§ 1212. Capital loss carrybacks and carryovers
(a)
Corporations
(1)
In general
If a corporation has a net capital loss for any taxable year (hereinafter in this paragraph referred to as the “loss year”), the amount thereof shall be—
(A)
a capital loss carryback to each of the 3 taxable years preceding the loss year, but only to the extent—
(B)
except as provided in subparagraph (C), a capital loss carryover to each of the 5 taxable years succeeding the loss year; and
(C)
a capital loss carryover to each of the 10 taxable years succeeding the loss year, but only to the extent such loss is attributable to a foreign expropriation loss,
and shall be treated as a short-term capital loss in each such taxable year. The entire amount of the net capital loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried, and the portion of such loss which shall be carried to each of the other taxable years to which such loss may be carried shall be the excess, if any, of such loss over the total of the capital gain net income for each of the prior taxable years to which such loss may be carried. For purposes of the preceding sentence, the capital gain net income for any such prior taxable year shall be computed without regard to the net capital loss for the loss year or for any taxable year thereafter. In the case of any net capital loss which cannot be carried back in full to a preceding taxable year by reason of clause (ii) of subparagraph (A), the capital gain net income for such prior taxable year shall in no case be treated as greater than the amount of such loss which can be carried back to such preceding taxable year upon the application of such clause (ii).
(2)
Definitions and special rules
(A)
Foreign expropriation capital loss defined
For purposes of this subsection, the term “foreign expropriation capital loss” means, for any taxable year, the sum of the losses taken into account in computing the net capital loss for such year which are—
(i)
losses sustained directly by reason of the expropriation, intervention, seizure, or similar taking of property by the government of any foreign country, any political subdivision thereof, or any agency or instrumentality of the foregoing, or
(ii)
losses (treated under section
165
(g)(1) as losses from the sale or exchange of capital assets) from securities which become worthless by reason of the expropriation, intervention, seizure, or similar taking of property by the government of any foreign country, any political subdivision thereof, or any agency or instrumentality of the foregoing.
(B)
Portion of loss attributable to foreign expropriation capital loss
For purposes of paragraph (1), the portion of any net capital loss for any taxable year attributable to a foreign expropriation capital loss is the amount of the foreign expropriation capital loss for such year (but not in excess of the net capital loss for such year).
(C)
Priority of application
For purposes of paragraph (1), if a portion of a net capital loss for any taxable year is attributable to a foreign expropriation capital loss, such portion shall be considered to be a separate net capital loss for such year to be applied after the other portion of such net capital loss.
(3)
Regulated investment companies
(A)
In general
If a regulated investment company has a net capital loss for any taxable year—
(B)
Coordination with general rule
If a net capital loss to which paragraph (1) applies is carried over to a taxable year of a regulated investment company—
(b)
Other taxpayers
(1)
In general
If a taxpayer other than a corporation has a net capital loss for any taxable year—
(2)
Treatment of amounts allowed under section
1211
(b)(1) or (2)
(A)
In general
For purposes of determining the excess referred to in subparagraph (A) or (B) of paragraph (1), there shall be treated as a short-term capital gain in the taxable year an amount equal to the lesser of—
(B)
Adjusted taxable income
For purposes of subparagraph (A), the term “adjusted taxable income” means taxable income increased by the sum of—
For purposes of the preceding sentence, any excess of the deductions allowed for the taxable year over the gross income for such year shall be taken into account as negative taxable income.
(c)
Carryback of losses from section
1256 contracts to offset prior gains from such contracts
(1)
In general
If a taxpayer (other than a corporation) has a net section
1256 contracts loss for the taxable year and elects to have this subsection apply to such taxable year, the amount of such net section
1256 contracts loss—
(B)
to the extent that, after the application of paragraphs (2) and (3), such loss is allowed as a carryback to any such preceding taxable year—
(i)
40 percent of the amount so allowed shall be treated as a short-term capital loss from section
1256 contracts, and
(ii)
60 percent of the amount so allowed shall be treated as a long-term capital loss from section
1256 contracts.
(2)
Amount carried to each taxable year
The entire amount of the net section
1256 contracts loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried back under paragraph (1). The portion of such loss which shall be carried to each of the 2 other taxable years to which such loss may be carried back shall be the excess (if any) of such loss over the portion of such loss which, after the application of paragraph (3), was allowed as a carryback for any prior taxable year.
(3)
Amount which may be used in any prior taxable year
An amount shall be allowed as a carryback under paragraph (1) to any prior taxable year only to the extent—
(4)
Net section
1256 contracts loss
For purposes of paragraph (1), the term “net section
1256 contracts loss” means the lesser of—
(A)
the net capital loss for the taxable year determined by taking into account only gains and losses from section
1256 contracts, or
(5)
Net section
1256 contract gain
For purposes of paragraph (1)—
(6)
Coordination with carryforward provisions of subsection (b)(1)
(A)
Carryforward amount reduced by amount used as carryback
For purposes of applying subsection (b)(1), if any portion of the net section
1256 contracts loss for any taxable year is allowed as a carryback under paragraph (1) to any preceding taxable year—