Title: To amend the Internal Revenue Code of 1986 to allow certain taxpayers a 2-year carryback of net operating losses and to restore and make permanent the limitation on excess business losses of non-corporate taxpayers.
Policy area: Taxation

Summary:
This bill makes permanent the limitation on excess business losses of noncorporate taxpayers and allows certain taxpayers a two-year carryback of net operating losses arising in 2020.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6579 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 6579

To amend the Internal Revenue Code of 1986 to allow certain taxpayers a 
   2-year carryback of net operating losses and to restore and make 
  permanent the limitation on excess business losses of non-corporate 
                               taxpayers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 21, 2020

   Mr. Doggett (for himself, Mr. Raskin, Ms. DeLauro, Mr. Cohen, Mr. 
   Beyer, Mr. Blumenauer, Mr. Khanna, Mr. Pocan, Ms. Schakowsky, Mr. 
Welch, Ms. Wild, Mr. DeFazio, Ms. Jayapal, and Ms. Omar) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to allow certain taxpayers a 
   2-year carryback of net operating losses and to restore and make 
  permanent the limitation on excess business losses of non-corporate 
                               taxpayers.

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

SECTION 1. LIMITATION ON EXCESS BUSINESS LOSSES OF NON-CORPORATE 
              TAXPAYERS RESTORED AND MADE PERMANENT.

    (a) In General.--Section 461(l)(1) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(1) Limitation.--In the case of taxable year of a 
        taxpayer other than a corporation beginning after December 31, 
        2017--
                    ``(A) subsection (j) (relating to limitation on 
                excess farm losses of certain taxpayers) shall not 
                apply, and
                    ``(B) any excess business loss of the taxpayer for 
                the taxable year shall not be allowed.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 2304(a) of the Coronavirus Aid, 
Relief, and Economic Security Act.

SEC. 2. CERTAIN TAXPAYERS ALLOWED 2-YEAR CARRYBACK OF NET OPERATING 
              LOSSES ARISING IN 2020.

    (a) Two-Year Carryback of Losses Arising in 2020.--
            (1) In general.--Section 172(b)(1)(D)(i) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) by striking ``beginning after December 31, 
                2017'' and inserting ``beginning after December 31, 
                2019'', and
                    (B) by striking ``5 taxable years'' in subclause 
                (I) and inserting ``2 taxable years''.
            (2) Conforming amendments.--
                    (A) The heading for section 172(b)(1)(D) of such 
                Code is amended by striking ``2018, 2019, and''.
                    (B) Section 172(b)(1)(D) of such Code is amended by 
                striking clause (iii) and by redesignating clauses (iv) 
                and (v) as clauses (iii) and (iv), respectively.
                    (C) Section 172(b)(1)(D)(iv) of such Code, as so 
                redesignated, is amended--
                            (i) by striking subclause (II), and
                            (ii) by striking ``Special rules'' and all 
                        that follows through ``If the 5-year carryback 
                        period'' and inserting the following: ``Special 
                        rule for election under paragraph (3) to 
                        exclude section 965 years.--If the 2-year 
                        carryback period''.
    (b) Carryback Only Allowed for Small Businesses.--
            (1) In general.--Section 172(b)(1)(D)(i) of such Code is 
        amended by striking ``net operating loss arising'' and 
        inserting ``net operating loss of an eligible small business 
        arising''.
            (2) Eligible small business.--Section 172(b)(1)(D) of such 
        Code, as amended by the preceding provisions of this Act, is 
        amended by adding at the end the following new clause:
                            ``(v) Eligible small business.--For 
                        purposes of clause (i), the term `eligible 
                        small business' means a corporation or 
                        partnership which meets the gross receipts test 
                        of section 448(c) (applied by substituting 
                        `$15,000,000' for `$25,000,000' each place it 
                        appears) for the taxable year in which the loss 
                        arose (or, in the case of a sole 
                        proprietorship, which would meet such test if 
                        such proprietorship were a corporation).''.
    (c) Disallowed for Certain Taxpayers.--Section 172(b)(1)(D) of such 
Code, as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new clauses:
                            ``(vi) Carryback disallowed for certain 
                        taxpayers.--Clause (i) shall not apply with 
                        respect to any loss arising in a taxable year 
                        in which--
                                    ``(I) the taxpayer (or any related 
                                person) is not allowed a deduction 
                                under this chapter for the taxable year 
                                by reason of section 162(m) or section 
                                280G, or
                                    ``(II) the taxpayer (or any related 
                                person) is a specified corporation for 
                                the taxable year.
                            ``(vii) Specified corporation.--For 
                        purposes of clause (vi)--
                                    ``(I) In general.--The term 
                                `specified corporation' means, with 
                                respect to any taxable year, a 
                                corporation the aggregate distributions 
                                (including redemptions) of which during 
                                all taxable years ending after December 
                                31, 2017, exceed the sum of applicable 
                                stock issued of such corporation and 5 
                                percent of the fair market value of the 
                                stock of such corporation as of the 
                                last day of the taxable year.
                                    ``(II) Applicable stock issued.--
                                The term `applicable stock issued' 
                                means, with respect to any corporation, 
                                the aggregate value of stock issued by 
                                the corporation during all taxable 
                                years ending after December 31, 2017, 
                                in exchange for money or property other 
                                than stock in such corporation.
                                    ``(III) Certain preferred stock 
                                disregarded.--For purposes of subclause 
                                (I), stock described in section 
                                1504(a)(4), and distributions 
                                (including redemptions) with respect to 
                                such stock, shall be disregarded.
                            ``(viii) Related person.--For purposes of 
                        clause (vi), a person is a related person to a 
                        taxpayer if the related person bears a 
                        relationship to the taxpayer specified in 
                        section 267(b) or section 707(b)(1).''.
    (d) Advance Carryback of Estimated Net Operating Losses Arising in 
2020.--
            (1) In general.--In the case of a taxable year beginning 
        after December 31, 2019, and before January 1, 2021, a taxpayer 
        may file an application with the Secretary of the Treasury for 
        an advance carryback adjustment of the tax for a prior taxable 
        year that would be affected, by reason of the amendments made 
        by this section, by so much of any net operating loss estimated 
        by the taxpayer to arise in the taxable year to which the 
        application relates as does not exceed $100,000.
            (2) Application.--The application shall set forth in such 
        detail and with such supporting data and explanation as the 
        Secretary may require an estimate of the taxpayer's net 
        operating loss that will arise in such taxable year.
            (3) Due date for application.--An application under this 
        subsection may not be filed later than the due date for filing 
        the return for the taxable year of the net operating loss from 
        which the carryback results.
            (4) Allowance of adjustments.--Not later than 30 days after 
        the date on which an application for an advance carryback 
        adjustment is filed under paragraph (1), the Secretary shall 
        dispose of such application under rules similar to the rules of 
        section 6411 of the Internal Revenue Code of 1986.
            (5) Reduction of net operating loss for application year.--
        The amount of any net operating loss (determined without regard 
        to this paragraph) of the taxpayer for any taxable year from 
        which an advance carryback adjustment is made under this 
        subsection shall be reduced (but not below zero) by the amount 
        of estimated net operating loss taken into account in 
        determining an advance carryback adjustment of the taxpayer 
        under this subsection.
            (6) Recapture.--The taxpayer's tax imposed by chapter 1 for 
        such taxable year shall be increased by the excess (if any) 
        of--
                    (A) the reduction in tax for all prior taxable 
                years by reason of an advance carryback adjustment 
                under this subsection, over
                    (B) the reduction in tax for all prior taxable 
                years by reason of a net operating loss finally arising 
                in the taxable year to which the application under this 
                section relates.
            (7) References to secretary.--Any reference to the 
        Secretary of the Treasury in this subsection shall be treated 
        as including a reference to the Secretary's delegate.
    (e) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 2302(b) of the 
Coronavirus Aid, Relief, and Economic Security Act.
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