(a) In general
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(1) 1-year carryback and 20-year carryforward If the sum of the business credit carryforwards to the taxable year plus the amount of the current year business credit for the taxable year exceeds the amount of the limitation imposed by subsection (c) of section 38 for such taxable year (hereinafter in this section referred to as the “unused credit year”), such excess (to the extent attributable to the amount of the current year business credit) shall be—
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1083(a)(1), substituted “1-year” for “3-year” and “20-year” for “15-year” in heading, “1 taxable” for “3 taxable” in subpar. (A), and “20 taxable” for “15 taxable” in subpar. (B).
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(A) a business credit carryback to the taxable year preceding the unused credit year, and
Amended 2005
- 2005 Pub. L. 109-135 Pub. L. 109–135, § 412(g)(1), substituted “the taxable year” for “each of the 1 taxable years”.
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(B) a business credit carryforward to each of the 20 taxable years following the unused credit year,
and, subject to the limitations imposed by subsections (b) and (c), shall be taken into account under the provisions of section 38(a) in the manner provided in section 38(a).
(2) Amount carried to each year
Amended 1997, 1998
- 1998 Pub. L. 105-206 Pub. L. 105–206 amended Pub. L. 105–34, § 1083(a)(2). See 1997 Amendment note below.
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1083(a)(2), as amended by Pub. L. 105–206, § 6010(n), in subpar. (A), substituted “21 taxable” for “18 taxable”, and in subpar. (B), substituted “20 years” for “17 years” in heading and “20 taxable” for “17 taxable” in text.
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(A) Entire amount carried to first year The entire amount of the unused credit for an unused credit year shall be carried to the earliest of the 21 taxable years to which (by reason of paragraph (1)) such credit may be carried.
(B) Amount carried to other 20 years The amount of the unused credit for the unused credit year shall be carried to each of the other 20 taxable years to the extent that such unused credit may not be taken into account under section 38(a) for a prior taxable year because of the limitations of subsections (b) and (c).
(3) 5-year carryback for marginal oil and gas well production credit Notwithstanding subsection (d), in the case of the marginal oil and gas well production credit—
Amended 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357, § 341(c), added par. (3).
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(A) this section shall be applied separately from the business credit (other than the marginal oil and gas well production credit),
Amended 2010, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(F), struck out “or the eligible small business credits” after “gas well production credit)”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2012(b), inserted “or the eligible small business credits” after “credit)”.
(B) paragraph (1) shall be applied by substituting “each of the 5 taxable years” for “the taxable year” in subparagraph (A) thereof, and
Amended 2005
- 2005 Pub. L. 109-135 Pub. L. 109–135, § 412(g)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “paragraph (1) shall be applied by substituting ‘5 taxable years’ for ‘1 taxable years’ in subparagraph (A) thereof, and”.
(C) paragraph (2) shall be applied—
(i) by substituting “25 taxable years” for “21 taxable years” in subparagraph (A) thereof, and
(ii) by substituting “24 taxable years” for “20 taxable years” in subparagraph (B) thereof.
(4) 3-year carryback for applicable credits Notwithstanding subsection (d), in the case of any applicable credit (as defined in section 6417(b))—
Amended 2010, 2018, 2022
- 2022 Pub. L. 117-169 Pub. L. 117–169 added par. (4).
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(E), struck out par. (4) which related to 5-year carryback for eligible small business credits.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2012(a), added par. (4).
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(A) this section shall be applied separately from the business credit (other than the applicable credit),
(B) paragraph (1) shall be applied by substituting “each of the 3 taxable years” for “the taxable year” in subparagraph (A) thereof, and
(C) paragraph (2) shall be applied—
(i) by substituting “23 taxable years” for “21 taxable years” in subparagraph (A) thereof, and
(ii) by substituting “22 taxable years” for “20 taxable years” in subparagraph (B) thereof.
(b) Limitation on carrybacks The amount of the unused credit which may be taken into account under section 38(a)(3) for any preceding taxable year shall not exceed the amount by which the limitation imposed by section 38(c) for such taxable year exceeds the sum of—
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(1) the amounts determined under paragraphs (1) and (2) of section 38(a) for such taxable year, plus
(2) the amounts which (by reason of this section) are carried back to such taxable year and are attributable to taxable years preceding the unused credit year.
(c) Limitation on carryforwards The amount of the unused credit which may be taken into account under section 38(a)(1) for any succeeding taxable year shall not exceed the amount by which the limitation imposed by section 38(c) for such taxable year exceeds the sum of the amounts which, by reason of this section, are carried to such taxable year and are attributable to taxable years preceding the unused credit year.
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(d) Transitional rule No portion of the unused business credit for any taxable year which is attributable to a credit specified in section 38(b) or any portion thereof may be carried back to any taxable year before the first taxable year for which such specified credit or such portion is allowable (without regard to subsection (a)).
Amended 1986, 1988, 1990, 1992, 1993, 1996, 1997, 2000, 2001, 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357, § 245(b)(1), amended heading and text of subsec. (d) generally, substituting provisions prohibiting carryback of the unused business credit attributable to a credit specified in section 38(b) for provisions prohibiting carryback of the enhanced oil recovery credit before 1991, sections 44, 45A, and 45B credits before their enactments, the renewable electricity production credit before its effective date, the empowerment zone employment credit, section 45C credit before July 1, 1996, DC Zone credits before their effective date, the new markets tax credit before Jan. 1, 2001, and the small employer pension plan startup cost credit before Jan. 1, 2002.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 619(c)(1), added par. (10).
- 2000 Pub. L. 106-554 Pub. L. 106–554 added par. (9).
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 701(b)(1), added par. (8).
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1703(n)(1)(A), substituted “45A” for “45” in heading.
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1703(n)(1)(B), substituted “45B” for “45” in heading.
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1205(c), added par. (7).
- 1993 Pub. L. 103-66 Pub. L. 103–66, § 13302(a)(2), added par. (4).
- 1993 Pub. L. 103-66 Pub. L. 103–66, § 13322(d), added par. (5).
- 1993 Pub. L. 103-66 Pub. L. 103–66, § 13443(b)(2), added par. (6).
- 1992 Pub. L. 102-486 Pub. L. 102–486 redesignated par. (5), relating to carryback of enhanced oil recovery credit, as (1), redesignated par. (5), relating to carryback of section 44 credit, as (2), and added par. (3).
- 1990 Pub. L. 101-508 Pub. L. 101–508, § 11801(a)(2), struck out par. (1) which related to carryforwards from an unused credit year which did not expire before first taxable year beginning after Dec. 31, 1983, par. (2) which related to carrybacks in determining amount allowable as credit including net tax liability, par. (3) which related to similar rules for research credit under section 30, and par. (4) which provided for no carryback of low-income housing credit before 1987.
- 1990 Pub. L. 101-508 Pub. L. 101–508, § 11611(b)(2), added par. (5) relating to carryback of section 44 credit.
- 1990 Pub. L. 101-508 Pub. L. 101–508, § 11511(b)(2), added par. (5) relating to carryback of enhanced oil recovery credit.
- 1988 Pub. L. 100-647 Pub. L. 100–647 added par. (4).
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1846(1), inserted “(as in effect before the enactment of the Tax Reform Act of 1984)”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1846(2), substituted “as defined in section 26(b)” for “as so defined in section 25(b)”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 231(d)(3)(C)(i), added par. (3).