THREE-YEAR NET OPERATING LOSS CARRYBACK.

SEC. 203. THREE-YEAR NET OPERATING LOSS CARRYBACK. (a) Allowance.—Paragraph (1), and so much of paragraph (2) as precedes the third sentence thereof, of section 172 (b) of the Internal Revenue Code of 1954 (relating to net operating loss deduction) are amended to read as follows: “(b) Net Operating Loss Carrybacks and Carryovers.— “(1) Years to which loss may be carried.— A net operating loss for any taxable year ending after December 31, 1957, shall be— “(A) a net operating loss carryback to each of the 3 taxable years preceding the taxable year of such loss, and “(B) a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss. “(2) Amount of carrybacks and carryovers.—Except as provided in subsection (i), the entire amount of the net operating loss for any taxable year (hereinafter in this section referred to as the ‘loss year’) shall be carried to the earliest of the 8 taxable years to which (by reason of subparagraphs (A) and (B) of paragraph (1)) such loss may be carried. The portion of such loss which shall be carried to each of the other 7 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.” (b) Taxable Years Beginning in 1957 and Ending in 1958.—Section 172 of such Code is amended by relettering subsection (i) as subsection (j), and by inserting after subsection (h) (as added by section 64 of this Act) the following new subsection: “(i) Carryback of Net Operating Loss for Taxable Years Beginning in 1957 and Ending in 1958.—In the case of a taxable year beginning in 1957 and ending in 1958, the amount of any net operating loss for such year which shall be carried to the third preceding taxable year is the amount which bears the same ratio to such net operating loss as the number of days in the loss year after December 31, 1957, bears to the total number of days in such year. In determining the amount carried to any other taxable year, the reduction for the third taxable year preceding the loss year shall not exceed the portion 72 Stat. 1679 of the net operating loss which is carried to the third preceding taxable year.” (c) Effective Date.—The amendments made by subsections (a) and (b) shall apply in respect of net operating losses for taxable years ending after December 31, 1957.