Title: Net Operating Loss Clarification Act of 2019
Policy area: Taxation

Summary:
Net Operating Loss Clarification Act of 2019
This bill amends the Tax Cuts and Jobs Act of 2017 (P.L. 115-97) to provide that the net operating carryforward and carryback modifications in that Act are effective for net operating losses arising in taxable years beginning after December 31, 2017 (instead of tax years ending after December 31, 2017).

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1996 Introduced in Senate (IS)]

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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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Net Operating Loss Clarification Act 
of 2019''.

SEC. 2. TECHNICAL AMENDMENTS RELATING TO THE NET OPERATING LOSS 
              DEDUCTION.

    (a) Clarification of Effective Date of Net Operating Loss Rules.--
Section 13302(e) of Public Law 115-97 is amended--
            (1) by striking all that follows ``shall apply to'' in 
        paragraph (1) and inserting ``taxable years to which losses 
        arising in taxable years beginning after December 31, 2017, may 
        be carried.'', and
            (2) by striking ``ending'' in paragraph (2) and inserting 
        ``beginning''.
    (b) Clarification of Net Operating Loss Carryback for Farming 
Losses and Certain Insurance Companies.--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.''.
    (c) Clarification of Determination of Taxable Income.--Section 
172(a)(2) of the Internal Revenue Code of 1986 is amended by striking 
``deduction allowable under this section'' and inserting ``deductions 
allowable under this section and sections 199A and 250''.
    (d) Clarification of Order and Method of Net Operating Loss 
Calculation.--
            (1) In general.--Section 172 of the Internal Revenue Code 
        of 1986 is amended by redesignating subsection (g) as 
        subsection (h) and by inserting after subsection (f) the 
        following new subsection:
    ``(g) Special Rule for Losses From Taxable Years Beginning Before 
January 1, 2018.--In the case of a taxable year (hereafter in this 
subsection referred to as the `current year') to which is carried a net 
operating loss arising in a taxable year beginning before January 1, 
2018, the amount determined under subsection (a) for the current 
taxable year shall be an amount equal to the sum of--
            ``(1) the aggregate amount of such net operating losses 
        carried to the current taxable year, and
            ``(2) the lesser of--
                    ``(A) the aggregate amount of net operating losses 
                arising in taxable years beginning after December 31, 
                2017, which are carried to the current taxable year, or
                    ``(B) 80 percent of the excess (if any) of--
                            ``(i) taxable income computed without 
                        regard to the deductions allowable under this 
                        section and sections 199A and 250, over
                            ``(ii) the amount determined under 
                        paragraph (1).''.
            (2) Conforming amendment.--Section 172(b)(2)(C) of such 
        Code is amended to read as follows:
                    ``(C) be reduced by 20 percent of taxable income 
                computed under section (a)(2) for such prior taxable 
                year (or if subsection (g) applies to such prior 
                taxable year, 20 percent of the excess described in 
                subsection (g)(2)(B) for such year).''.
    (e) Conforming Amendments to Rules Regarding REMICs.--Section 
860E(a)(3)(B) of the Internal Revenue Code of 1986 is amended by 
striking all that follows ``for purposes of'' and inserting 
``subsection (a)(2), and the second sentence of subsection (b)(2), of 
section 172.''.
    (f) Accelerated Refunds.--In the case of a net operating loss 
carryback which is allowed for a taxable year by reason of the 
amendments made by subsections (a) through (e), an application under 
section 6411(a) of the Internal Revenue Code of 1986 with respect to 
such carryback shall not fail to be treated as timely filed if filed by 
the later of--
            (1) the date which is 4 months after the date of the 
        enactment of this Act, or
            (2) the date otherwise applicable under section 6411(a) of 
        such Code.
    (g) Effective Date.--The amendments made by subsections (a) through 
(e) shall take effect as if included in the provision of Public Law 
115-97 to which they relate.
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