ELIMINATION OF EXPIRED PROVISIONS IN SECTION 172.

SEC. 11811. ELIMINATION OF EXPIRED PROVISIONS IN SECTION 172. (a) General Rule.— Subsection (b) of section 172 is amended to read as follows: “(b) Net Operating Loss Carrybacks and Carryovers.— “(1) Years to which loss may be carried.— “(A) General rule.— Except as otherwise provided in this paragraph, a net operating loss for any taxable year— 104 STAT. 1388–531 “(i) shall be a net operating loss carryback to each of the 3 taxable years preceding the taxable year of such loss, and “(ii) shall be a net operating loss carryover to each of the 15 taxable years following the taxable year of the loss. “(B) Special rules for Reit’s.— “(i) In general.— A net operating loss for a REIT year shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss. “(ii) Special rule.— In the case of any net operating loss for a taxable year which is not a REIT year, such loss shall not be carried back to any taxable year which is a REIT year. “(iii) REIT year.— For purposes of this subparagraph, the term ‘REIT year’ means any taxable year for which the provisions of part II of subchapter M (relating to real estate investment trusts) apply to the taxpayer. “(C) Specified liability losses.— In the case of a taxpayer which has a specified liability loss (as defined in subsection (f)) for a taxable year, such specified liability loss shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of such loss. “(D) Bad debt losses of commercial banks.— In the case of any bank (as defined in section 585(a)(2)), the portion of the net operating loss for any taxable year beginning after December 31, 1986, and before January 1, 1994, which is attributable to the deduction allowed under section 166(a) shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of the loss and a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss. “(E) Excess interest loss.— “(i) In general.— If— “(I) there is a corporate equity reduction trans-action, and “(II) an applicable corporation has a corporate equity reduction interest loss for any loss limitation year ending after August 2, 1989, then the corporate equity reduction interest loss shall be a net operating loss carryback and carryover to the taxable years described in subparagraph (A), except that such loss shall not be carried back to a taxable year preceding the taxable year in which the corporate equity reduction transaction occurs. “(ii) Loss limitation year.— For purposes of clause (i) and subsection (m), the term ‘loss limitation year’ means, with respect to any corporate equity reduction transaction, the taxable year in which such transaction occurs and each of the 2 succeeding taxable years. “(iii) Applicable corporation.— For purposes of clause (i), the term ‘applicable corporation’ means— “(I) a C corporation which acquires stock, or the stock of which is acquired in a major stock acquisition, 104 STAT. 1388–532 “(II) a C corporation making distributions with respect to, or redeeming, its stock in connection with an excess distribution, or “(III) a C corporation which is a successor of a corporation described in subclause (I) or (II). “(iv) Other definitions.— “For definitions of terms used in this subparagraph, see subsection (h). “(2) Amount of carrybacks and carryovers.— The entire amount of the net operating loss for any taxable year (herein-after in this section referred to as the ‘loss year’) shall be carried to the earliest of the taxable years to which (by reason of paragraph (1)) such loss may be carried. The portion of such loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable income for each of the prior taxable years to which such loss may be carried. For purposes of the preceding sentence, the taxable income for any such prior taxable year shall be computed— “(A) with the modifications specified in subsection (d) other than paragraphs (1), (4), and (5) thereof, and “(B) by determining the amount of the net operating loss deduction without regard to the net operating loss for the loss year or for any taxable year thereafter, and the taxable income so computed shall not be considered to be less than zero. “(3) Election to waive carryback.— Any taxpayer entitled to a carryback period under paragraph (1) may elect to relinquish the entire carryback period with respect to a net operating loss for any taxable year. Such election shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the net operating loss for which the election is to be in effect. Such election, once made for any taxable year, shall be irrevocable for such taxable year.” (b) Conforming Amendments.— (1) Section 172 is amended by striking subsections (g), (h), (i), and (k), and by redesignating subsections (j), (1), (m), and (n) as subsections (f), (g), (h), and (i), respectively. (2) (A) Subsection (f) of section 172 (as redesignated by paragraph (1)) is amended to read as follows: “(f) Rules Relating to Specified Liability Loss.— For purposes of this section— “(1) In general.— The term ‘specified liability loss’ means the sum of the following amounts to the extent taken into account in computing the net operating loss for the taxable year: “(A) Any amount allowable as a deduction under section 162 or 165 which is attributable to— “(i) product liability, or “(ii) expenses incurred in the investigation or settlement of, or opposition to, claims against the taxpayer on account of product liability. “(B) Any amount (not described in subparagraph (A)) allowable as a deduction under this chapter with respect to a liability which arises under a Federal or State law or out of any tort of the taxpayer if— 104 STAT. 1388–533 “(i) in the case of a liability arising out of a Federal or State law, the act (or failure to act) giving rise to such liability occurs at least 3 years before the beginning of the taxable year, or “(ii) in the case of a liability arising out of a tort, such liability arises out of a series of actions (or failures to act) over an extended period of time a substantial portion of which occurs at least 3 years before the beginning of the taxable year. A liability shall not be taken into account under subparagraph (B) unless the taxpayer used an accrual method of accounting throughout the period or periods during which the acts or failures to act giving rise to such liability occurred. “(2) Limitation.— The amount of the specified liability loss for any taxable year shall not exceed the amount of the net operating loss for such taxable year. “(3) Special rule for nuclear powerplants.— Except as provided in regulations prescribed by the Secretary, that portion of a specified liability loss which is attributable to amounts incurred in the decommissioning of a nuclear powerplant (or any unit thereof) may, for purposes of subsection (b)(l)(C), be carried back to each of the taxable years during the period— “(A) beginning with the taxable year in which such plant (or unit thereof) was placed in service, and “(B) ending with the taxable year preceding the loss year. “(4) Product liability.— The term ‘product liability’ means— “(A) liability of the taxpayer for damages on account of physical injury or emotional harm to individuals, or damage to or loss of the use of property, on account of any defect in any product which is manufactured, leased, or sold by the taxpayer, but only if “(B) such injury, harm, or damage arises after the taxpayer has completed or terminated operations with respect to, and has relinquished possession of, such product. “(5) Coordination with subsection (b) (2).— For purposes of applying subsection (b)(2), a specified liability loss for any taxable year shall be treated as a separate net operating loss for such taxable year to be taken into account after the remaining portion of the net operating loss for such taxable year. “(6) Election.— Any taxpayer entitled to a 10-year carryback under subsection (b)(l)(C) from any loss year may elect to have the carryback period with respect to such loss year determined without regard to subsection (b)(l)(C). Such election shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for that taxable year.” (B) The portion of any loss which is attributable to a deferred statutory or tort liability loss (as defined in section 172(k) of the Internal Revenue Code of 1986 as in effect on the day before the date of the enactment of this Act) may not be carried back to any taxable year beginning before January 1, 1984, by reason of the amendment made by subparagraph (A). (3) Paragraph (2) of section 172(g) (as redesignated by para graph (1)) is amended to read as follows: 104 STAT. 1388–534 “(2) Coordination with subsection (b) (2).— For purposes of subsection (b)(2), the portion of a net operating loss for any taxable year which is attributable to the deduction allowed under section 166(a) shall be treated in a manner similar to the manner in which a specified liability loss is treated.” (4) Subparagraph (B) of section 172(h)(4) (as redesignated by paragraph (1)) is amended to read as follows: “(B) Coordination with subsection (b)(2).— For purposes of subsection (b)(2) “(i) a corporate equity reduction interest loss shall be treated in a manner similar to the manner in which a specified liability loss is treated, and “(ii) in determining the net operating loss deduction for any prior taxable year referred to in the 3rd sentence of subsection (b)(2), the portion of any net operating loss which may not be carried to such taxable year under subsection (b)(l)(F) shall not be taken into account.” (c) Effective Date.— The amendments made by this section shall apply to net operating losses for taxable years beginning after December 31, 1990.