Sec. 2303. MODIFICATIONS FOR NET OPERATING LOSSES
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## SEC. 2303 MODIFICATIONS FOR NET OPERATING LOSSES ###
(a)Temporary Repeal of Taxable Income Limitation ####
(1)In general **[**[26 U.S.C. 172](/us/usc/t26/s172)**]** The first sentence of section 172(a) of the Internal Revenue Code of 1986is amended by striking “ an amount equal to ” and all that follows and inserting > “an amount equal to— > > > #### “(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 > > > #### “(2) > > in the case of a taxable year beginning after December 31, 2020, the sum of— > > > ##### “(A) > > the aggregate amount of net operating losses arising in taxable years beginning before January 1, 2018, carried to such taxable year, plus > > > ##### “(B) > > the lesser of— > > > ###### “(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— > > > ###### “(I) > > taxable income computed without regard to the deductions under this section and sections 199A and 250, over > > > ###### “(II) > > the amount determined under subparagraph (A).” > . ####
(2)Conforming amendments #####
(A)Section 172(b)(2)(C) of such Code is amended to read as follows: > > ##### “(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.” > . #####
(B)Section 172(d)(6)(C) of such Code is amended by striking “subsection (a)(2)” and inserting “subsection (a)(2)(B)(ii)(I)”. #####
(C)Section 860E(a)(3)(B) of such Code is amended by striking all that follows “for purposes of” and inserting “subsection (a)(2)(B)(ii)(I) and the second sentence of subsection (b)(2) of section 172.”. ###
(b)Modifications of Rules Relating to Carrybacks ####
(1)In general Section 172(b)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: > > ##### “(D) Special rule for losses arising in 2018, 2019, and 2020 > > > ###### “(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— > > > ###### “(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 > > > ###### “(II) > > subparagraphs
(B)and (C)(i) shall not apply. > > > ###### “(ii) Special rules for reits > > For purposes of this subparagraph— > > > ###### “(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. > > > ###### “(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)Conforming amendment Section 172(b)(1)(A) of such Code, as amended by subsection (c)(2), is amended by striking “and (C)(i)” and inserting “, (C)(i), and (D)”. ###
(c)Technical Amendment Relating to Section 13302 of Public Law 115-97 ####
(1)**[**[26 U.S.C. 172 note](/us/usc/t26/s172)**]** Section 13302(e) of Public Law 115-97is amended to read as follows: > > ### “(e) Effective Dates > > > #### “(1) Net operating loss limitation > > The amendments made by subsections
(a)and (d)(2) shall apply to— > > > ##### “(A) > > taxable years beginning after December 31, 2017, and > > > ##### “(B) > > taxable years beginning on or before such date to which net operating losses arising in taxable years beginning after such date are carried. > > > #### “(2) Carryovers and carrybacks > > The amendments made by subsections (b), (c), and (d)(1) shall apply to net operating losses arising in taxable years beginning after December 31, 2017.” > . ####
(2)**[**[26 U.S.C. 172](/us/usc/t26/s172)**]** Section 172(b)(1)(A) of the Internal Revenue Code of 1986 is amended to read as follows: > > ##### “(A) General rule > > A net operating loss for any taxable year— > > > ###### “(i) > > shall be a net operating loss carryback to the extent provided in subparagraphs
(B)and (C)(i), and > > > ###### “(ii) > > except as provided in subparagraph (C)(ii), shall be a net operating loss carryover— > > > ###### “(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 > > > ###### “(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.” > . ###
(d)Effective Dates **[**[26 U.S.C. 172 note](/us/usc/t26/s172)**]** ####
(1)Net operating loss limitation The amendments made by subsection
(a)shall apply— #####
(A)to taxable years beginning after December 31, 2017, and #####
(B)to taxable years beginning on or before December 31, 2017, to which net operating losses arising in taxable years beginning after December 31, 2017, are carried. ####
(2)Carryovers and carrybacks The amendment made by subsection
(b)shall apply to— #####
(A)net operating losses arising in taxable years beginning after December 31, 2017, and #####
(B)taxable years beginning before, on, or after such date to which such net operating losses are carried. ####
(3)Technical amendments The amendments made by subsection
(c)shall take effect as if included in the provisions of Public Law 115-97 to which they relate. ####
(4)Special rule In the case of a net operating loss arising in a taxable year beginning before January 1, 2018, and ending after December 31, 2017— #####
(A)an application under section 6411(a) of the Internal Revenue Code of 1986 with respect to the carryback of such net operating loss shall not fail to be treated as timely filed if filed not later than the date which is 120 days after the date of the enactment of this Act, and #####
(B)an election to— ######
(i)forgo any carryback of such net operating loss, ######
(ii)reduce any period to which such net operating loss may be carried back, or ######
(iii)revoke any election made under section 172(b) to forgo any carryback of such net operating loss, shall not fail to be treated as timely made if made not later than the date which is 120 days after the date of the enactment of this Act. ###
(e)Special Rules With Respect to Farming Losses ####
(1)Election to disregard application of amendments made by subsections
(a)and
(b)#####
(A)In general If a taxpayer who has a farming loss (within the meaning of section 172(b)(1)(B)(ii) of the Internal Revenue Code of 1986) for any taxable year beginning in 2018, 2019, or 2020 makes an election under this paragraph, then— ######
(i)the amendments made by subsection
(a)shall not apply to any taxable year beginning in 2018, 2019, or 2020, and ######
(ii)the amendments made by subsection
(b)shall not apply to any net operating loss arising in any taxable year beginning in 2018, 2019, or 2020. #####
(B)Election ######
(i)In general Except as provided in clause (ii)(II), an election under this paragraph shall be made in such manner as may be prescribed by the Secretary. Such election, once made, shall be irrevocable. ######
(ii)Time for making election ######
(I)In general An election under this paragraph shall be made by the due date (including extensions of time) for filing the taxpayer's return for the taxpayer’s first taxable year ending after the date of the enactment of the COVID-related Tax Relief Act of 2020. ######
(II)Previously filed returns In the case of any taxable year for which the taxpayer has filed a return of Federal income tax before the date of the enactment of the COVID-related Tax Relief Act of 2020 which disregards the amendments made by subsections
(a)and (b), such taxpayer shall be treated as having made an election under this paragraph unless the taxpayer amends such return to reflect such amendments 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 the COVID-related Tax Relief Act of 2020. #####
(C)Regulations The Secretary of the Treasury (or the Secretary’s delegate) shall issue such regulations and other guidance as may be necessary to carry out the purposes of this paragraph, including regulations and guidance relating to the application of the rules of section 172(a) of the Internal Revenue Code of 1986 (as in effect before the date of the enactment of the CARES Act) to taxpayers making an election under this paragraph. ####
(2)Revocation of election to waive carryback The last sentence of section 172(b)(3) of the Internal Revenue Code of 1986 and the last sentence of section 172(b)(1)(B) of such Code shall not apply to any election— #####
(A)which was made before the date of the enactment of the COVID-related Tax Relief Act of 2020, and #####
(B)which relates to the carryback period provided under section 172(b)(1)(B) of such Code with respect to any net operating loss arising in taxable years beginning in 2018 or 2019.
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