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TITLE 26-INTERNAL REVENUE CODE (A) after the application of this section without regard to paragraph (1)(E), and (B) without taking into consideration amounts remaining in the account which were added, with respect to all taxable years, by reason of subsection (a)(1)(C). (3) Priorities The amounts required to be subtracted from the protection against loss account- (A) under subparagraphs (A), (B), and (C) of paragraph (1) shall be subtracted- (I) first (on a first-in, first-out, basis) from amounts in the account with respect to the five preceding taxable years and the taxable year, and (ii) then from- amounts in the account with respect to earlier years, (B) under subparagraph (E) of paragraph (1) shall be subtracted only from amounts in the account with respect to the taxable year, and (C) under paragraphs (A), (B), (C), and (E), of paragraph (1) shall, if the amount to be subtracted from the total amounts in the account with respect to any taxable year is less than such total, be subtracted from each of the amounts (referred to in subsec- tion (a)(1)) in the account with respect to such year in the proportion which each bears to such total. (4) Termination of taxability under section 821 If the taxpayer is not subject to tax under section 821 for any taxable year, the entire amount in the account at the close of the pre- ceding taxable year shall be subtracted from the account in such preceding taxable year. (5) Election to subtract amount from account (A) A taxpayer may elect from any tax- able year for which it is subject to tax under section 821(a) to subtract from its protection against loss account any amount which, but for the application of this sub- paragraph, would be in such account as of the close of such taxable year. (B) The election provided by subpara- graph (A) for any taxable year shall be made (in such manner and in such form as the Secretary may by regulations prescribe) after the close of such taxable year and not later than the time prescribed by law for filing the return (including extensions thereof) for the taxable year following such taxable year. Such an election, once made, may not be revoked. (Added Pub. L. 87-834, § 8(c), Oct. 16, 1962, 76 Stat. 993, and amended Pub. L. 94-455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834. AMENDMENTS 1976-Subsec. (d)(5)(B). Pub. L. 94-455 struck out "or his delegate" following "Secretary". EFFECTIVE DATE Section applicable with respect to taxable years be- ginning after Dec. 31, 1962, see section 8(h) of Pub. L. 87-834, set out as an Effective Date of 1962 Amend- ment note under section 821 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 821, 823, 825, 826 of this title. § 825. Unused loss deduction (a) Amount of deduction For purposes of this part, the unused loss de- duction for the taxable year shall be an amount equal to the unused loss carryovers or carry- backs to the taxable year. (b) Unused loss defined For purposes of this part, the term "unused loss" means, with respect to any taxable year, the amount (if any) by which- (1) the sum of the statutory underwriting loss and the investment loss, exceeds (2) the sum of- (A) the taxable investment income, (B) the statutory underwriting income, and (C) the amounts required by section 824(d) to be subtracted from the protection against loss account. (c) Loss year defined For purposes of this part, the term "loss year" means, with respect to any company sub- ject to the tax imposed by section 821(a), any taxable year in which the unused loss (as de- fined in subsection (b)) of such taxpayer is more than zero. (d) Years to which carried (1) In general The unused loss for any taxable year shall be- (A) an unused loss carryback to each of the 3 taxable years preceding the loss year, and (B) an unused loss carryover to each of the 5 taxable years following the loss year. In the case of an unused loss for a taxable year ending after December 31, 1975, such unused loss shall be an unused loss carryover to each of the 7 taxable years following the loss year. (2) Election for unused loss carrybacks In the case of an unused loss for any tax- able year ending after December 31, 1975, the taxpayer may elect to relinquish the entire carryback period for such loss. Such election shall be made by the due date (including ex- tensions of time) for filing the return for the taxable year of the unused loss for which the election is to be in effect, and once made for any taxable year, such election shall be irrev- ocable for that taxable year. (e) Amount of carrybacks and'carryovers The entire amount of the unused loss for any loss year shall be carried to the earliest of the taxable years to which such loss may be car- ried. 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 offsets (as defined in subsection f)) for each of the prior taxable years to which such loss may be carried, Page 527 § 825