(4) The item relating to section 195 in the table 
of contents of part VI of subchapter B of chapter 1 
of such Code is amended to read as follows: 
‘‘Sec. 195. Start-up and organizational expenditures.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
in connection with active trades or businesses which begin 
in taxable years beginning after December 31, 2021. 
SEC. 3. PRESERVATION OF START-UP NET OPERATING 
LOSSES AND TAX CREDITS AFTER OWNER-
SHIP CHANGE. 
(a) APPLICATION TO NET OPERATING LOSSES.— 
Section 382(d) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new para-
graph: 
‘‘(4) EXCEPTION FOR START-UP LOSSES.— 
‘‘(A) IN GENERAL.—In the case of any net 
operating loss carryforward described in para-
graph (1)(A) which arose in a start-up period 
taxable year, the amount of such net operating 
loss carryforward otherwise taken into account 
under such paragraph shall be reduced by the 
net start-up loss determined with respect to the 
trade or business referred to in subparagraph 
(B)(i) for such start-up period taxable year. 
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‘‘(B) START-UP PERIOD TAXABLE YEAR.— 
The term ‘start-up period taxable year’ means 
any taxable year of the old loss corporation 
which— 
‘‘(i) begins before the close of the 3- 
year period beginning on the date on which 
any trade or business of such corporation 
begins as an active trade or business (as 
determined under section 195(d)(2) with-
out regard to subparagraph (B) thereof), 
and 
‘‘(ii) ends after May 31, 2022. 
‘‘(C) NET START-UP LOSS.— 
‘‘(i) IN
GENERAL.—The term ‘net 
start-up loss’ means, with respect to any 
trade or business referred to in subpara-
graph (B)(i) for any start-up period tax-
able year, the amount which bears the 
same ratio (but not greater than 1) to the 
net operating loss carryforward which 
arose in such start-up period taxable year 
as— 
‘‘(I) the net operating loss (if 
any) which would have been deter-
mined for such start-up period taxable 
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year if only items of income, gain, de-
duction, and loss properly allocable to 
such trade or business were taken into 
account, bears to 
‘‘(II) the amount of the net oper-
ating loss determined for such start- 
up period taxable year. 
‘‘(ii) SPECIAL RULE FOR LAST TAX-
ABLE YEAR IN START-UP PERIOD.—In the 
case of any start-up period taxable year 
which ends after the close of the 3-year pe-
riod described in subparagraph (B)(i) with 
respect to any trade or business, the net 
start-up loss with respect to such trade or 
business for such start-up period taxable 
year shall be the same proportion of such 
loss (determined without regard to this 
clause) as the proportion of such start-up 
period taxable year which is on or before 
the last day of such period. 
‘‘(D) APPLICATION
TO
NET
OPERATING 
LOSS
ARISING
IN
YEAR
OF
OWNERSHIP 
CHANGE.—Subparagraph (A) shall apply to any 
net operating loss described in paragraph 
(1)(B) in the same manner as such subpara-
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graph 
applies 
to 
net 
operating 
loss 
carryforwards described in paragraph (1)(A), 
but by only taking into account the amount of 
such net operating loss (and the amount of the 
net start-up loss) which is allocable under para-
graph (1)(B) to the period described in such 
paragraph. Proper adjustment in the allocation 
of the net start-up loss under the preceding 
sentence shall be made in the case of a taxable 
year to which subparagraph (C)(ii) applies. 
‘‘(E) APPLICATION
TO
TAXABLE
YEARS 
WHICH ARE START-UP PERIOD TAXABLE YEARS 
WITH RESPECT TO MORE THAN 1 TRADE OR 
BUSINESS.—In the case of any net operating 
loss carryforward which arose in a taxable year 
which is a start-up period taxable year with re-
spect to more than 1 trade or business— 
‘‘(i) this paragraph shall be applied 
separately with respect to each such trade 
or business, and 
‘‘(ii) the aggregate reductions under 
subparagraph (A) shall not exceed such net 
operating loss carryforward. 
‘‘(F) CONTINUITY OF BUSINESS REQUIRE-
MENT.—If the new loss corporation does not 
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continue the trade or business referred to in 
subparagraph (B)(i) at all times during the 2- 
year period beginning on the change date, this 
paragraph shall not apply with respect to such 
trade or business. 
‘‘(G) CERTAIN
TITLE
OR
SIMILAR 
CASES.— 
‘‘(i) 
MULTIPLE
OWNERSHIP 
CHANGES.—In the case of a 2nd ownership 
change to which subsection (l)(5)(D) ap-
plies, this paragraph shall not apply for 
purposes of determining the pre-change 
loss with respect to such 2nd ownership 
change. 
‘‘(ii) CERTAIN
INSOLVENCY
TRANS-
ACTIONS.—If subsection (l)(6) applies for 
purposes of determining the value of the 
old loss corporation under subsection (e), 
this paragraph shall not apply. 
‘‘(H) NOT
APPLICABLE
TO
DISALLOWED 
INTEREST.—This paragraph shall not apply for 
purposes of applying the rules of paragraph (1) 
to the carryover of disallowed interest under 
paragraph (3). 
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‘‘(I) TRANSITION RULE.—This paragraph 
shall not apply with respect to any trade or 
business if the date on which such trade or 
business begins as an active trade or business 
(as determined under section 195(d)(2) without 
regard to subparagraph (B) thereof) is on or 
before May 31, 2022.’’. 
(b) APPLICATION TO EXCESS CREDITS.—Section 383 
of such Code is amended by redesignating subsection (e) 
as subsection (f) and by inserting after subsection (d) the 
following new subsection: 
‘‘(e) EXCEPTION FOR START-UP EXCESS CREDITS.— 
‘‘(1) IN GENERAL.—In the case of any unused 
general business credit of the corporation under sec-
tion 39 which arose in a start-up period taxable 
year, the amount of such unused general business 
credit otherwise taken into account under subsection 
(a)(2)(A) shall be reduced by the start-up excess 
credit determined with respect to any trade or busi-
ness referred to in section 382(d)(4)(B)(i) for such 
start-up period taxable year. 
‘‘(2) START-UP PERIOD TAXABLE YEAR.—For 
purposes of this subsection, the term ‘start-up pe-
riod taxable year’ has the meaning given such term 
in section 382(d)(4)(B). 
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