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

§ 1.172-1 Net operating loss deduction.§ 1.172-2 Net operating loss in case of a corporation.§ 1.172-3 Net operating loss in case of a taxpayer other than a corporation.§ 1.172-4 Net operating loss carrybacks and net operating loss carryovers.§ 1.172-5 Taxable income which is subtracted from net operating loss to determine carryback or carryover.§ 1.172-6 Illustration of net operating loss carrybacks and carryovers.§ 1.172-7 Joint return by husband and wife.§ 1.172-8 Net operating loss carryovers for regulated transportation corporations.§ 1.172-9 Election with respect to portion of net operating loss attributable to foreign expropriation loss.§ 1.172-10 Net operating losses of real estate investment trusts.§ 1.172-13 Product liability losses.Prop. § 1.172(h)-0 Proposed 2012 · Table of Contents.Prop. § 1.172(h)-1 Proposed 2012 · Existence of CERT and loss limitation years.Prop. § 1.172(h)-2 Proposed 2012 · Computation of a CERIL.Prop. § 1.172(h)-3 Proposed 2012 · Limitation on allocable interest deductions.Prop. § 1.172(h)-4 Proposed 2012 · Special rules for predecessor and successors.Prop. § 1.172(h)-5 Proposed 2012 · Operating rules.

Amended 1958, 1962, 1964, 1971, 1976, 1978, 1982, 1984, 1986, 1989, 1990, 1996, 1998, 2002, 2008, 2009, 2014, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(c)(2)(A), struck out subsec. (h) relating to farming loss rules and redesignated subsec. (i) as (f).
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(ii), redesignated subsec. (i) as (h). Former subsec. (h) redesignated (g).
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(viii), struck out concluding provisions which read as follows: “Such term shall not include any qualified disaster loss (as defined in subsection (j)).”
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(ix), substituted “subsection (b)(1)(F)” for “subsection (b)(1)(G)” in two places.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(ii), redesignated subsecs. (i) and (k) as (h) and (i), respectively, and struck out subsec. (j) which related to rules relating to qualified disaster losses.
2009 Pub. L. 111-5 Pub. L. 111–5, § 1211(b), redesignated subsec. (l) as (k) and struck out former subsec. (k). Prior to amendment, text read as follows: “Any taxpayer entitled to a 5-year carryback under subsection (b)(1)(H) from any loss year may elect to have the carryback period with respect to such loss year determined without regard to subsection (b)(1)(H). Such election shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.”
2008 Pub. L. 110-343 Pub. L. 110–343, § 708(d)(2), inserted concluding provisions.
2008 Pub. L. 110-343 Pub. L. 110–343, § 708(b), added subsec. (j) and redesignated former subsecs. (j) and (k) as (k) and (l), respectively.
2002 Pub. L. 107-147 Pub. L. 107–147, § 102(b), added subsec. (j) and redesignated former subsec. (j) as (k).
1998 Pub. L. 105-277 Pub. L. 105–277, § 2013(b), added subsec. (i) and redesignated former subsec. (i) as (j).
1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(t)(5), substituted “corporation.” for “corporation,” at end.
1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(t)(30), substituted “For purposes of subsection (b)(2)—” for “For purposes of subsection (b)(2)” in introductory provisions.
1996 Pub. L. 104-188 Pub. L. 104–188, § 1702(h)(16), substituted “(b)(1)(E)” for “(b)(1)(M)”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(1), redesignated subsec. (m) as (h) and struck out former subsec. (h) which defined “foreign expropriation loss”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11324(a), in par. (3)(B)(ii), formerly subsec. (m)(3)(B)(ii), substituted heading for one which read: “Exceptions” and amended text generally. Prior to amendment, text read as 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.”
1990 Pub. L. 101-508 Pub. L. 101–508, § 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.”
1990 Pub. L. 101-508 Pub. L. 101–508, § 11704(a)(2), substituted “subsection (b)(2)” for “subsection (B)(2)” in heading.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(1), redesignated subsec. (n) as (i) and struck out former subsec. (i) which provided for rules relating to mortgage disposition losses of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(1), redesignated subsec. (j) as (f).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(1), struck out subsec. (k) which related to definitions and special rules relating to deferred statutory or tort liability losses.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(1), redesignated subsecs. (l) to (n) as (g) to (i), respectively.
1989 Pub. L. 101-239 Pub. L. 101–239, § 7211(b), added subsec. (m) and redesignated former subsec. (m) as (n).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1303(b)(2), substituted “subsection (b)(1)(J)” for “subsection (b)(1)(K)”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(b)(2)(C), added subsec. (l) and redesignated former subsec. (l) as (m).
1984 Pub. L. 98-369 Pub. L. 98–369, § 91(d)(3)(B), substituted “this section” for “subsection (b)” in introductory provisions.
1984 Pub. L. 98-369 Pub. L. 98–369, § 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.
1984 Pub. L. 98-369 Pub. L. 98–369, § 91(d)(3)(B), substituted “this section” for “subsection (b)” in introductory provisions.
1984 Pub. L. 98-369 Pub. L. 98–369, § 91(d)(2), added subsec. (k) and redesignated former subsec. (k) as (l).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(b), added subsec. (i). Former subsec. (i) redesignated (j).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(b), (c)(4), redesignated former subsec. (i) as (j) and, in par. (3) of subsec. (j) as so redesignated, substituted “subsection (b)(1)(I)” for “subsection (b)(1)(H)” wherever appearing. Former subsec. (j) redesignated (k).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(b), redesignated former subsec. (j) as (k).
1978 Pub. L. 95-600 Pub. L. 95–600, § 371(b), added subsec. (i) and redesignated former subsec. (i) as (j).
1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(C)(i), redesignated subsec. (k) as (h). Former subsec. (h) redesignated (f).
1976 Pub. L. 94-455 Pub. L. 94–455, § 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.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(C)(i), redesignated subsecs. (j) to (l) as (g) to (i), respectively.
1971 Pub. L. 91-677 Pub. L. 91–677, § 2(c), added par. (3).
1964 L. 88–272, § 234(b)(5), substituted references to section 7701(a)(33) for references to section 1503(c)(1) or (2), wherever appearing.
1964 Pub. L. 88-272 Pub. L. 88–272, § 210(a)(5), added subsec. (k) and redesignated former subsec. (k) as (l).
1962 Pub. L. 87-710 Pub. L. 87–710, § 1(b), added subsec. (j) and redesignated former subsec. (j) as (k).
1958 Pub. L. 85-866 Pub. L. 85–866, §§ 64(b), 203(b), added subsecs. (h) and (i) and redesignated former subsec. (h) as (j).

Cases: United Dominion Industries v. United States, 532 U.S. 822 (2001); United States v. Foster Lumber Co., 429 U.S. 32 (1976); Young v. Commissioner, 783 F.2d 1201 (5th Cir. 1986)

(a) Deduction allowed There shall be allowed as a deduction for the taxable year an amount equal to—

Amended 2017, 2020

2020 Pub. L. 116-136 Pub. L. 116–136, § 2303(a)(1), substituted “an amount equal to—” and pars. (1) and (2) for “an amount equal to the lesser of—
“(1) the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, or
“(2) 80 percent of taxable income computed without regard to the deduction allowable under this section.”
2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(a)(1), amended subsec. (a) generally. Prior to amendment, text read as follows: “There shall be allowed as a deduction for the taxable year an amount equal to the aggregate of (1) the net operating loss carryovers to such year, plus (2) the net operating loss carrybacks to such year. For purposes of this subtitle, the term ‘net operating loss deduction’ means the deduction allowed by this subsection.”

Cited by 33

(1) in the case of a taxable year beginning before January 1, 2021, the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and

Cited by 1

(2) in the case of a taxable year beginning after December 31, 2020, the sum of—

Cited by 2

(A) the aggregate amount of net operating losses arising in taxable years beginning before January 1, 2018, carried to such taxable year, plus

Cited by 2

(B) the lesser of—

Cited by 3

(i) the aggregate amount of net operating losses arising in taxable years beginning after December 31, 2017, carried to such taxable year, or

(ii) 80 percent of the excess (if any) of—

Cited by 8

(I) taxable income computed without regard to the deductions under this section and sections 199A and 250, over

Cited by 1

(II) the amount determined under subparagraph (A).

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

Amended 1958, 1964, 1990

1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(a), amended subsec. (b) generally, substituting present provisions for provisions delineating years to which loss may be carried, relating to amount of carrybacks and carryovers, and providing for special rules for foreign expropriation losses.
1964 Pub. L. 88-272 Pub. L. 88–272, § 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.
1958 Pub. L. 85-866 Pub. L. 85–866, § 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).

Cited by 22

(1) Years to which loss may be carried

Amended 1962, 1967, 1969, 1976, 1978, 1980, 1981, 1982, 1984, 1986, 1988, 1989, 1990, 1996, 1997, 1998, 2002, 2004, 2005, 2008, 2009, 2014, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(b)(2), struck out subpars. (D) to (F) which related to corporate equity reduction interest loss, retention of 3-year carryback in certain cases, and farming losses, respectively.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (F) as (E). Former subpar. (E) redesignated (D).
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(iv), substituted “subsection (h)).” for “subsection (i)) or qualified disaster loss (as defined in subsection (j)).” in concluding provisions.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(iii), substituted “section 165(i)(5)” for “section 165(h)(3)(C)(i)”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(v), substituted “subsection (h)” for “subsection (i)”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (G) as (F). Former subpar. (F) redesignated (E).
2014 Pub. L. 113-295 Pub. L. 113–295, § 211(c)(1)(B), substituted “section 165(h)(3)(C)(i)” for “subsection (h)(3)(C)(i)”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (G) as (F) and struck out subpars. (H) to (J) which related to carryback for 2008 or 2009 net operating losses, transmission property and pollution control investment, and certain losses attributable to federally declared disasters, respectively.
2009 Pub. L. 111-92 Pub. L. 111–92 amended subpar. (H) generally. Prior to amendment, subpar. (H) provided for carryback for 2008 net operating losses of small businesses.
2009 Pub. L. 111-5 Pub. L. 111–5, § 1211(a), amended subpar. (H) generally. Prior to amendment, subpar. (H) read as follows: “In the case of a net operating loss for any taxable year ending during 2001 or 2002, subparagraph (A)(i) shall be applied by substituting ‘5’ for ‘2’ and subparagraph (F) shall not apply.”
2008 Pub. L. 110-343 Pub. L. 110–343, § 708(d)(1), inserted “or qualified disaster loss (as defined in subsection (j))” before period at end of concluding provisions.
2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(2)(D)(v), substituted “federally declared disasters (as defined by subsection (h)(3)(C)(i))” for “Presidentially declared disasters (as defined in section 1033(h)(3))”.
2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(2)(D)(vi), substituted “federally declared disasters” for “Presidentially declared disasters”.
2008 Pub. L. 110-343 Pub. L. 110–343, § 708(a), added subpar. (J).
2005 Pub. L. 109-58 Pub. L. 109–58 added subpar. (I).
2005 Pub. L. 109-135 Pub. L. 109–135, § 402(f)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “At the election of the taxpayer in any taxable year ending after December 31, 2005, and before January 1, 2009, in the case of a net operating loss in a taxable year ending after December 31, 2002, and before January 1, 2006, there shall be a net operating loss carryback to each of the 5 years preceding the taxable year of such loss to the extent that such loss does not exceed 20 percent of the sum of electric transmission property capital expenditures and pollution control facility capital expenditures of the taxpayer for the taxable year preceding the taxable year in which such election is made.”
2005 Pub. L. 109-135 Pub. L. 109–135, § 402(f)(2), substituted “for a taxable year” for “in a taxable year”.
2005 Pub. L. 109-135 Pub. L. 109–135, § 402(f)(3), added cl. (iv), redesignated cl. (vi) as (v), and struck out former cls. (iv) and (v) which read as follows:
2005 “(iv) Application for adjustment.—In the case of any portion of a net operating loss to which an election under clause (i) applies, an application under section 6411(a) with respect to such loss shall not fail to be treated as timely filed if filed within 24 months after the due date specified under such section.
2005 “(v) Special rules relating to refund.—For purposes of a net operating loss to which an election under clause (i) applies, references in sections 6501(h), 6511(d)(2)(A), and 6611(f)(1) to the taxable year in which such net operating loss arises or result in a net loss carryback shall be treated as references to the taxable year in which such election occurs.”
2004 Pub. L. 108-311 Pub. L. 108–311 struck out “a taxpayer which has” after “In the case of”.
2002 Pub. L. 107-147 Pub. L. 107–147, § 417(8), substituted “3 taxable years” for “3 years” and “2 taxable years” for ‘2 years”.
2002 Pub. L. 107-147 Pub. L. 107–147, § 102(a), added subpar. (H).
1998 Pub. L. 105-277 Pub. L. 105–277, § 2013(c), inserted concluding provisions.
1998 Pub. L. 105-277 Pub. L. 105–277, § 4003(h), added cl. (iv).
1998 Pub. L. 105-277 Pub. L. 105–277, § 2013(a), added subpar. (G).
1997 Pub. L. 105-34 Pub. L. 105–34, § 1082(b), added subpar. (F).
1996 Pub. L. 104-188 Pub. L. 104–188, § 1702(h)(2), substituted “subsection (h)” for “subsection (m)”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 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).
1989 Pub. L. 101-239 Pub. L. 101–239, § 7211(a), added subpar. (M).
1988 Pub. L. 100-647 Pub. L. 100–647, § 1009(c)(1), redesignated subpars. (L) and (M) as (K) and (L), respectively.
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(a)(1), inserted “and before January 1, 1987,”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 901(d)(4)(B), substituted “referred to in section 582(c)(5)” for “to which section 585, 586, or 593 applies”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(a)(2), inserted “and before January 1, 1987,”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(a)(3)(A), struck out “after December 31, 1981,” and inserted “after December 31, 1981, and before January 1, 1987,”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 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”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 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.”
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(b)(1), added subpars. (L) and (M).
1984 Pub. L. 98-369 Pub. L. 98–369, § 177(c)(1)(A), inserted “, or a net operating loss of the Federal Home Loan Mortgage Corporation for any taxable year beginning after December 31, 1984” in introductory provisions.
1984 Pub. L. 98-369 Pub. L. 98–369, § 177(c)(1)(B), (C), struck out “FNMA” before “mortgage disposition loss”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 91(d)(1), added subpar. (K).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(a), added subpar. (H). Former subpar. (H) redesignated (I).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(a), (c)(3), redesignated former subpar. (H) as (I) and substituted “subsection (j)” for “subsection (i)”. Former subpar. (I) redesignated (J).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(a), redesignated former subpar. (I) as (J).
1981 Pub. L. 97-34 Pub. L. 97–34, § 207(a)(2)(B)(i), substituted “15” for “8”.
1981 Pub. L. 97-34 Pub. L. 97–34, § 207(a)(2)(B)(ii), struck out designation subclause “(I)” for provisions prohibiting a loss carryback to any taxable year which is a REIT year and struck out provision formerly 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).
1980 Pub. L. 96-595 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.
1980 Pub. L. 96-222 Pub. L. 96–222, § 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 Pub. L. 95-600 Pub. L. 95–600, § 371(a)(1), added subpar. (H) relating to product liability losses.
1978 Pub. L. 95-600 Pub. L. 95–600, § 601(b)(1), added subpar. (H) relating to an electing GSOC.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1606(b), added subpar. (E).
1969 Pub. L. 91-172 Pub. L. 91–172 substituted “(E), (F), and (G)”, for “and (E)” in subpar. (A)(i) and added subpars. (F) and (G).
1967 Pub. L. 90-225 Pub. L. 90–225, § 3(a)(1)–(3), inserted reference to subpar. (E) in subpars. (A)(i) and (B), and added subpar. (E).
1962 Pub. L. 87-794 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).

Cited by 15

(A) General rule A net operating loss for any taxable year—

Amended 1978, 1980, 1982, 1984, 1986, 1988, 2020

2020 Pub. L. 116-136 Pub. L. 116–136, § 2303(c)(2), amended subpar. (A) generally. Prior to amendment, text read as follows: “Except as otherwise provided in this paragraph, a net operating loss for any taxable year—
“(i) except as otherwise provided in this paragraph, shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss, and
“(ii) shall be a net operating loss carryover to each taxable year following the taxable year of the loss.”
1988 Pub. L. 100-647 Pub. L. 100–647, § 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”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(b)(2)(A), (B), inserted reference to subpars. (L) and (M).
1984 Pub. L. 98-369 Pub. L. 98–369, § 91(d)(3)(A), substituted “(J), and (K)” for “and (J)”.
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(c)(1), substituted “(H), (I), and (J)” for “(H), and (I)”.
1980 Pub. L. 96-222 Pub. L. 96–222, § 106(a)(6), substituted “, (H), and (I)” for “and (H)”.
1980 Pub. L. 96-222 Pub. L. 96–222, § 103(a)(15), amended directory language of Pub. L. 95–600, § 371(a)(2), to correct an error, and did not involve any change in text. See 1978 Amendment note for subsec. (b)(1)(A) below.
1978 Pub. L. 95-600 Pub. L. 95–600, § 371(a)(2), as amended by Pub. L. 96–222, § 103(a)(15), substituted “(G), and (H)” for “and (G)”.
1978 Pub. L. 95-600 Pub. L. 95–600, § 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.

Cited by 2

(i) shall be a net operating loss carryback to the extent provided in subparagraphs (B), (C)(i), and (D), and

Amended 1997, 2017, 2020

2020 Pub. L. 116-136 Pub. L. 116–136, § 2303(b)(2), substituted “, (C)(i), and (D)” for “and (C)(i)”.
2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(b)(1)(A), substituted “except as otherwise provided in this paragraph, shall not be a net operating loss carryback to any taxable year” for “shall be a net operating loss carryback to each of the 2 taxable years”.
1997 Pub. L. 105-34 Pub. L. 105–34, § 1082(a)(1), substituted “2” for “3”.

(ii) except as provided in subparagraph (C)(ii), shall be a net operating loss carryover—

Amended 1997, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(b)(1)(B), substituted “to each taxable year” for “to each of the 20 taxable years”.
1997 Pub. L. 105-34 Pub. L. 105–34, § 1082(a)(2), substituted “20” for “15”.

(I) in the case of a net operating loss arising in a taxable year beginning before January 1, 2018, to each of the 20 taxable years following the taxable year of the loss, and

Cited by 1

(II) in the case of a net operating loss arising in a taxable year beginning after December 31, 2017, to each taxable year following the taxable year of the loss.

Cited by 1

(B) Farming losses

Amended 1976, 1978, 1980, 1981, 1982, 1986, 1988, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(b)(2), (c)(1), added subpar. (B) and struck out former subpar. (B). Prior to amendment, text read as follows:
2017 “(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.
2017 “(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.
2017 “(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.”
1988 Pub. L. 100-647 Pub. L. 100–647, § 1009(c)(3), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “Except as provided in subparagraphs (C), (D), and (E), a net operating loss for any taxable year ending after December 31, 1955, shall be a net 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.”
1986 Pub. L. 99-514 Pub. L. 99–514, § 903(b)(2)(A), (B), inserted reference to subpars. (L) and (M).
1982 Pub. L. 97-362 Pub. L. 97–362, § 102(c)(2), substituted “(H), and (J)” for “and (I)”.
1981 Pub. L. 97-34 Pub. L. 97–34, § 207(a)(1), substituted “15 taxable years” for “7 taxable years”.
1980 Pub. L. 96-222 Pub. L. 96–222, § 106(a)(7), substituted “(G), and (I)” for “and (G)”.
1978 Pub. L. 95-600 Pub. L. 95–600, § 701(d)(1), inserted reference to subpar. (G).
1976 Pub. L. 94-455 Pub. L. 94–455, § 806(a), inserted “Except as provided in subparagraphs (C), (D), (E), and (F), a net operating loss for any taxable year ending after December 31, 1975, shall be a net operating loss carryover to each of the 7 taxable years following the taxable year of such loss” after “year of such loss”.

Cited by 4

(i) In general In the case of any portion of a net operating loss for the taxable year which is a farming loss with respect to the taxpayer, such loss shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss.

Cited by 1

(ii) Farming loss For purposes of this section, the term “farming loss” means the lesser of—

Cited by 8

(I) the amount which would be the net operating loss for the taxable year if only income and deductions attributable to farming businesses (as defined in section 263A(e)(4)) are taken into account, or

(II) the amount of the net operating loss for such taxable year.

(iii) Coordination with paragraph (2) For purposes of applying paragraph (2), a farming loss for any taxable year shall be treated as a separate net operating loss for such taxable year to be taken into account after the remaining portion of the net operating loss for such taxable year.

(iv) Election Any taxpayer entitled to a 2-year carryback under clause (i) from any loss year may elect not to have such clause apply to such loss year. Such election shall be made in such manner as prescribed by the Secretary and shall be made by the due date (including extensions of time) for 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.

(C) Insurance companies In the case of an insurance company (as defined in section 816(a)) other than a life insurance company, the net operating loss for any taxable year—

Amended 1976, 1981, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(b)(2), (d)(1), added subpar. (C) and struck out former subpar. (C). Prior to amendment, text read as follows: “In the case of a taxpayer which has a specified liability loss (as 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.”
1981 Pub. L. 97-34 Pub. L. 97–34, § 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”.
1976 Pub. L. 94-455 Pub. L. 94–455, §§ 806(b)(1), 1901(a)(29)(C)(ii), inserted “For any taxable year ending after December 31, 1975, the preceding sentence shall be applied by substituting ‘9 taxable years’ for ‘7 taxable years’ ” after “year of such loss”, substituted “subsection (g)(1)” for “subsection (j)(1)” after “as defined in” and “subsection (g)” for “subsection (j)” after “as provided in”.

Cited by 3

(i) shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss, and

Cited by 3

(ii) shall be a net operating loss carryover to each of the 20 taxable years following the taxable year of the loss.

Cited by 1

(D) Special rule for losses arising in 2018, 2019, and 2020

Amended 1971, 1976, 2014, 2017, 2020

2020 Pub. L. 116-136 Pub. L. 116–136, § 2303(b)(1), added subpar. (D).
2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(b)(2), struck out subpars. (D) to (F) which related to corporate equity reduction interest loss, retention of 3-year carryback in certain cases, and farming losses, respectively.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(i), redesignated subpar. (E) as (D) and struck out former subpar. (D). Prior to amendment, text of subpar. (D) read as follows: “In the case of any bank (as defined in section 585(a)(2)), the portion of the net operating loss for any taxable year beginning after December 31, 1986, and before January 1, 1994, which is attributable to the deduction allowed under section 166(a) shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of the loss and a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss.”
1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1901(a)(29)(C)(iii), 2126, substituted “subsection (h)” for “subsection (k)” after “as defined in” and “20” for “15” after “expropriation loss, to each of the”.
1971 Pub. L. 91-677 Pub. L. 91–677, § 2(a), inserted “(or, with respect to that portion of the net operating loss for such year attributable to a Cuban 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”.

Cited by 3

(i) In general In the case of any net operating loss arising in a taxable year beginning after December 31, 2017, and before January 1, 2021—

Cited by 1

(I) such loss shall be a net operating loss carryback to each of the 5 taxable years preceding the taxable year of such loss, and

Cited by 4

(II) subparagraphs (B) and (C)(i) shall not apply.

Amended 2014

2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(i), struck out “ending after August 2, 1989” after “loss limitation year”.

(ii) Special rules for REITs For purposes of this subparagraph—

Amended 2014

2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(ii), substituted “subsection (g)” for “subsection (h)”.

(I) In general A net operating loss for a REIT year shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss.

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

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

(iii) Special rule for life insurance companies In the case of a life insurance company, if a net operating loss is carried pursuant to clause (i)(I) to a life insurance company taxable year beginning before January 1, 2018, such net operating loss carryback shall be treated in the same manner as an operations loss carryback (within the meaning of section 810 as in effect before its repeal) of such company to such taxable year.

(iv) Rule relating to carrybacks to years to which section 965 applies If a net operating loss of a taxpayer is carried pursuant to clause (i)(I) to any taxable year in which an amount is includible in gross income by reason of section 965(a), the taxpayer shall be treated as having made the election under section 965(n) with respect to each such taxable year.

(v) Special rules for elections under paragraph (3)

(I) Special election to exclude section 965 years If the 5-year carryback period under clause (i)(I) with respect to any net operating loss of a taxpayer includes 1 or more taxable years in which an amount is includible in gross income by reason of section 965(a), the taxpayer may, in lieu of the election otherwise available under paragraph (3), elect under such paragraph to exclude all such taxable years from such carryback period.

Cited by 1

(II) Time of elections An election under paragraph (3) (including an election described in subclause (I)) with respect to a net operating loss arising in a taxable year beginning in 2018 or 2019 shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the first taxable year ending after the date of the enactment of this subparagraph.

(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—

Amended 1962, 1971, 1976, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(a)(2), substituted “shall—” and subpars. (A) to (C) for “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.”
1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(C)(iv), substituted “subsection (g)” for “subsections (i) and (j)” after “provided in”.
1971 Pub. L. 91-677 Pub. L. 91–677, § 2(b), inserted provisions relating to treatment of Cuban expropriation losses.
1962 Pub. L. 87-794 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”.

Cited by 47

(A) be computed with the modifications specified in subsection (d) other than paragraphs (1), (4), and (5) thereof, and 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,

Amended 1984

1984 Pub. L. 98-369 Pub. L. 98–369, § 722(a)(4)(A), substituted “and (5)” for “and (6)”.

Cited by 9

(B) not be considered to be less than zero, and

Cited by 4

(C) for taxable years beginning after December 31, 2020, be reduced by 20 percent of the excess (if any) described in subsection (a)(2)(B)(ii) for such taxable year.

Amended 2020

2020 Pub. L. 116-136 Pub. L. 116–136, § 2303(a)(2)(A), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “not exceed the amount determined under subsection (a)(2) for such prior taxable year.”

Cited by 1

(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.

Amended 1962, 1967, 1976, 1978

1978 Pub. L. 95-600 Pub. L. 95–600, § 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.
1978 Pub. L. 95-600 Pub. L. 95–600, § 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.
1978 Pub. L. 95-600 Pub. L. 95–600, § 703(p)(1)(B), redesignated subpar. (E) as (C). Former subpar. (C) redesignated (A).
1978 Pub. L. 95-600 Pub. L. 95–600, § 703(p)(1)(B), redesignated subpars. (D) and (E) as (B) and (C), respectively.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” in two places after “Secretary”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(C)(iii), substituted “subsection (h)” for “subsection (k)” after “as defined in”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “Or his delegate” in two places after “Secretary”.
1976 Pub. L. 94-455 Pub. L. 94–455, §§ 806(c), 1901(a)(29)(A)(ii), added subpar. (E). Former subpar. (E), which related to applicability of special rules in computing taxpayer’s net operating loss deduction, was struck out.
1976 Pub. L. 94-455 Pub. L. 94–455, § 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.
1967 Pub. L. 90-225 Pub. L. 90–225, § 3(a)(4), added subpars. (E) and (F).
1962 Pub. L. 87-794 Pub. L. 87–794 added par. (3).
1962 Pub. L. 87-710 Pub. L. 87–710, § 1(a), authorized a carryover of a net operating loss for any taxable year ending after Dec. 31, 1955, to each of the 5 taxable years following the 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).

Cited by 19

(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).

Amended 1976

1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(B), struck out “(for any taxable year ending after December 31, 1953)” after “means”.

Cited by 22

(d) Modifications The modifications referred to in this section are as follows:

Cited by 20

(1) Net operating loss deduction No net operating loss deduction shall be allowed.

Cited by 2

(2) Capital gains and losses of taxpayers other than corporations In the case of a taxpayer other than a corporation—

Amended 1986, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13113(d)(1)(A), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “In the case of a 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.”
1986 Pub. L. 99-514 Pub. L. 99–514, § 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.”

(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.

Cited by 1

(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.

Cited by 1

(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—

Cited by 10

(A) any gain or loss from the sale or other disposition of—

Cited by 1

(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;

Amended 1988, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13113(d)(1)(B), which directed the insertion of “, (2)(B),” after “paragraph (1)”, was executed by making the insertion after “paragraphs (1)” to reflect the probable intent of Congress.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1003(a)(1), substituted “paragraphs (1) and (3)” for “paragraphs (1), (2)(B), and (3)”.

(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

Amended 1998

1998 Pub. L. 105-277 Pub. L. 105–277, § 4004(a), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “any deduction allowable under section 165(c)(3) (relating to casualty losses) shall not be taken into account; and”.

(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.

Amended 1962, 1984

1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(5), struck out “or section 405(c)” after “section 404”.
1962 Pub. L. 87-792 Pub. L. 87–792 added subpar. (D).

(5) Computation of deduction for dividends received The deductions allowed by sections 243 (relating to dividends received by corporations) 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).

Amended 1976, 2014, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(53), substituted “sections 243” for “section 243”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(41)(B), amended par. (5) generally. Prior to amendment, text read as follows: “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.”
1976 Pub. L. 94-455 Pub. L. 94–455, § 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).

Cited by 2

(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—

Amended 1976, 1984, 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1899A(6), added heading.
1984 Pub. L. 98-369 Pub. L. 98–369, § 722(a)(4)(B), redesignated pars. (7) and (8) as (6) and (7), respectively.
1976 Pub. L. 94-455 Pub. L. 94–455, § 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).

(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));

(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)); and

(C) subsection (a)(2)(B)(ii)(I) shall be applied by substituting “real estate investment trust taxable income (as defined in section 857(b)(2) but without regard to the deduction for dividends paid (as defined in section 561))” for “taxable income”.

Amended 2017, 2020

2020 Pub. L. 116-136 Pub. L. 116–136, § 2303(a)(2)(B), substituted “subsection (a)(2)(B)(ii)(I)” for “subsection (a)(2)”.
2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(a)(3), added subpar. (C).

[(7) Repealed. Pub. L. 115–97, title I, § 13305(b)(3), Dec. 22, 2017, 131 Stat. 2126]

Amended 1976, 1984, 1986, 2005, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13305(b)(3), struck out par. (7). Text read as follows: “The deduction under section 199 shall not be allowed.”
2005 Pub. L. 109-135 Pub. L. 109–135, § 403(a)(17), added par. (7).
1986 Pub. L. 99-514 Pub. L. 99–514, § 104(b)(4), struck out par. (7), zero bracket amount, which read as follows: “In the case of a taxpayer other than a corporation, the zero bracket amount shall be treated as a deduction 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.”
1984 Pub. L. 98-369 Pub. L. 98–369, § 722(a)(4)(B), redesignated pars. (7) and (8) as (6) and (7), respectively.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1606(c), added par. (7).

(8) Qualified business income deduction Any deduction under section 199A shall not be allowed.

Amended 1977, 1984, 2017, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 101(a)(2)(B), substituted “Any deduction” for “The deduction”.
2017 Pub. L. 115-97 Pub. L. 115–97, § 11011(d)(1), added par. (8).
1984 Pub. L. 98-369 Pub. L. 98–369, § 722(a)(4)(B), redesignated pars. (7) and (8) as (6) and (7), respectively.
1977 Pub. L. 95-30 Pub. L. 95–30 added par. (8).

(9) Deduction for foreign-derived deduction eligible income The deduction under section 250 shall not be allowed.

Amended 2017, 2025

2025 Pub. L. 119-21 Pub. L. 119–21 substituted “deduction eligible” for “intangible” in heading.
2017 Pub. L. 115-97 Pub. L. 115–97, § 14202(b)(1), added par. (9).

(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.

Amended 1976

1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(D), struck out “The preceding sentence shall apply with respect to all taxable years, whether they begin before, on, or after January 1, 1954” after “applicable to such other taxable year”.

(f) Special rule for insurance companies In the case of an insurance company (as defined in section 816(a)) other than a life insurance company—

Amended 1958, 1976, 1982, 1990, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(d)(2), added subsec. (f) and redesignated former subsec. (f) as (g).
2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(c)(2)(A), redesignated subsec. (i) as (f) and struck out former subsecs. (f) and (g) which related to rules relating to specified liability loss and corporate equity reduction interest losses, respectively.
1990 Pub. L. 101-508 Pub. L. 101–508, § 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.
1982 Pub. L. 97-354 Pub. L. 97–354 struck out subsec. (f) relating to net operating loss of electing small business corporation.
1976 Pub. L. 94-455 Pub. L. 94–455, § 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.
1958 Pub. L. 85-866 Pub. L. 85–866, § 14(a), added pars. (3) and (4).

Cited by 7

(1) the amount of the deduction allowed under subsection (a) shall be the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and

Amended 1998

1998 Pub. L. 105-277 Pub. L. 105–277, § 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.”

(2) subparagraph (C) of subsection (b)(2) shall not apply.

(g) Cross references

Amended 1958, 1976, 1981, 1990, 2014, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(d)(2), added subsec. (f) and redesignated former subsec. (f) as (g).
2017 Pub. L. 115-97 Pub. L. 115–97, § 13302(c)(2)(A), redesignated subsec. (i) as (f) and struck out former subsecs. (f) and (g) which related to rules relating to specified liability loss and corporate equity reduction interest losses, respectively.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(A)(ii), redesignated subsec. (h) as (g) and struck out former subsec. (g) which related to rules relating to bad debt losses of commercial banks.
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(vii), substituted “subsection (b)(1)(D)” for “subsection (b)(1)(E)”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(1), redesignated subsec. (l) as (g) and struck out former subsec. (g) which related to carryover of net operating losses for certain regulated transportation corporations.
1981 Pub. L. 97-34 Pub. L. 97–34, § 207(a)(2)(C), struck out subpar. (C) which provided that, in the case of a net operating loss carryover from a loss year ending after Dec. 31, 1975, subpars. (A) and (B) were to be applied by substituting “8th taxable year” for “6th taxable year” and “9th taxable year” for “7th taxable year”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 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.
1976 Pub. L. 94-455 Pub. L. 94–455, § 806(b)(2), added subpar. (C).
1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(29)(E), struck out par. (4) relating to carryover of net operating loss for certain regulated transportation corporations for taxable years beginning in 1955 and ending in 1956.
1958 Pub. L. 85-866 Pub. L. 85–866, § 14(b), added par. (3) and redesignated former par. (3) as (4).

Cited by 1

(1) For treatment of net operating loss carryovers in certain corporate acquisitions, see section 381.

Cited by 1

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

Amended 1990, 2014

2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(30)(B)(vi), struck out subpar. (F). Text read as follows: “If any of the 3 taxable years described in subparagraph (C)(ii) end on or before August 2, 1989, the taxpayer may 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.”
1990 Pub. L. 101-508 Pub. L. 101–508, § 11811(b)(3), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “In applying paragraph (2) of subsection (b), the portion of the net operating loss for any taxable year which is attributable to the deduction allowed under section 166(a) shall be treated in a manner similar to the manner in which a foreign expropriation loss is treated.”