II 

116TH CONGRESS 

1ST SESSION S. 1996 

To amend the Internal Revenue Code of 1986 to clarify the application 

of the net operating loss deduction. 

IN THE SENATE OF THE UNITED STATES 

JUNE 26, 2019 

Ms. MCSALLY (for herself, Ms. SINEMA, Mrs. BLACKBURN, Mr. CORNYN, and 

Mr. ALEXANDER) 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 clarify 

the application of the net operating loss deduction. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Net Operating Loss 

5 Clarification Act of 2019’’. 

6 SEC. 2. TECHNICAL AMENDMENTS RELATING TO THE NET 

7 OPERATING LOSS DEDUCTION. 

8 (a) CLARIFICATION OF EFFECTIVE DATE OF NET

9 OPERATING LOSS RULES.—Section 13302(e) of Public 

10 Law 115–97 is amended— 


pamtmann on DSKBFK8HB2PROD with BILLS
2 

•S 1996 IS

1 (1) by striking all that follows ‘‘shall apply to’’ 

2 in paragraph (1) and inserting ‘‘taxable years to 

3 which losses arising in taxable years beginning after 

4 December 31, 2017, may be carried.’’, and 

5 (2) by striking ‘‘ending’’ in paragraph (2) and 

6 inserting ‘‘beginning’’. 

7 (b) CLARIFICATION OF NET OPERATING LOSS

8 CARRYBACK FOR FARMING LOSSES AND CERTAIN INSUR9 ANCE COMPANIES.—Section 172(b)(1)(A) of the Internal 

10 Revenue Code of 1986 is amended to read as follows: 

11 ‘‘(A) GENERAL RULE.—A net operating 

12 loss for any taxable year— 

13 ‘‘(i) shall be a net operating loss 

14 carryback to the extent provided in sub15 paragraphs (B) and (C)(i), and 

16 ‘‘(ii) except as provided in subpara17 graph (C)(ii), shall be a net operating loss 

18 carryover— 

19 ‘‘(I) in the case of a net oper20 ating loss arising in a taxable year be21 ginning before January 1, 2018, to 

22 each of the 20 taxable years following 

23 the taxable year of the loss, and 

24 ‘‘(II) in the case of a net oper25 ating loss arising in a taxable year beVerDate Sep 11 2014 23:16 Jul 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1996.IS S1996

pamtmann on DSKBFK8HB2PROD with BILLS
3 

•S 1996 IS

1 ginning after December 31, 2017, to 

2 each taxable year following the tax3 able year of the loss.’’. 

4 (c) CLARIFICATION OF DETERMINATION OF TAX5 ABLE INCOME.—Section 172(a)(2) of the Internal Rev6 enue Code of 1986 is amended by striking ‘‘deduction al7 lowable under this section’’ and inserting ‘‘deductions al8 lowable under this section and sections 199A and 250’’. 

9 (d) CLARIFICATION OF ORDER AND METHOD OF NET

10 OPERATING LOSS CALCULATION.— 

11 (1) IN GENERAL.—Section 172 of the Internal 

12 Revenue Code of 1986 is amended by redesignating 

13 subsection (g) as subsection (h) and by inserting 

14 after subsection (f) the following new subsection: 

15 ‘‘(g) SPECIAL RULE FOR LOSSES FROM TAXABLE

16 YEARS BEGINNING BEFORE JANUARY 1, 2018.—In the 

17 case of a taxable year (hereafter in this subsection referred 

18 to as the ‘current year’) to which is carried a net operating 

19 loss arising in a taxable year beginning before January 

20 1, 2018, the amount determined under subsection (a) for 

21 the current taxable year shall be an amount equal to the 

22 sum of— 

23 ‘‘(1) the aggregate amount of such net oper24 ating losses carried to the current taxable year, and 

25 ‘‘(2) the lesser of— 


pamtmann on DSKBFK8HB2PROD with BILLS
4 

•S 1996 IS

1 ‘‘(A) the aggregate amount of net oper2 ating losses arising in taxable years beginning 

3 after December 31, 2017, which are carried to 

4 the current taxable year, or 

5 ‘‘(B) 80 percent of the excess (if any) of— 

6 ‘‘(i) taxable income computed without 

7 regard to the deductions allowable under 

8 this section and sections 199A and 250, 

9 over 

10 ‘‘(ii) the amount determined under 

11 paragraph (1).’’. 

12 (2) CONFORMING AMENDMENT.—Section 

13 172(b)(2)(C) of such Code is amended to read as 

14 follows: 

15 ‘‘(C) be reduced by 20 percent of taxable 

16 income computed under section (a)(2) for such 

17 prior taxable year (or if subsection (g) applies 

18 to such prior taxable year, 20 percent of the ex19 cess described in subsection (g)(2)(B) for such 

20 year).’’. 

21 (e) CONFORMING AMENDMENTS TO RULES REGARD22 ING REMICS.—Section 860E(a)(3)(B) of the Internal 

23 Revenue Code of 1986 is amended by striking all that fol24 lows ‘‘for purposes of’’ and inserting ‘‘subsection (a)(2), 


pamtmann on DSKBFK8HB2PROD with BILLS
5 

•S 1996 IS

1 and the second sentence of subsection (b)(2), of section 

2 172.’’. 

3 (f) ACCELERATED REFUNDS.—In the case of a net 

4 operating loss carryback which is allowed for a taxable 

5 year by reason of the amendments made by subsections 

6 (a) through (e), an application under section 6411(a) of 

7 the Internal Revenue Code of 1986 with respect to such 

8 carryback shall not fail to be treated as timely filed if filed 

9 by the later of— 

10 (1) the date which is 4 months after the date 

11 of the enactment of this Act, or 

12 (2) the date otherwise applicable under section 

13 6411(a) of such Code. 

14 (g) EFFECTIVE DATE.—The amendments made by 

15 subsections (a) through (e) shall take effect as if included 

16 in the provision of Public Law 115–97 to which they re17 late. 

Æ 


pamtmann on DSKBFK8HB2PROD with BILLS