each non-Amtrak State an amount equal to 1 percent of the 
    amount of such refund.
        ``(2) Use of payment.--Each non-Amtrak State shall use the 
    payment described in paragraph (1) (and any interest thereon) solely 
    to finance qualified expenses of the State.
        ``(3) Repayment.--A non-Amtrak State shall pay to the United 
    States--
            ``(A) any portion of the payment received by the State under 
        paragraph (1) (and any interest thereon) which is used for a 
        purpose other than to finance qualified expenses of the State or 
        which remains unused as of January 1, 2010, or
            ``(B) if such State ceases to be a non-Amtrak State, the 
        portion of such payment (and any interest thereon) remaining as 
        of the date of the cessation.
    Rules similar to the rules of subsection (a)(2)(B) shall apply for 
    purposes of this paragraph.
    ``(d) Tax Consequences.--
        ``(1) Reduction in carryovers.--If the Corporation elects the 
    application of this section, the Corporation's existing qualified 
    carryovers shall be reduced by an amount equal to the amount 
    determined under subsection (a)(3) divided by 0.35.
        ``(2) Reduction in tax paid by railroad predecessors.--
            ``(A) In general.--The Secretary of the Treasury or his 
        delegate shall appropriately adjust the tax account of each 
        railroad predecessor to reduce the net tax liability of such 
        predecessor for taxable years beginning in the carryback period 
        which is offset by reason of the application of this section.
            ``(B) FIFO ordering rule.--The Secretary shall make the 
        adjustments under subparagraph (A) first for the earliest year 
        in the carryback period and then for each subsequent year in 
        such period.
            ``(C) No effect on other taxpayers.--In no event shall any 
        taxpayer other than the Corporation be allowed a refund or 
        credit by reason of this section.
            ``(D) Waiver of limitations.--If the adjustment under 
        subparagraph (A) is barred by the operation of any law or rule 
        of law, such law or rule of law shall be waived solely for 
        purposes of making such adjustment.
        ``(3) Tax treatment of expenditures.--With respect to any 
    payment by the Corporation of qualified expenses described in 
    subsection (e)(1)(A) during any taxable year from the amount of any 
    refund of the payment described in subsection (a)(1)--
            ``(A) no deduction shall be allowed to the Corporation with 
        respect to any amount paid or incurred which is attributable to 
        such amount, and
            ``(B) the basis of any property shall be reduced by the 
        portion of the cost of such property which is attributable to 
        such amount.
        ``(4) Payments to a non-amtrak state.--No deduction shall be 
    allowed to the Corporation under chapter 1 of the Internal Revenue 
    Code of 1986 for any payment to a non-Amtrak State required under 
    subsection (a)(2)(A)(ii).
    ``(e) Definitions.--For purposes of this section--
        ``(1) Qualified expenses.--The term `qualified expenses' means 
    expenses incurred for--
            ``(A) in the case of the Corporation--
                ``(i) the acquisition of equipment, rolling stock, and 
            other capital improvements, the upgrading of maintenance 
            facilities, and the maintenance of existing equipment, in 
            intercity passenger rail service, and
                ``(ii) the payment of interest and principal on 
            obligations incurred for such acquisition, upgrading, and 
            maintenance, and
            ``(B) in the case of a non-Amtrak State--
                ``(i) the acquisition of equipment, rolling stock, and 
            other capital improvements, the upgrading of maintenance 
            facilities, and the maintenance of existing equipment, in 
            intercity passenger rail service,
                ``(ii) the acquisition of equipment, rolling stock, and 
            other capital improvements, the upgrading of maintenance 
            facilities, and the maintenance of existing equipment, in 
            intercity bus service,
                ``(iii) the purchase of intercity passenger rail 
            services from the Corporation,
                ``(iv) capital expenditures related to State-owned rail 
            operations in the State,
                ``(v) any project that is eligible to receive funding 
            under section 5309, 5310, or 5311 of title 49, United States 
            Code,
                ``(vi) any project that is eligible to receive funding 
            under section 103, 130, 133, 144, 149, or 152 of title 23, 
            United States Code,
                ``(vii) the upgrading and maintenance of intercity 
            primary and rural air service facilities, and the purchase 
            of intercity air service between primary and rural airports 
            and regional hubs,
                ``(viii) the provision of passenger ferryboat service 
            within the State,
                ``(ix) the provision of harbor improvements within the 
            State, and
                ``(x) the payment of interest and principal on 
            obligations incurred for such acquisition, upgrading, 
            maintenance, purchase, expenditures, provision, and 
            projects.
    In the case of a non-Amtrak State which provides its own intercity 
    passenger rail service on the date of the enactment of this 
    paragraph [Aug. 5, 1997], subparagraph (B) shall be applied by only 
    taking into account clauses (i) and (iv).
        ``(2) Non-amtrak state.--The term `non-Amtrak State' means any 
    State which is not receiving intercity passenger rail service from 
    the Corporation as of the date of the enactment of this Act [Aug. 5, 
    1997].
    ``(f) Authorizing Reform Required.--
        ``(1) In general.--The Secretary of the Treasury shall not make 
    payment of any refund of any payment described in subsection (a)(1) 
    earlier than the date of the enactment of Federal legislation, other 
    than legislation included in this section, which is enacted after 
    July 29, 1997, and which authorizes reforms of the National Railroad 
    Passenger Corporation.
        ``(2) No interest.--Notwithstanding any other provision of law, 
    if the payment of any refund is delayed by reason of paragraph (1), 
    no interest shall accrue with respect to such payment prior to the 
    45th day following the date of the enactment of Federal legislation 
    described in paragraph (1).
        ``(3) Estimate of revenue.--For purposes of estimating revenues 
    under budget reconciliation, the impact of this section on Federal 
    revenues shall be determined without regard to this subsection.''
    [Pub. L. 105-178, title IX, Sec. 9007(b), June 9, 1998, 112 Stat. 
506, provided that: ``The amendments made by this section [amending 
section 977 of Pub. L. 105-34, set out above] shall take effect as if 
included in the enactment of section 977 of the Taxpayer Relief Act of 
1997 [Pub. L. 105-34].'']


                    Deduction for Special Assessments

    Subsec. (f) of this section not applicable to deduction for special 
assessments, see section 2711(2) of Pub. L. 104-208, set out as a note 
under section 162 of this title.


 Carryback of Deferred Statutory or Tort Liability Loss to Taxable Year 
                    Beginning Before January 1, 1984

    Section 11811(b)(2)(B) of Pub. L. 101-508 provided that: ``The 
portion of any loss which is attributable to a deferred statutory or 
tort liability loss (as defined in section 172(k) of the Internal 
Revenue Code of 1986 as in effect on the day before the date of the 
enactment of this Act [Nov. 5, 1990]) may not be carried back to any 
taxable year beginning before January 1, 1984, by reason of the 
amendment made by subparagraph (A) [amending this section].''


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.


         Refund or Credit of Overpayment; Limitations; Interest

    Section 14 of Pub. L. 85-866 provided that if any refund or credit 
of any overpayment resulting from application of subsecs. (a) and (b) of 
Pub. L. 85-866, amending former subsecs. (f)(3), (4) and (g)(3), (4), 
was prevented on Sept. 2, 1958 or 6 months thereafter, by operation of 
any law or rule of law, refund was to be allowed if a claim was filed 
within six months of the date of such date but such refund was to be 
without interest.


   Interest Attributable to Net Operating Loss Carryback for Certain 
                      Taxable Years Ending in 1954

    For payment of interest attributable to net operating loss 
carryback, see section 83(e) of Pub. L. 85-866, set out as a note under 
section 6601 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 56, 72, 163, 170, 186, 246, 
381, 382, 384, 447, 481, 512, 527, 528, 535, 537, 545, 556, 584, 613A, 
642, 703, 773, 805, 831, 834, 844, 852, 857, 860E, 860J, 904, 907, 1212, 
1242, 1244, 1247, 1314, 1341, 1351, 1375, 1398, 1402, 1503, 6164, 6411, 
6655, 7518 of this title; title 42 section 411; title 46 App. section 
1177.
