Base erosion tax benefits
(i) Base erosion tax benefits. The amount of any base erosion tax benefit as defined in 1.59A-3(c)(1). (ii) Certain net operating loss deductions. The base erosion percentage, as described in 1.59A-2(e)(3), of any net operating loss deduction allowed to the taxpayer under section 172 for the taxable year. For purposes of determining modified taxable income, the net operating loss deduction allowed does not exceed taxable income before taking into account the net operating loss deduction. See paragraph (c)(1) and (2) of this section (Examples 1 and 2). The base erosion percentage for the taxable year that the net operating loss arose is used to determine the addition under this paragraph (b)(2)(ii). For a net operating loss that arose in a taxable year beginning before January 1, 2018, the base erosion percentage for the taxable year is zero. (3) Rule for holders of a residual interest in a REMIC. For purposes of paragraph (b)(1) of this section, the limitation in section 860E(a)(1) is not taken into account in determining the taxable income amount that is used to compute modified taxable income for the taxable year.