Page 172

TITLE 26-INTERNAL REVENUE CODE terest wholly or partially taxable" following "(1)" in par. (1). Subsec. (a)(2). Pub. L. 94-455. § 1901(b)(l)(E)(ii), sub- stituted "Tax-exempt bonds" for "Interest wholly tax- exempt" following "(2)" in par. (2). Subsec. (a)(3). Pub. L. 94-455, § 1901(b)(1)(E)(ii), struck out par. (3) relating to adjustment of credit or deduction for interest partially tax-exempt and rede- signated par. (4) as par. (3). Subsec. (a)(4). Pub. L. 94-455, § 1901(b)(1)(E)(iii), re- designated former par. (4) as par. (3). Subsec. (b)(1)(B)(i). Pub. L. 94-455. § 1951(b)(5)(A)(ii), substituted "clause (ii) applies, or" for "clause (ii) or (iii) applies" following "bond to which" and inserted "and" at the end thereof. Subsec. (b)(1)(B)(ii). Pub. L. 94-455, §§ 1901(b)(1)(E)(Iv), 1951(b)(5)(A)(iii), substituted "subsection (a)(1)" for "subsection (c)(1)(B)" following "bond described in" and "and" for "or" following "1957". Subsec. (b)(1)(B)(iii). Pub. L. 94-455, 4 1951(b)(5)(A)(i), struck out cl. (iii) relating to certain bonds acquired before 1958. Subsec. (b)(2). Pub. L. 94-455, § 1951(b)(5)(A)(iv), struck out "or (iii)" following "paragraph (1)(B)(ii)". Subsec. (b)(3)(B). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (c)(1). Pub. L. 94-455, § 1901(b)(1)(E)(v), sub- stituted "In the case of bonds the interest on which is not excludible from gross income, this section shall apply only if the taxpayer has so elected" for "This section shall apply with respect to the following classes of taxpayers with respect to the following classes of bonds only if the taxpayer has elected to have this section apply" following "election permit. ted", and struck out subpars. (A) and (B) relating to partially tax-exempt, and wholly taxable, bonds. Subsec. (c)(2). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" in three places following "Secretary". 1958-Subsec. (b)(1)(B). Pub. L. 85-866, § 13(a)(1), substituted ". in the case of any bond other than a bond to which clause (ii) or (i) applies" for "(but in the case of bonds described in subsection (c)(1)(B) issued after January 22, 1951, and acquired after Janu- ary 22, 1954, only if such earlier call date is a date more than 3 years after the date of such issue), and", designated such provision as cl. (i), and added cl. (ii) and (iii). Subsec. (b)(2). Pub. L. 85-866, § 13(a)(2), substituted "In the case of a bond to which paragraph (1)(B)(ii) or (iii) applies and which has a call date," for "In the case of a bond described in subsection (c)(1)(B) issued after January 22, 1951, and acquired after January 22, 1954, which has a call date not more than 3 years after the date of such issue," in the second sentence. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsecs,(.,)(3), (b)(1)(B)(ii), and (c)(1) by section 1901(b)(1)(E)(iii) to (v) of Pub. L. 94-455, re- spectively, effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment under section 2 of this title. Amendment of subsec. (b)(1)(B)(iii) by section 1951(b)(5)(A)(i) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31. 1976, see section 1951(d) of Pib. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 72 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Section 13(b) of Pub. L. 85-866 provided that: "The amendments made by subsection (a) [to subsecs. (b)(1)(B), (2) of this section] shall apply with respect to taxable years ending after December 31, 1957." SAVINGS PROVISION Section 1951(b)(5)(B) of Pub. L. 94-455 provided that: "Notwithstanding the amendments made by sub- paragraph (A) [repealing subsec. (b)(1)(B)(iii) of this section], in the case of a bond the interest on which is not excludable from gross income- "(I) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and "(ii) which was acquired by the taxpayer after Jan- uary 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under sec- tion 171(b)(1)(B)(i) but shall be determined with refer- ence to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be deter- mined in accordance with the provisions of section 171(b)(2)." SECTION REFERRED TO IN OTHEN SECTIONS This section is referred to in sections 75, 163, 809, 818, 822, 1016 of this title. § 172. Net operating loss deduction (a) Deduction allowed There shall be allowed as a deduction for the taxable year an amount equal to the aggregate of (1) the net operating loss carryovers to such year, plus (2) the net operating loss carrybacks to such year. For purposes of this subtitle, the term "net operating loss deduction" means the deduction allowed by this subsection. (b) Net operating loss carrybacks and carryovers (1) Years to which loss may be carried (A)(i) Except as provided in clause (ii) and in subparagraphs (D), (E), (F), and (G), a net operating loss for any taxable year ending after December 31, 1957, shall be a net operating loss carryback to each of the 3 taxable years preceding the taxable year of such loss. (ii) In the case of a taxpayer with respect to a taxable year ending on or after Decem- ber 31, 1962, for which a certification has been issued under section 317 of the Trade Expansion Act of 1962, a net operating loss for such taxable year shall be a net operat- ing loss carryback to each of the 5 taxable years preceding the taxable year of such loss. (B) Except as provided in subparagraphs (C), (D), and (E), a net operating loss for any taxable year ending after December 31, 1955, shall be a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss. Except as pro- vided in subparagraphs (C), (D), (E), and F), a net operating loss for any taxable year ending after December 31, 1975, shall be a net operating loss carryover to each of the 7 taxable years following the taxable year of such loss. (C) In the case of a taxpayer which is a regulated transportation corporation (as de- fined in subsection (g)(1)), a net operating loss for any taxable year ending after De- cember 31, 1955, shall (except as provided in subsection (g)) be a net operating loss car- ryover to each of the 7 taxable years follow- ing the taxable year of such loss. For any taxable year ending after December 31, 1975, the preceding sentence shall be ap- plied by substituting "9 taxable years" for "7 taxable years". (D) In the case of a taxpayer which has a foreign expropriation loss (as defined in Page 172 § 172