26 USC § 383 - Special limitations on certain excess credits, etc.

(a) Excess credits

(1) In general

Under regulations, if an ownership change occurs with respect to a corporation, the amount of any excess credit for any taxable year which may be used in any post-change year shall be limited to an amount determined on the basis of the tax liability which is attributable to so much of the taxable income as does not exceed the section 382 limitation for such post-change year to the extent available after the application of section 382 andsubsections (b) and (c) of this section.

(2) Excess credit

For purposes of paragraph (1), the term “excess credit” means—

(A) any unused general business credit of the corporation under section 39, and

(B) any unused minimum tax credit of the corporation under section 53.

(b) Limitation on net capital loss

If an ownership change occurs with respect to a corporation, the amount of any net capital loss under section 1212 for any taxable year before the 1st post-change year which may be used in any post-change year shall be limited under regulations which shall be based on the principles applicable under section 382. Such regulations shall provide that any such net capital loss used in a post-change year shall reduce the section 382 limitation which is applied to pre-change losses under section 382 for such year.

(c) Foreign tax credits

If an ownership change occurs with respect to a corporation, the amount of any excess foreign taxes under section 904 (c) for any taxable year before the 1st post-change taxable year shall be limited under regulations which shall be consistent with purposes of this section and section 382.

(d) Pro ration rules for year which includes change

For purposes of this section, rules similar to the rules of subsections (b)(3) and (d)(1)(B) ofsection 382 shall apply.

(e) Definitions

Terms used in this section shall have the same respective meanings as when used in section 382, except that appropriate adjustments shall be made to take into account that the limitations of this section apply to credits and net capital losses.

Source

(Added Pub. L. 92–178, title III, § 302(a),Dec. 10, 1971, 85 Stat. 521; amended Pub. L. 94–455, title VIII, § 806(f)(2), title X, § 1031(b)(5), title XIX, § 1906(b)(13)(A),Oct. 4, 1976, 90 Stat. 1605, 1623, 1834; Pub. L. 95–30, title II, § 202(d)(3)(B), (C),May 23, 1977, 91 Stat. 148; Pub. L. 96–222, title I, § 103(a)(6)(G)(xiii),Apr. 1, 1980, 94 Stat. 211; Pub. L. 96–223, title II, § 232(b)(2)(C), (D),Apr. 2, 1980, 94 Stat. 276; Pub. L. 97–34, title II, § 221(b)(1)(C), (D), title III, § 331(d)(1)(C), (D),Aug. 13, 1981, 95 Stat. 246, 294; Pub. L. 98–369, div. A, title IV, § 474(r)(12)(A), (B),July 18, 1984, 98 Stat. 841; Pub. L. 99–514, title VI, § 621(b), (e)(1),Oct. 22, 1986, 100 Stat. 2265, 2266.)

Amendments

1986—Pub. L. 99–514, § 621(b), amended section generally. Prior to amendment, section read as follows: “If—

“(1) the ownership and business of a corporation are changed in the manner described in section 382 (a)(1), or

“(2) in the case of a reorganization specified in paragraph (2) of section 381 (a), there is a change in ownership described in section 382 (b)(1)(B),

then the limitations provided in section 382 in such cases with respect to the carryover of net operating losses shall apply in the same manner, as provided under regulations prescribed by the Secretary, with respect to any unused business credit of the corporation which can otherwise be carried forward under section 39, to any unused credit of the corporation which could otherwise be carried forward under section 30 (g)(2), to any excess foreign taxes of the corporation which could otherwise be carried forward under section 904 (c), and to any net capital loss of the corporation which can otherwise be carried forward under section 1212.”

Pub. L. 99–514, § 621(e)(1), repealed amendment by Pub. L. 94–455, § 806(f)(2). See 1976 Amendment note below.

1984—Pub. L. 98–369, § 474(r)(12)(A)(ii), in catchline of section 383, as in effect prior to amendment by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, substituted “Special limitations on unused business credits, research credits, foreign taxes, and capital losses” for “Special limitations on carryovers of unused investment credits, work incentive program credits, new employee credits, alcohol fuel credits, research credits, employee stock ownership credits, foreign taxes, and capital losses”.

Pub. L. 98–369, § 474(r)(12)(B)(ii), in catchline of section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (b) of this title, substituted “business credits, research credits” for “investment credits, work incentive program credits”.

Pub. L. 98–369, § 474(r)(12)(B)(ii), in catchline of section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, substituted “business credits” for “investment credits” and struck out references to work incentive program credits, new employee credits, alcohol fuel credits, and employee stock ownership credits.

Pub. L. 98–369, § 474(r)(12)(A)(i), in section 383, as in effect prior to amendment by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, substituted “with respect to any unused business credit of the corporation which can otherwise be carried forward under section 39, to any unused credit of the corporation which could otherwise be carried forward under section 30 (g)(2), to any excess foreign taxes of the corporation which could otherwise be carried forward under section 904 (c), and to any net capital loss of the corporation which can otherwise be carried forward under section 1212” for “with respect to any unused investment credit of the corporation which can otherwise be carried forward under section 46 (b), to any unused work incentive program credit of the corporation which can otherwise be carried forward under section 50A (b), to any unused new employee credit of the corporation which could otherwise be carried forward under section 53 (b), to any unused credit of the corporation which could otherwise be carried forward under section 44E (e)(2), to any unused credit of the corporation which could otherwise be carried forward under section 44F (g)(2), to any unused credit of the corporation which could otherwise be carried forward under section 44G (b)(2), to any excess foreign taxes of the corporation which can otherwise be carried forward under section 904 (c), and to any net capital loss of the corporation which can otherwise be carried forward under section 1212”.

Pub. L. 98–369, § 474(r)(12)(B)(i), in section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (b) of this title, substituted “with respect to any unused business credit of the corporation under section 39, to any unused credit of the corporation under section 30 (g)(2), to any excess foreign taxes of the corporation under section 904 (c), and to any net capital loss of the corporation under section 1212” for “with respect to any unused investment credit of the corporation under section 46 (b), to any unused work incentive program credit of the corporation under section 50A (b), to any excess foreign taxes of the corporation under section 904 (c), and to any net capital loss of the corporation under section 1212”.

Pub. L. 98–369, § 474(r)(12)(B)(i), in section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, substituted “with respect to any unused business credit of the corporation under section 39, to any unused credit of the corporation under section 30 (g)(2), to any excess foreign taxes of the corporation under section 904 (c), and to any net capital loss of the corporation under section 1212” for “with respect to any unused investment credit of the corporation under section 46 (b), to any unused work incentive program credit of the corporation under section 50A (b), to any unused new employee credit of the corporation under section 53 (b), to any unused credit of the corporation under section 44E (e)(2), to any unused credit of the corporation under section 44F (g)(2), to any unused credit of the corporation under section 44G (b)(2), to any excess foreign taxes of the corporation under section 904 (c), and to any net capital loss of the corporation under section 1212”.

1981—Pub. L. 97–34, § 331(d)(1)(C)(ii), (D)(ii), in catchlines of sections 383, as related to section 382 (a) of this title, before and after amendment by Pub. L. 94–455, § 806(f)(2), inserted reference to employee stock ownership credits.

Pub. L. 97–34, § 331(d)(1)(D)(i), in section 383, as in effect prior to amendment by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted “to any unused credit of the corporation which could otherwise be carried forward under section 44G (b)(2),”.

Pub. L. 97–34, § 331(d)(1)(C)(i), in section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted “to any unused credit of the corporation under section 44G (b)(2),”.

Pub. L. 97–34, § 221(b)(1)(C)(ii), (D)(ii), in catchlines of sections 383, as related to section 382 (a) of this title, before and after amendment by Pub. L. 94–455, § 806(f)(2), inserted reference to research credits.

Pub. L. 97–34, § 221(b)(1)(D)(i), in section 383, as in effect prior to amendment by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted “to any unused credit of the corporation which could otherwise be carried forward under section 44F (g)(2),” after “section 44E (e)(2),”.

Pub. L. 97–34, § 221(b)(1)(C)(i), in section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted “to any unused credit of the corporation under section 44F (g)(2),” after “section 44E (e)(2),”.

1980—Pub. L. 96–223, § 232(b)(2)(D), in section 383, as in effect prior to amendment by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted reference to unused alcohol fuel credits in section catchline and reference to any unused credit of the corporation which could otherwise be carried forward under section 44E (e)(2) in text.

Pub. L. 96–223, § 232(b)(2)(C), in section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted reference to unused alcohol fuel credits in section catchline and reference to any unused credit of the corporation under section 44E (e)(2) in text.

Pub. L. 96–222, in sections 383, as related to section 382 (a) of this title, before and after amendment by Pub. L. 94–455, § 806(f)(2), substituted “section 53 (b)” for “section 53 (c)”.

1977—Pub. L. 95–30, § 202(d)(3)(C), in section 383, as in effect prior to amendment by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted “to any unused new employee credit of the corporation which could otherwise be carried forward under section 53 (c)” in text and “new employee credits,” in catchline.

Pub. L. 95–30, § 202(d)(3)(B), in section 383, as amended by Pub. L. 94–455, § 806(f)(2), as related to section 382 (a) of this title, inserted “to any unused new employee credit of the corporation under section 53 (c)” in text and “new employee credits,” in section catchline.

1976—Pub. L. 94–455, §§ 1031(b)(5), 1906(b)(13)(A), struck out “or his delegate” after “Secretary”, and substituted “section 904 (c)” for “section 904 (d)”, respectively, in section 383 set out first.

Pub. L. 94–455, § 806(f)(2), which substituted, in sections 383 as related to section 382 (a) and (b) of this title, provisions that the net operating loss limitations in section 382 shall apply to unused investment credits under section 46 (b), to unused work incentive program credits under section 50A (b), to excess foreign taxes under section 904 (d) and to net capital losses under section 1212 for provisions that the net operating loss carryover limitations in section 382 shall apply, in the case of ownership changes described in section 382 (a)(1) or reorganizations specified in section 381 (a)(2) resulting in ownership changes described in section 382 (b)(1)(B), to unused investment credits under section 46 (b), to unused work incentive program credits under section 50A (B), to excess foreign taxes under section 904 (c), and to net capital losses under section 1212, was repealed by Pub. L. 99–514, § 621(e)(1). See Effective Date of 1986 and 1976 Amendment notes below.

Effective Date of 1986 Amendment

Amendment by section 621(b) ofPub. L. 99–514applicable to any ownership change after Dec. 31, 1986, except as otherwise provided, see section 621(f) ofPub. L. 99–514, as amended, set out as a note under section 382 of this title.

Repeal of amendment by section 806(f)(1) ofPub. L. 94–455effective Jan. 1, 1986, with certain exceptions, see section 621(f)(2) ofPub. L. 99–514, set out as a note under section 382 of this title.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–369applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) ofPub. L. 98–369, set out as a note under section 21 of this title.

Effective Date of 1981 Amendment

Amendment by section 221(b)(1)(C), (D) ofPub. L. 97–34applicable to amounts paid or incurred after June 30, 1981, see section 221(d) ofPub. L. 97–34, as amended, set out as an Effective Date note under section 41 of this title.

Amendment by section 331(d)(1)(C), (D) ofPub. L. 97–34applicable to taxable years beginning after Dec. 31, 1981, see section 339 ofPub. L. 97–34, set out as a note under section 401 of this title.

Effective Date of 1980 Amendments

Amendment by Pub. L. 96–223applicable to sales or uses after Sept. 30, 1980, in taxable years ending after such date, see section 232(h)(1) ofPub. L. 96–223, set out as an Effective Date note under section 40 of this title.

Amendment by Pub. L. 96–222effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95–600, Nov. 6, 1978, 92 Stat. 2763, to which such amendment relates, see section 201 ofPub. L. 96–222, set out as a note under section 32 of this title.

Effective Date of 1976 Amendment

For effective date of amendment by section 1031(b)(5) ofPub. L. 94–455, see section 1031(c) ofPub. L. 94–455, set out as a note under section 904 of this title.

For purposes of applying this section (as it relates to section 382 (a) of this title) as amended by section 806(e), (f) ofPub. L. 94–455, the amendments made by section 806(e), (f) ofPub. L. 94–455effective for taxable years beginning after Dec. 31, 1985, with specified provisions for determining the beginning of the taxable years specified in section 382 (a)(1)(B)(ii) of this title, and this section (as it relates to section 382 (b) of this title) as amended by section 806(e), (f) ofPub. L. 94–455to apply (and such sections as in effect prior to such amendment not to apply) to reorganizations pursuant to a plan of reorganization adopted by one or more of the parties thereto on or after Jan. 1, 1986, see section 806(g)(2), (3) ofPub. L. 94–455, as amended, formerly set out as a note under section 382 of this title.

Effective Date

Section 302(c) ofPub. L. 92–178provided that: “The amendments made by this section [enacting this section] shall be applicable only with respect to reorganizations and other changes in ownership occurring after the date of enactment of this Act [Dec. 10, 1971] pursuant to a plan of reorganization or contract entered into on or after September 29, 1971.”

Delay in Effective Date of 1976 Amendment

For election by taxpayer for application of prior law with respect to any acquisition or reorganization occurring before the end of the taxpayer’s first taxable year beginning after June 30, 1978, see section 368 ofPub. L. 95–600, set out as a Delay in Effective Date of 1976 Amendment note under section 382 of this title.