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TITLE 26-INTERNAL REVENUE CODE amount equal to the amount allowed for the taxable year under section 1211(b)(1) (A), (B), or (C) shall be treated as a short- term capital gain in such year. (B) For purposes of determining the excess referred to in paragraph (1)(B), an amount equal to the sum of- (1) the amount allowed for the taxable year under section 1211(b)(1)(A), (B), or (C), and (ii) the excess of the amount described in clause (1) over the net short-term cap- ital loss (determined without regard to this subsection) for such year, shall be treated as a short-term capital gain in such year. (3) Transitional rule In the case of any amount which, under paragraph (1) and section 1211(b) (as in effect for taxable years beginning before January 1, 1970), is treated as a capital loss in the first taxable year beginning after December 31, 1969, paragraph (1) and section 1211(b) (as in effect for taxable years beginning before Jan- uary 1, 1970) shall apply (and paragraph (1) and section 1211(b) as in effect for taxable years beginning after December 31, 1969, shall not apply) to the extent such amount exceeds the total of any net capital gains (de- termined without regard to this subsection) of taxable years beginning after December 31, 1969. (Aug. 16, 1954, ch. 736, 68A Stat. 321; Feb. 26, 1964, Pub. L. 88-272, title II, § 230(a), 78 Stat. 99; Sept. 2, 1964, Pub. L. 88-57 1, § 7(a), 78 Stat. 860, Dec. 30, 1969, Pub. L. 91-172, title V, §§ 512 (a), (b), (f)(1), 513(b), 83 Stat. 638, 639, 641, 642; Oct. 4, 1976, Pub. L. 94-455, title XIV, § 1403 (a), title XIX, § 1901(b)(33)(O), 90 Stat. 1733, 1802.) AMENDMENTS 1976-Subsee. (a)(1). Pub. L. 94-455, §§ 1403(a), 1901(b)(33)(O), in subpar. (B) inserted introductory phrase "except as provided in subparagraph (C)," and deleted parenthetical text "(10) taxable years to the extent such loss is attributable to a foreign expropri- ation capital loss)" following "5 taxable years" and added subpar. (C), and substituted "capital gain net income" for "net capital gains", "net capital gain" and "net capital gain" in last three sentences, respectively. 1969-Pub. L. 91-172, § 512(f)(1), substituted "carry- backs and carryovers" for "carryover" in section catchline. Subsec. (a)(1). Pub. L. 91-172, § 512(a), provided for a 3-year capital loss carryback for corporations, not available for foreign expropriation capital losses for which a special 10-year carryforward Is presently available, in addition to the 5-year capital loss carry- forward presently allowed corporations, to the extent the carryback of such loss does not increase or pro. duce a net operating loss for the taxable year to which it is being carried back. Subsecs. (a)(3). (4). Pub. L. 91-172, §512(b), added subsecs. (a)(3), (4). Subsec. (b). Pub. L. 91-172, § 513(b), struck out refer- ence to Dec. 31, 1963, struck out determination of a short-term capital gain as an amount equal to the excess allowed for the taxable year under former sec- tion 1211(b) over the gains from sales or exchanges of capital assets, struck out par. (2) treating as a short- term capital loss in the first taxable year beginning after Dec. 31, 1963, any amount which is treated as a short-term capital loss in such year under this sub- chapter as in effect immediately before the enactment of the Revenue Act of 1964, added new par. (2) dealing with special rules for determining the excesses re- ferred to in par. (WA) and par. (1)(B) and added par. (3). 1964-Subsec, (a). Pub. L. 88-571 provided that if any portion of a net capital loss is attributable to a foreign expropriation capital loss, such portion shall be a short-term capital loss in each of the 10 succeed- ing taxable years, defined foreign expropriation cap- ital loss, stated what portion of loss Is attributable to foreign expropriation capital loss and the priority of application of the net capital loss, and eliminated pro- visions that net capital losses for taxable years begin- ning before Oct. 20, 1951, were to be determined under the applicable law relating to the computation of cap- ital gains and losses in effect before such date. Pub. L. 88-272 designated existing provisions as subsec. (a), limited such subsection to corporations, and added subsec. (b). En-crmvE DATE OF 1976 AMENDMENT Section 1403(b) of Pub. L. 94-455 provided that: "The amendments made by this section [amending subsec. (a)(1)(B) and enacting subsec. (a)(1)(C) of this section] shall apply to loss year% (within the meaning of section 1212(al(l) of the Internal Revenue Code of 1954) Esubsec. (a)(l) of this section] ending on or after January 1, 1970." Amendment of text following subsec. (a)(1)(C) by section 1901(b)(33)(O) of Pub. L. 94-455 applicable with respect to 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 note under sec- tion 2 of this title. Emi cxv DATE or 1969 AENDMENT Section 512(g) of Pub. L. 91-172 provided that: "The amendments made by this section [amending this sec- tion and sections 246. 381, 481, 535, 1314, 6411, 6501, 6511, 6601 and 6611 of this title] shall apply with re- spect to net capital losses sustained in taxable years beginning after December 31, 1969." Amendment of subsec. (b) by section 513(b) of Pub. L. 91-172 applicable to taxable years beginning after Dec. 31, 1969, see section 513(d) of Pub. L. 91-172, set out as an Effective Date of 1969 Amendment note under section 1211 of this title. EmFEcTivE DATE o0 1964 AmENDMENT Section 7(b) of Pub. L. 88-571 provided that: "The amendment made by subsection (a) [to this section] shall apply with respect to net capital losses (to the extent attributable to foreign expropriation capital losses, as defined in section 1212(a)(2)(A) of the Inter- nal Revenue Code of 1954) sustained in taxable years ending after December 31, 1958." Section 230(c) of Pub. L. 88-272 provided that: "The amendments made by this section (to this section, and section 1222 of this title] shall apply to taxable years beginning after December 31, 1963." ELEcTION NOT TO CARRYBACK CERTAIN NEr CAPITAL LossEs Pub. L 91-688, § 3, Jan. 12, 1971, 84 Stat. 2073, pro- vided that: "(a) For purposes of applying section 1212(a) of the Internal Revenue Code of 1954 [this section] (as amended by section 512 of the Tax Reform Act of 1969) in the case of a corporation which makes an election under subsection (b), any net capital loss sus- tained in a taxable year beginning after December 31, 1969, may not be carried back to any taxable year be. ginning before January 1, 1970, for which it was sub- ject to taxation under section 802 of such Code (sec- tion 802 of this title], if the carryback of such loss would result in an increase in such corporation's income tax liability for any such taxable year. "(b) An election to have the provisions of subsection (a) apply shall be made by a corporation- "(1) in such form and manner as the Secretary of the Treasury or his delegate may prescribe, and § 1212 Page 678