26 U.S.C. § 1212: Capital loss carrybacks and carryovers

such loss is not attributable to a foreign expropriation capital loss, and the carryback of such loss does not increase or produce a net operating loss (as defined in section 172(c)) for the taxable year to which it is being carried back; except as provided in subparagraph (C), a capital loss carryover to each of the 5 taxable years succeeding the loss year; and 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, 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 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. 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). 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. paragraph (1) shall not apply to such loss, the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss arising on the first day of the next taxable year, and the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss arising on the first day of the next taxable year. Clauses (ii) and (iii) of subparagraph (A) shall be applied without regard to any amount treated as a short-term capital loss under paragraph (1). Paragraph (1) shall be applied by substituting “net capital loss for the loss year or any taxable year thereafter (other than a net capital loss to which paragraph (3)(A) applies)” for “net capital loss for the loss year or any taxable year thereafter”. for which it is a regulated investment company (as defined in section 851), or for which it is a real estate investment trust (as defined in section 856). the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. the amount allowed for the taxable year under paragraph (1) or (2) of section 1211(b), or the adjusted taxable income for such taxable year. the amount allowed for the taxable year under paragraph (1) or (2) of section 1211(b), and the deduction allowed for such year under section 151 or any deduction in lieu thereof. shall be a carryback to each of the 3 taxable years preceding the loss year, and 40 percent of the amount so allowed shall be treated as a short-term capital loss from section 1256 contracts, and 60 percent of the amount so allowed shall be treated as a long-term capital loss from section 1256 contracts. 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. such amount does not exceed the net section 1256 contract gain for such year, and the allowance of such carryback does not increase or produce a net operating loss (as defined in section 172(c)) for such year. the net capital loss for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or the sum of the amounts which, but for paragraph (6)(A), would be treated as capital losses in the succeeding taxable year under subparagraphs (A) and (B) of subsection (b)(1). the capital gain net income for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or the capital gain net income for the taxable year. The net section 1256 contract gain for any taxable year before the loss year shall be computed without regard to the net section 1256 contracts loss for the loss year or for any taxable year thereafter. 40 percent of the amount allowed as a carryback shall be treated as a short-term capital gain for the loss year, and 60 percent of the amount allowed as a carryback shall be treated as a long-term capital gain for the loss year. Any amount carried forward as a short-term or long-term capital loss to any taxable year under subsection (b)(1) (after the application of subparagraph (A)) shall, to the extent attributable to losses from section 1256 contracts, be treated as loss from section 1256 contracts for such taxable year. The term “section 1256 contract” means any section 1256 contract (as defined in section 1256(b)) to which section 1256 applies. This subsection shall not apply to any estate or trust. Except as provided in paragraphs (2) and (3), the amendments made by this section [amending this section and section 1222 of this title ] shall apply to net capital losses for taxable years beginning after the date of the enactment of this Act [ Dec. 22, 2010 ]. Subparagraph (B) of section 1212(a)(3) of the Internal Revenue Code of 1986, as added by this section, shall apply to taxable years beginning after the date of the enactment of this Act. Except as provided in subparagraph (B), for purposes of section 4982 of the Internal Revenue Code of 1986, paragraphs (1) and (2) shall apply by substituting ‘the 1-year periods taken into account under subsection (b)(1)(B) of such section with respect to calendar years beginning after December 31, 2010 ’ for ‘taxable years beginning after the date of the enactment of this Act’. A regulated investment company may elect to apply subparagraph (A) by substituting ‘2011’ for ‘2010’. Such election shall be made at such time and in such form and manner as the Secretary of the Treasury (or the Secretary’s delegate) shall prescribe.” For purposes of applying section 1212(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (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 sustained in a taxable year beginning after December 31, 1969 , may not be carried back to any taxable year beginning before January 1, 1970 , for which it was subject to taxation under section 802 of such Code [ section 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. in such form and manner as the Secretary of the Treasury or his delegate may prescribe, and not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for the first taxable year beginning after December 31, 1969 , in which such corporation sustains a net capital loss. The Secretary of the Treasury or his delegate shall prescribe such regulations as he determines necessary to carry out the purposes of this section.”