II 

111TH CONGRESS 

1ST SESSION S. 1835 

To amend the Internal Revenue Code of 1986 to allow a 5-year carryback 

of operating losses, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 22, 2009 

Mr. BROWNBACK introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

5-year carryback of operating losses, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. 5-YEAR CARRYBACK OF OPERATING LOSSES. 

4 (a) IN GENERAL.—Subparagraph (H) of section 

5 172(b)(1) of the Internal Revenue Code of 1986 is amend6 ed to read as follows: 

7 ‘‘(H) CARRYBACK FOR 2008 AND 2009 NET

8 OPERATING LOSSES.— 

9 ‘‘(i) IN GENERAL.—In the case of an 

10 applicable 2008 or 2009 net operating loss 


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1 with respect to which the taxpayer has 

2 elected the application of this subpara3 graph— 

4 ‘‘(I) subparagraph (A)(i) shall be 

5 applied by substituting any whole 

6 number elected by the taxpayer which 

7 is more than 2 and less than 6 for ‘2’, 

8 ‘‘(II) subparagraph (E)(ii) shall 

9 be applied by substituting the whole 

10 number which is one less than the 

11 whole number substituted under sub12 clause (I) for ‘2’, and 

13 ‘‘(III) subparagraph (F) shall not 

14 apply. 

15 ‘‘(ii) APPLICABLE 2008 OR 2009 NET

16 OPERATING LOSS.—For purposes of this 

17 subparagraph, the term ‘applicable 2008 

18 or 2009 net operating loss’ means— 

19 ‘‘(I) the taxpayer’s net operating 

20 loss for any taxable year ending in 

21 2008 or 2009, or 

22 ‘‘(II) if the taxpayer elects to 

23 have this subclause apply in lieu of 

24 subclause (I), the taxpayer’s net operVerDate Nov 24 2008 23:43 Oct 22, 2009 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1835.IS S1835

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1 ating loss for any taxable year begin2 ning in 2008 or 2009. 

3 ‘‘(iii) ELECTION.—Any election under 

4 this subparagraph shall be made in such 

5 manner as may be prescribed by the Sec6 retary, and shall be made by the due date 

7 (including extension of time) for filing the 

8 taxpayer’s return for the taxable year of 

9 the net operating loss. Any such election, 

10 once made, shall be irrevocable. 

11 ‘‘(iv) COORDINATION WITH ALTER12 NATIVE TAX NET OPERATING LOSS DEDUC13 TION.—In the case of a taxpayer who 

14 elects to have clause (ii)(II) apply, section 

15 56(d)(1)(A)(ii) shall be applied by sub16 stituting ‘ending during 2001 or 2002 or 

17 beginning during 2008 or 2009’ for ‘end18 ing during 2001, 2002, 2008, or 2009’.’’. 

19 (b) ALTERNATIVE TAX NET OPERATING LOSS DE20 DUCTION.—Subclause (I) of section 56(d)(1)(A)(ii) is 

21 amended to read as follows: 

22 ‘‘(I) the amount of such deduc23 tion attributable to the sum of 

24 carrybacks of net operating losses 

25 from taxable years ending during 


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1 2001, 2002, 2008, or 2009 and 

2 carryovers of net operating losses to 

3 such taxable years, or’’. 

4 (c) LOSS FROM OPERATIONS OF LIFE INSURANCE

5 COMPANIES.—Subsection (b) of section 810 is amended 

6 by adding at the end the following new paragraph: 

7 ‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSSES.— 

8 ‘‘(A) IN GENERAL.—In the case of an ap9 plicable 2008 or 2009 loss from operations with 

10 respect to which the taxpayer has elected the 

11 application of this paragraph, paragraph (1)(A) 

12 shall be applied, at the election of the taxpayer, 

13 by substituting ‘5’ or ‘4’ for ‘3’. 

14 ‘‘(B) APPLICABLE 2008 OR 2009 LOSS FROM

15 OPERATIONS.—For purposes of this paragraph, 

16 the term ‘applicable 2008 or 2009 loss from op17 erations’ means— 

18 ‘‘(i) the taxpayer’s loss from oper19 ations for any taxable year ending in 2008 

20 or 2009, or 

21 ‘‘(ii) if the taxpayer elects to have this 

22 clause apply in lieu of clause (i), the tax23 payer’s loss from operations for any tax24 able year beginning in 2008 or 2009. 


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1 ‘‘(C) ELECTION.—Any election under this 

2 paragraph shall be made in such manner as 

3 may be prescribed by the Secretary, and shall 

4 be made by the due date (including extension of 

5 time) for filing the taxpayer’s return for the 

6 taxable year of the loss from operations. Any 

7 such election, once made, shall be irrevocable. 

8 ‘‘(D) COORDINATION WITH ALTERNATIVE

9 TAX NET OPERATING LOSS DEDUCTION.—In the 

10 case of a taxpayer who elects to have subpara11 graph (B)(ii) apply, section 56(d)(1)(A)(ii) shall 

12 be applied by substituting ‘ending during 2001 

13 or 2002 or beginning during 2008 or 2009’ for 

14 ‘ending during 2001, 2002, 2008, or 2009’.’’. 

15 (d) ANTI-ABUSE RULES.—The Secretary of Treasury 

16 or the Secretary’s designee shall prescribe such rules as 

17 are necessary to prevent the abuse of the purposes of the 

18 amendments made by this section, including anti-stuffing 

19 rules, anti-churning rules (including rules relating to sale20 leasebacks), and rules similar to the rules under section 

21 1091 of the Internal Revenue Code of 1986 relating to 

22 losses from wash sales. 

23 (e) EFFECTIVE DATES.— 

24 (1) IN GENERAL.—Except as otherwise pro25 vided in this subsection, the amendments made by 


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1 this section shall apply to net operating losses aris2 ing in taxable years ending after December 31, 

3 2007. 

4 (2) ALTERNATIVE TAX NET OPERATING LOSS

5 DEDUCTION.—The amendment made by subsection 

6 (b) shall apply to taxable years ending after 1997. 

7 (3) LOSS FROM OPERATIONS OF LIFE INSUR8 ANCE COMPANIES.—The amendment made by sub9 section (d) shall apply to losses from operations aris10 ing in taxable years ending after December 31, 

11 2007. 

12 (4) TRANSITIONAL RULE.—In the case of a net 

13 operating loss (or, in the case of a life insurance 

14 company, a loss from operations) for a taxable year 

15 ending before the date of the enactment of this 

16 Act— 

17 (A) any election made under section 

18 172(b)(3) or 810(b)(3) of the Internal Revenue 

19 Code of 1986 with respect to such loss may 

20 (notwithstanding such section) be revoked be21 fore the applicable date, 

22 (B) any election made under section 

23 172(b)(1)(H) or 810(b)(4) of such Code with 

24 respect to such loss shall (notwithstanding such 


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1 section) be treated as timely made if made be2 fore the applicable date, and 

3 (C) any application under section 6411(a) 

4 of such Code with respect to such loss shall be 

5 treated as timely filed if filed before the appli6 cable date. 

7 For purposes of this paragraph, the term ‘‘applica8 ble date’’ means the date which is 60 days after the 

9 date of the enactment of this Act. 

10 (f) EXCEPTION FOR TARP RECIPIENTS.—The 

11 amendments made by this section shall not apply to— 

12 (1) any taxpayer if— 

13 (A) the Federal Government acquires, at 

14 any time, an equity interest in the taxpayer 

15 pursuant to the Emergency Economic Stabiliza16 tion Act of 2008, or 

17 (B) the Federal Government acquires, at 

18 any time, any warrant (or other right) to ac19 quire any equity interest with respect to the 

20 taxpayer pursuant to such Act, 

21 (2) the Federal National Mortgage Association 

22 and the Federal Home Loan Mortgage Corporation, 

23 and 

24 (3) any taxpayer which at any time in 2008 or 

25 2009 is a member of the same affiliated group (as 


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1 defined in section 1504 of the Internal Revenue 

2 Code of 1986, determined without regard to sub3 section (b) thereof) as a taxpayer described in para4 graph (1) or (2). 

5 (g) TRANSFERS TO THE GENERAL FUND.—From 

6 time to time, the Secretary of the Treasury shall transfer 

7 to the general fund of the Treasury an amount equal to 

8 the reduction in revenues to the Treasury resulting from 

9 the amendments made by subsections (a) through (f). Not10 withstanding section 5 of the American Recovery and Re11 investment Act of 2009 (Public Law 111–5), such 

12 amounts shall be transferred from the amounts appro13 priated or made available and remaining unobligated 

14 under such Act. 

Æ 


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