
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: 26USC383]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
          Subchapter C--Corporate Distributions and Adjustments
 
                           PART V--CARRYOVERS
 
Sec. 383. Special limitations on certain excess credits, etc.


(a) Excess credits

                           (1) In general

        Under regulations, if an ownership change occurs with respect to 
    a corporation, the amount of any excess credit for any taxable year 
    which may be used in any post-change year shall be limited to an 
    amount determined on the basis of the tax liability which is 
    attributable to so much of the taxable income as does not exceed the 
    section 382 limitation for such post-change year to the extent 
    available after the application of section 382 and subsections (b) 
    and (c) of this section.

                          (2) Excess credit

        For purposes of paragraph (1), the term ``excess credit'' 
    means--
            (A) any unused general business credit of the corporation 
        under section 39, and
            (B) any unused minimum tax credit of the corporation under 
        section 53.

(b) Limitation on net capital loss

    If an ownership change occurs with respect to a corporation, the 
amount of any net capital loss under section 1212 for any taxable year 
before the 1st post-change year which may be used in any post-change 
year shall be limited under regulations which shall be based on the 
principles applicable under section 382. Such regulations shall provide 
that any such net capital loss used in a post-change year shall reduce 
the section 382 limitation which is applied to pre-change losses under 
section 382 for such year.

(c) Foreign tax credits

    If an ownership change occurs with respect to a corporation, the 
amount of any excess foreign taxes under section 904(c) for any taxable 
year before the 1st post-change taxable year shall be limited under 
regulations which shall be consistent with purposes of this section and 
section 382.

(d) Pro ration rules for year which includes change

    For purposes of this section, rules similar to the rules of 
subsections (b)(3) and (d)(1)(B) of section 382 shall apply.

(e) Definitions

    Terms used in this section shall have the same respective meanings 
as when used in section 382, except that appropriate adjustments shall 
be made to take into account that the limitations of this section apply 
to credits and net capital losses.

(Added Pub. L. 92-178, title III, Sec. 302(a), Dec. 10, 1971, 85 Stat. 
521; amended Pub. L. 94-455, title VIII, Sec. 806(f)(2), title X, 
Sec. 1031(b)(5), title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 
1605, 1623, 1834; Pub. L. 95-30, title II, Sec. 202(d)(3)(B), (C), May 
23, 1977, 91 Stat. 148; Pub. L. 96-222, title I, 
Sec. 103(a)(6)(G)(xiii), Apr. 1, 1980, 94 Stat. 211; Pub. L. 96-223, 
title II, Sec. 232(b)(2)(C), (D), Apr. 2, 1980, 94 Stat. 276; Pub. L. 
97-34, title II, Sec. 221(b)(1)(C), (D), title III, Sec. 331(d)(1)(C), 
(D), Aug. 13, 1981, 95 Stat. 246, 294; Pub. L. 98-369, div. A, title IV, 
Sec. 474(r)(12)(A), (B), July 18, 1984, 98 Stat. 841; Pub. L. 99-514, 
title VI, Sec. 621(b), (e)(1), Oct. 22, 1986, 100 Stat. 2265, 2266.)


                               Amendments

    1986--Pub. L. 99-514, Sec. 621(b), amended section generally. Prior 
to amendment, section read as follows: ``If--
        ``(1) the ownership and business of a corporation are changed in 
    the manner described in section 382(a)(1), or
        ``(2) in the case of a reorganization specified in paragraph (2) 
    of section 381(a), there is a change in ownership described in 
    section 382(b)(1)(B),
then the limitations provided in section 382 in such cases with respect 
to the carryover of net operating losses shall apply in the same manner, 
as provided under regulations prescribed by the Secretary, with respect 
to any unused business credit of the corporation which can otherwise be 
carried forward under section 39, to any unused credit of the 
corporation which could otherwise be carried forward under section 
30(g)(2), to any excess foreign taxes of the corporation which could 
otherwise be carried forward under section 904(c), and to any net 
capital loss of the corporation which can otherwise be carried forward 
under section 1212.''
    Pub. L. 99-514, Sec. 621(e)(1), repealed amendment by Pub. L. 94-
455, Sec. 806(f)(2). See 1976 Amendment note below.
    1984--Pub. L. 98-369, Sec. 474(r)(12)(A)(ii), in catchline of 
section 383, as in effect prior to amendment by Pub. L. 94-455, 
Sec. 806(f)(2), as related to section 382(a) of this title, substituted 
``Special limitations on unused business credits, research credits, 
foreign taxes, and capital losses'' for ``Special limitations on 
carryovers of unused investment credits, work incentive program credits, 
new employee credits, alcohol fuel credits, research credits, employee 
stock ownership credits, foreign taxes, and capital losses''.
    Pub. L. 98-369, Sec. 474(r)(12)(B)(ii), in catchline of section 383, 
as amended by Pub. L. 94-455, Sec. 806(f)(2), as related to section 
382(b) of this title, substituted ``business credits, research credits'' 
for ``investment credits, work incentive program credits''.
    Pub. L. 98-369, Sec. 474(r)(12)(B)(ii), in catchline of section 383, 
as amended by Pub. L. 94-455, Sec. 806(f)(2), as related to section 
382(a) of this title, substituted ``business credits'' for ``investment 
credits'' and struck out references to work incentive program credits, 
new employee credits, alcohol fuel credits, and employee stock ownership 
credits.
    Pub. L. 98-369, Sec. 474(r)(12)(A)(i), in section 383, as in effect 
prior to amendment by Pub. L. 94-455, Sec. 806(f)(2), as related to 
section 382(a) of this title, substituted ``with respect to any unused 
business credit of the corporation which can otherwise be carried 
forward under section 39, to any unused credit of the corporation which 
could otherwise be carried forward under section 30(g)(2), to any excess 
foreign taxes of the corporation which could otherwise be carried 
forward under section 904(c), and to any net capital loss of the 
corporation which can otherwise be carried forward under section 1212'' 
for ``with respect to any unused investment credit of the corporation 
which can otherwise be carried forward under section 46(b), to any 
unused work incentive program credit of the corporation which can 
otherwise be carried forward under section 50A(b), to any unused new 
employee credit of the corporation which could otherwise be carried 
forward under section 53(b), to any unused credit of the corporation 
which could otherwise be carried forward under section 44E(e)(2), to any 
unused credit of the corporation which could otherwise be carried 
forward under section 44F(g)(2), to any unused credit of the corporation 
which could otherwise be carried forward under section 44G(b)(2), to any 
excess foreign taxes of the corporation which can otherwise be carried 
forward under section 904(c), and to any net capital loss of the 
corporation which can otherwise be carried forward under section 1212''.
    Pub. L. 98-369, Sec. 474(r)(12)(B)(i), in section 383, as amended by 
Pub. L. 94-455, Sec. 806(f)(2), as related to section 382(b) of this 
title, substituted ``with respect to any unused business credit of the 
corporation under section 39, to any unused credit of the corporation 
under section 30(g)(2), to any excess foreign taxes of the corporation 
under section 904(c), and to any net capital loss of the corporation 
under section 1212'' for ``with respect to any unused investment credit 
of the corporation under section 46(b), to any unused work incentive 
program credit of the corporation under section 50A(b), to any excess 
foreign taxes of the corporation under section 904(c), and to any net 
capital loss of the corporation under section 1212''.
    Pub. L. 98-369, Sec. 474(r)(12)(B)(i), in section 383, as amended by 
Pub. L. 94-455, Sec. 806(f)(2), as related to section 382(a) of this 
title, substituted ``with respect to any unused business credit of the 
corporation under section 39, to any unused credit of the corporation 
under section 30(g)(2), to any excess foreign taxes of the corporation 
under section 904(c), and to any net capital loss of the corporation 
under section 1212'' for ``with respect to any unused investment credit 
of the corporation under section 46(b), to any unused work incentive 
program credit of the corporation under section 50A(b), to any unused 
new employee credit of the corporation under section 53(b), to any 
unused credit of the corporation under section 44E(e)(2), to any unused 
credit of the corporation under section 44F(g)(2), to any unused credit 
of the corporation under section 44G(b)(2), to any excess foreign taxes 
of the corporation under section 904(c), and to any net capital loss of 
the corporation under section 1212''.
    1981--Pub. L. 97-34, Sec. 331(d)(1)(C)(ii), (D)(ii), in catchlines 
of sections 383, as related to section 382(a) of this title, before and 
after amendment by Pub. L. 94-455, Sec. 806(f)(2), inserted reference to 
employee stock ownership credits.
    Pub. L. 97-34, Sec. 331(d)(1)(D)(i), in section 383, as in effect 
prior to amendment by Pub. L. 94-455, Sec. 806(f)(2), as related to 
section 382(a) of this title, inserted ``to any unused credit of the 
corporation which could otherwise be carried forward under section 
44G(b)(2),''.
    Pub. L. 97-34, Sec. 331(d)(1)(C)(i), in section 383, as amended by 
Pub. L. 94-455, Sec. 806(f)(2), as related to section 382(a) of this 
title, inserted ``to any unused credit of the corporation under section 
44G(b)(2),''.
    Pub. L. 97-34, Sec. 221(b)(1)(C)(ii), (D)(ii), in catchlines of 
sections 383, as related to section 382(a) of this title, before and 
after amendment by Pub. L. 94-455, Sec. 806(f)(2), inserted reference to 
research credits.
    Pub. L. 97-34, Sec. 221(b)(1)(D)(i), in section 383, as in effect 
prior to amendment by Pub. L. 94-455, Sec. 806(f)(2), as related to 
section 382(a) of this title, inserted ``to any unused credit of the 
corporation which could otherwise be carried forward under section 
44F(g)(2),'' after ``section 44E(e)(2),''.
    Pub. L. 97-34, Sec. 221(b)(1)(C)(i), in section 383, as amended by 
Pub. L. 94-455, Sec. 806(f)(2), as related to section 382(a) of this 
title, inserted ``to any unused credit of the corporation under section 
44F(g)(2),'' after ``section 44E(e)(2),''.
    1980--Pub. L. 96-223, Sec. 232(b)(2)(D), in section 383, as in 
effect prior to amendment by Pub. L. 94-455, Sec. 806(f)(2), as related 
to section 382(a) of this title, inserted reference to unused alcohol 
fuel credits in section catchline and reference to any unused credit of 
the corporation which could otherwise be carried forward under section 
44E(e)(2) in text.
    Pub. L. 96-223, Sec. 232(b)(2)(C), in section 383, as amended by 
Pub. L. 94-455, Sec. 806(f)(2), as related to section 382(a) of this 
title, inserted reference to unused alcohol fuel credits in section 
catchline and reference to any unused credit of the corporation under 
section 44E(e)(2) in text.
    Pub. L. 96-222, in sections 383, as related to section 382(a) of 
this title, before and after amendment by Pub. L. 94-455, 
Sec. 806(f)(2), substituted ``section 53(b)'' for ``section 53(c)''.
    1977--Pub. L. 95-30, Sec. 202(d)(3)(C), in section 383, as in effect 
prior to amendment by Pub. L. 94-455, Sec. 806(f)(2), as related to 
section 382(a) of this title, inserted ``to any unused new employee 
credit of the corporation which could otherwise be carried forward under 
section 53(c)'' in text and ``new employee credits,'' in catchline.
    Pub. L. 95-30, Sec. 202(d)(3)(B), in section 383, as amended by Pub. 
L. 94-455, Sec. 806(f)(2), as related to section 382(a) of this title, 
inserted ``to any unused new employee credit of the corporation under 
section 53(c)'' in text and ``new employee credits,'' in section 
catchline.
    1976--Pub. L. 94-455, Secs. 1031(b)(5), 1906(b)(13)(A), struck out 
``or his delegate'' after ``Secretary'', and substituted ``section 
904(c)'' for ``section 904(d)'', respectively, in section 383 set out 
first.
    Pub. L. 94-455, Sec. 806(f)(2), which substituted, in sections 383 
as related to section 382(a) and (b) of this title, provisions that the 
net operating loss limitations in section 382 shall apply to unused 
investment credits under section 46(b), to unused work incentive program 
credits under section 50A(b), to excess foreign taxes under section 
904(d) and to net capital losses under section 1212 for provisions that 
the net operating loss carryover limitations in section 382 shall apply, 
in the case of ownership changes described in section 382(a)(1) or 
reorganizations specified in section 381(a)(2) resulting in ownership 
changes described in section 382(b)(1)(B), to unused investment credits 
under section 46(b), to unused work incentive program credits under 
section 50A(B), to excess foreign taxes under section 904(c), and to net 
capital losses under section 1212, was repealed by Pub. L. 99-514, 
Sec. 621(e)(1). See Effective Date of 1986 and 1976 Amendment notes 
below.


                    Effective Date of 1986 Amendment

    Amendment by section 621(b) of Pub. L. 99-514 applicable to any 
ownership change after Dec. 31, 1986, except as otherwise provided, see 
section 621(f) of Pub. L. 99-514, as amended, set out as a note under 
section 382 of this title.
    Repeal of amendment by section 806(f)(1) of Pub. L. 94-455 effective 
Jan. 1, 1986, with certain exceptions, see section 621(f)(2) of Pub. L. 
99-514, set out as a note under section 382 of this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable to taxable years beginning 
after Dec. 31, 1983, and to carrybacks from such years, see section 
475(a) of Pub. L. 98-369, set out as a note under section 21 of this 
title.


                    Effective Date of 1981 Amendment

    Amendment by section 221(b)(1)(C), (D) of Pub. L. 97-34 applicable 
to amounts paid or incurred after June 30, 1981, see section 221(d) of 
Pub. L. 97-34, as amended, set out as an Effective Date note under 
section 41 of this title.
    Amendment by section 331(d)(1)(C), (D) of Pub. L. 97-34 applicable 
to taxable years beginning after Dec. 31, 1981, see section 339 of Pub. 
L. 97-34, set out as a note under section 401 of this title.


                    Effective Date of 1980 Amendments

    Amendment by Pub. L. 96-223 applicable to sales or uses after Sept. 
30, 1980, in taxable years ending after such date, see section 232(h)(1) 
of Pub. L. 96-223, set out as an Effective Date note under section 40 of 
this title.
    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, Nov. 6, 1978, 92 Stat. 2763, 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 1976 Amendment

    For effective date of amendment by section 1031(b)(5) of Pub. L. 94-
455, see section 1031(c) of Pub. L. 94-455, set out as a note under 
section 904 of this title.
    For purposes of applying this section (as it relates to section 
382(a) of this title) as amended by section 806(e), (f) of Pub. L. 94-
455, the amendments made by section 806(e), (f) of Pub. L. 94-455 
effective for taxable years beginning after Dec. 31, 1985, with 
specified provisions for determining the beginning of the taxable years 
specified in section 382(a)(1)(B)(ii) of this title, and this section 
(as it relates to section 382(b) of this title) as amended by section 
806(e), (f) of Pub. L. 94-455 to apply (and such sections as in effect 
prior to such amendment not to apply) to reorganizations pursuant to a 
plan of reorganization adopted by one or more of the parties thereto on 
or after Jan. 1, 1986, see section 806(g)(2), (3) of Pub. L. 94-455, as 
amended, formerly set out as a note under section 382 of this title.


                             Effective Date

    Section 302(c) of Pub. L. 92-178 provided that: ``The amendments 
made by this section [enacting this section] shall be applicable only 
with respect to reorganizations and other changes in ownership occurring 
after the date of enactment of this Act [Dec. 10, 1971] pursuant to a 
plan of reorganization or contract entered into on or after September 
29, 1971.''


                Delay in Effective Date of 1976 Amendment

    For election by taxpayer for application of prior law with respect 
to any acquisition or reorganization occurring before the end of the 
taxpayer's first taxable year beginning after June 30, 1978, see section 
368 of Pub. L. 95-600, set out as a Delay in Effective Date of 1976 
Amendment note under section 382 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 382, 384 of this title.
