SEC. 172-Continued (b) (revised Sept. 1962)-Continued Do..... (in full) Applicability: Net operating losses for taxable years ending after December 31, 1955. (Id., § 2, 76 Stat. 649.) Oct. 11, 1962, H.R. 11970, P.L. 87-794, § 317(b), 76 Stat. 889: Amended Sec. 172(b) (as amended by P.L. 87-710, § 1(a)) to read as follows: "(b) NET OPERATING LOSS CARRYBACKS AND CARRYOVERS."(1) YEARS TO WHICH LOSS MAY BE CARRIED. "(A)(i) Except as provided in clause (ii), a net operating loss for any taxable year ending after December 31, 1957, shall be a net operating loss carryback to each of the 3 taxable years preceding the taxable year of such loss. "(ii) In the case of a taxpayer with respect to a taxable year ending on or after December 31, 1962, for which a certification has been issued under section 317 of the Trade Expansion Act of 1962, a net operating loss for such taxable year shall be a net operating loss carryback to each of the 5 taxable years preceding the taxable year of such loss. "(B) Except as provided in subparagraph (C), 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. "(C) In the case of a taxpayer which is a regulated transportation corporation (as defined in subsection (j)(1)), a net operating loss for any taxable year ending after December 31, 1955, shall (except as provided in subsection (j)) be a net operating loss carryover to each of the 7 taxable years following the taxable year of such loss. "(2) AMOUNT OF CARRYBACKS AND CARRYOVERS.-Except as provided in subsections (i) and (j), 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 (6) 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) SPECIAL RULES. "(A) Paragraph (1)(A)(ii) shall apply only if— "(i) there has been filed, at such time and in such manner as may be prescribed by the Secretary or his delegate, a notice of filing of the application under section 317 of the Trade Expansion Act of 1962 for tax assistance, and, after its issuance, a copy of the certification under such section, and SEC. 172-Continued (b) (revised Oct. 1962)-Continued (b)(1). (in part, subpar. added) "(ii) the taxpayer consents in writing to the assessment, within such period as may be agreed upon with the Secretary or his delegate, of any deficiency for any year to the extent attributable to the disallowance of a deduction previously allowed with respect to such net operating loss, even though at the time of filing such consent the assessment of such deficiency would otherwise be prevented by the operation of any law or rule of law. "(B) In the case of "(i) a partnership and its partners, or "(ii) an electing small business corporation under subchapter S and its shareholders, paragraph (1)(A) (ii) shall apply as determined under regulations prescribed by the Secretary or his delegate. Such paragraph shall apply to a net operating loss of a partner or such a shareholder only if it arose predominantly from losses in respect of which certifications under section 317 of the Trade Expansion Act of 1962 were filed under this section." 63 Applicability: Section 317(b) of P.L. 87-794 provided as follows: "(b) Effective with respect to net operating losses for taxable years ending after December 31, 1955, subsection (b) of section 172 of the Internal Revenue Code of 1954 (relating to net operating loss carrybacks and carryovers) is amended to read as follows:" etc. (76 Stat. 889.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 210(a), 78 Stat. 47-48: Amended Sec. 172(b)(1) (as amended by P.L. 87–794, § 317(b))— (1) by striking out in subparagraph (A)(i)— "Except as provided in clause (ii)" and inserting in lieu thereof "Except as provided in clause (ii) and in subparagraph (D)"; (2) by striking out in subparagraph (B)— "Except as provided in subparagraph (C)" and inserting in lieu thereof— "Except as provided in subparagraphs (C) and (D)"; and (3) by adding at the end of subsection (b)(1), after subparagraph (C), the following new subparagraph (D): 63 Section 101 (short title) of P.L. 87-794 provided (76 Stat. 872) that "This Act may be cited as the 'Trade Expansion Act of 1962' ". Section 317(a) of such Act provided as follows (76 Stat. 889): "(a) If "(1) to carry out an adjustment proposal of a firm certified pursuant to section 311, such firm applies for tax assistance under this section within 24 months after the close of a taxable year and alleges in such application that it has sustained a net operating loss for such taxable year, "(2) the Secretary of Commerce determines that any such alleged loss for such taxable year arose predominantly out of the carrying on of a trade or business which was seriously injured, during such year, by the increased imports which the Tariff Commission has determined to result from concessions granted under trade agreements, and "(3) the Secretary of Commerce determines that tax assistance under this section will materially contribute to the economic adjustment of the firm, then the Secretary of Commerce shall certify such determinations with respect to such firm for such taxable year. No determination or certification under this subsection shall constitute a determination of the existence or amount of any net operating loss for purposes of section 172 of the Internal Revenue Code of 1954." SEC. 172-Continued (b) (2) (B). (in full) (b) (2) (sen'ce added) (b) (3) _ (subpars. (C), (D) added) "(D) In the case of a taxpayer which has a foreign expropriation loss (as defined in subsection (k)) for any taxable year ending after December 31, 1958, the portion of the net operating loss for such year attributable to such foreign expropriation loss shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss and shall be a net operating carryover to each of the 10 taxable years following the taxable year of such loss." Applicability: Foreign expropriation losses (as defined in section 172(k), as amended by P.L. 88-272, § 210(a) (5)) sustained in taxable years ending after December 31, 1958. (Id., § 210(c), 78 Stat. 49.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 210(b) (1), 78 Stat. 48-49: Amended Sec. 172(b)(2) (as amended by P.L. 87-794, § 317(b)) by striking out subparagraph (B) and inserting in lieu thereof the following: "(B) by determining the amount of the net operating loss deduction "(i) without regard to the net operating loss for the loss year or for any taxable year thereafter, and "(ii) without regard to that portion, if any, of a net operating loss for a taxable year attributable to a foreign expropriation loss, if such portion may not, under paragraph (1)(D), be carried back to such prior taxable year,". Applicability: Foreign expropriation losses sustained in taxable years ending after December 31, 1958. (Id., § 210(c), 78 Stat. 49.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 210(b) (2), 78 Stat. 49: Amended Sec. 172(b) (2) (as amended by P.L. 88-272, § 210(b)(1)) by adding at the end thereof the following new sentence: "For purposes of this paragraph, if a portion of the net operating loss for the loss year is attributable to a foreign expropriation loss to which paragraph (1) (D) applies, such portion shall be considered to be a separate net operating loss for such year to be applied after the other portion of such net operating loss." Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 210(a) (4), 78 Stat. 48: Amended Sec. 172(b) (3) (as amended by P.L. 87-794, § 317(b)) by adding at the end thereof, after subparagraph (B), the following new subparagraphs (C) and (D): "(C) Paragraph (1)(D) shall apply only if— "(i) the foreign expropriation loss (as defined in subsection (k)) for the taxable year equals or exceeds 50 percent of the net operating loss for the taxable year, "(ii) in the case of a foreign expropriation loss for a taxable year ending after December 31, 1963, the taxpayer elects (at such time and in such manner as the Secretary or his delegate by regulations prescribes) to have paragraph (1)(D) apply, and SEC. 172-Continued (b) (3) ((C), (D) added 1964)-Continued (d) (4) (D)... (added) (f) (3), (4) (added) "(iii) in the case of a foreign expropriation loss for a taxable year ending after December 31, 1958, and before January 1, 1964, the taxpayer elects (in such manner as the Secretary or his delegate by regulations prescribes) on or before December 31, 1965, to have paragraph (1)(D) apply. "(D) If a taxpayer makes an election under subparagraph (C) (iii), then (notwithstanding any law or rule of law), with respect to any taxable year ending before January 1, 1964, affected by the election "(i) the time for making or changing any choice or election under subpart A of part III of subchapter N (relating to foreign tax credit) shall not expire before January 1, 1966, "(ii) any deficiency attributable to the election under subparagraph (C) (iii) or to the application of clause (i) of this subparagraph may be assessed at any time before January 1, 1969, and "(iii) refund or credit of any overpayment attributable to the election under subparagraph (C) (iii) or to the application of clause (i) of this subparagraph may be made or allowed if claim therefor is filed before January 1, 1969." Applicability: Foreign expropriation losses sustained in taxable years ending after December 31, 1958. (Id., § 210(c), 78 Stat. 49.) Oct. 10, 1962, H.R. 10, P.L. 87–792, § 7(f), 76 Stat. 829: Amended Sec. 172(d)(4) (nonbusiness deductions of taxpayers other than corporations) (1) by striking out "and" at the end of subparagraph (B); (2) by striking out the period at the end of subparagraph (C) and inserting "; and"; and (3) by adding after subparagraph (C) the following new subparagraph: "(D) any deduction allowed under section 404 or section 405(c) 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." 64 Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 14(a), 72 Stat. 1611: Amended Sec. 172(f) 4 (relating to net operating loss provisions for taxable years beginning in 1953 and ending in 1954) by adding at the end thereof the following new paragraphs: "(3) The net operating loss deduction for such year shall be, in lieu of the amount specified in section 122(c) of the Internal Revenue Code of 1939, the sum of "(A) that portion of the net operating loss deduction for such year, computed as if subsection (a) of this section were applicable to the taxable year, which the number of days in such year after December 31, 1953, bears to the total number of days in such year, and SEC. 172-Continued "(B) that portion of the net operating loss deduction for such year, computed under section 122(c) of the Internal Revenue Code of 1939 as if this paragraph had not been enacted, which the number of days in such year before January 1, 1954, bears to the total number of days in such year. "(4) For purposes of the second sentence of subsection (b) (2), the taxable income for such year shall be the sum of "(A) that portion of the net income for such year, computed without regard to this paragraph, which the number of days in such year before January 1, 1954, bears to the total number of days in such year, and (B) that portion of the net income for such year, computed"(i) without regard to paragraphs (1) and (2) of section 122 (d) of the Internal Revenue Code of 1939, and "(ii) by allowing as a deduction an amount equal to the sum of the credits provided in subsections (b) and (h) of section 26 of such Code, which the number of days in such year after December 31, 1953, bears to the total number of days in such year." Applicability: Taxable years beginning after December 31, 1953, and ending after August 16, 1954. (Id., § 1(c)(1), 72 Stat. 1606. See n. 36, p. 79 above.) (g)(3)------ Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 14(b), 72 Stat. 1611: (redesignated, Amended Sec. 172(g) (special transitional rules) by redesignating added) paragraph (3) (excess profits tax not affected) as paragraph (4), and by inserting after paragraph (2) (losses for taxable years ending after December 31, 1953) the following new paragraph: "(3) TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1953, AND ENDING BEFORE AUGUST 17, 1954. In the case of a taxable year which begins after December 31, 1953, and ends before August 17, 1954 "(A) the net operating loss deduction for such year shall be computed as if subsection (a) of this section applied to such taxable year, and "(B for purposes of the second sentence of subsection (b) (2), the taxable income for such taxable year shall be the net income for such taxable year, computed "(i) without regard to paragraphs (1) and (2) of section 122 (d) of the Internal Revenue Code of 1939, and "(ii) by allowing as a deduction an amount equal to the sum of the credits provided in subsections (b) and (h) of section 26 of such Code." With respect to the amendments to subsections (f) and (g) of Sec. 172, P.L. 85-866 provided (§ 14(c), 72 Stat. 1611) as follows: "(c) STATUTE OF LIMITATIONS, ETC.; INTEREST.-If refund or credit of any overpayment resulting from the application of the amendment made by subsection (a) or (b) is prevented on the date of the enactment of this Act [Sept. 2, 1958], or within 6 months after such date, by the operation of any law or rule of law (other than section 3760 of the Internal Revenue Code of 1939 or section 7121 of the Internal Revenue Code of 1954, relating to closing agreements, and other than section 3761 of the Internal Revenue Code of 1939 or section 7122 of the Internal Revenue Code of 1954, relating to compromises), refund or credit of such overpayment may, nevertheless, be made or allowed if claim therefor is filed within 6 months after such date. No interest shall be paid or allowed on any overpayment resulting from the application of the amendment made by subsection (a) or (b)." See also Sec. 6511, "ANCILLARY PROVISIONS", p. 1108 below. |