United States Code (Last Updated: May 24, 2014) |
Title 26. INTERNAL REVENUE CODE |
SubTitle A. Income Taxes |
Chapter 1. NORMAL TAXES AND SURTAXES |
SubChapter A. Determination of Tax Liability |
Part IV. CREDITS AGAINST TAX |
SubPart D. Business Related Credits |
§ 39. Carryback and carryforward of unused credits
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(a) In general (1) 1-year carryback and 20-year carryforward If the sum of the business credit carryforwards to the taxable year plus the amount of the current year business credit for the taxable year exceeds the amount of the limitation imposed by subsection (c) of section 38 for such taxable year (hereinafter in this section referred to as the “unused credit year”), such excess (to the extent attributable to the amount of the current year business credit) shall be— (A) a business credit carryback to the taxable year preceding the unused credit year, and (B) a business credit carryforward to each of the 20 taxable years following the unused credit year, and, subject to the limitations imposed by subsections (b) and (c), shall be taken into account under the provisions of section 38(a) in the manner provided in section 38(a). (2) Amount carried to each year (A) Entire amount carried to first year The entire amount of the unused credit for an unused credit year shall be carried to the earliest of the 21 taxable years to which (by reason of paragraph (1)) such credit may be carried.
(B) Amount carried to other 20 years The amount of the unused credit for the unused credit year shall be carried to each of the other 20 taxable years to the extent that such unused credit may not be taken into account under section 38(a) for a prior taxable year because of the limitations of subsections (b) and (c).
(3) 5-year carryback for marginal oil and gas well production credit Notwithstanding subsection (d), in the case of the marginal oil and gas well production credit— (A) this section shall be applied separately from the business credit (other than the marginal oil and gas well production credit) or the eligible small business credits, (B) paragraph (1) shall be applied by substituting “each of the 5 taxable years” for “the taxable year” in subparagraph (A) thereof, and (C) paragraph (2) shall be applied— (i) by substituting “25 taxable years” for “21 taxable years” in subparagraph (A) thereof, and (ii) by substituting “24 taxable years” for “20 taxable years” in subparagraph (B) thereof. (4) 5-year carryback for eligible small business credits (A) In general Notwithstanding subsection (d), in the case of eligible small business credits determined in the first taxable year of the taxpayer beginning in 2010— (i) paragraph (1) shall be applied by substituting “each of the 5 taxable years” for “the taxable year” in subparagraph (A) thereof, and (ii) paragraph (2) shall be applied— (I) by substituting “25 taxable years” for “21 taxable years” in subparagraph (A) thereof, and (II) by substituting “24 taxable years” for “20 taxable years” in subparagraph (B) thereof. (B) Eligible small business credits For purposes of this subsection, the term “eligible small business credits” has the meaning given such term by section 38(c)(5)(B).
(b) Limitation on carrybacks The amount of the unused credit which may be taken into account under section 38(a)(3) for any preceding taxable year shall not exceed the amount by which the limitation imposed by section 38(c) for such taxable year exceeds the sum of— (1) the amounts determined under paragraphs (1) and (2) of section 38(a) for such taxable year, plus (2) the amounts which (by reason of this section) are carried back to such taxable year and are attributable to taxable years preceding the unused credit year. (c) Limitation on carryforwards The amount of the unused credit which may be taken into account under section 38(a)(1) for any succeeding taxable year shall not exceed the amount by which the limitation imposed by section 38(c) for such taxable year exceeds the sum of the amounts which, by reason of this section, are carried to such taxable year and are attributable to taxable years preceding the unused credit year.
(d) Transitional rule No portion of the unused business credit for any taxable year which is attributable to a credit specified in section 38(b) or any portion thereof may be carried back to any taxable year before the first taxable year for which such specified credit or such portion is allowable (without regard to subsection (a)).
Prior Provisions
A prior section 39 was renumbered section 34 of this title.
Another prior section 39 was renumbered section 37 of this title.
Amendments
2010—Subsec. (a)(3)(A). Pub. L. 111–240, § 2012(b), inserted “or the eligible small business credits” after “credit)”.
Subsec. (a)(4). Pub. L. 111–240, § 2012(a), added par. (4).
2005—Subsec. (a)(1)(A). Pub. L. 109–135, § 412(g)(1), substituted “the taxable year” for “each of the 1 taxable years”.
Subsec. (a)(3)(B). Pub. L. 109–135, § 412(g)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “paragraph (1) shall be applied by substituting ‘5 taxable years’ for ‘1 taxable years’ in subparagraph (A) thereof, and”.
2004—Subsec. (a)(3). Pub. L. 108–357, § 341(c), added par. (3).
Subsec. (d). Pub. L. 108–357, § 245(b)(1), amended heading and text of subsec. (d) generally, substituting provisions prohibiting carryback of the unused business credit attributable to a credit specified in section 38(b) for provisions prohibiting carryback of the enhanced oil recovery credit before 1991, sections 44, 45A, and 45B credits before their enactments, the renewable electricity production credit before its effective date, the empowerment zone employment credit, section 45C credit before
2001—Subsec. (d)(10). Pub. L. 107–16, § 619(c)(1), added par. (10).
2000—Subsec. (d)(9). Pub. L. 106–554 added par. (9).
1998—Subsec. (a)(2). Pub. L. 105–206 amended Pub. L. 105–34, § 1083(a)(2). See 1997 Amendment note below.
1997—Subsec. (a)(1). Pub. L. 105–34, § 1083(a)(1), substituted “1-year” for “3-year” and “20-year” for “15-year” in heading, “1 taxable” for “3 taxable” in subpar. (A), and “20 taxable” for “15 taxable” in subpar. (B).
Subsec. (a)(2). Pub. L. 105–34, § 1083(a)(2), as amended by Pub. L. 105–206, § 6010(n), in subpar. (A), substituted “21 taxable” for “18 taxable”, and in subpar. (B), substituted “20 years” for “17 years” in heading and “20 taxable” for “17 taxable” in text.
Subsec. (d)(8). Pub. L. 105–34, § 701(b)(1), added par. (8).
1996—Subsec. (d)(5). Pub. L. 104–188, § 1703(n)(1)(A), substituted “45A” for “45” in heading.
Subsec. (d)(6). Pub. L. 104–188, § 1703(n)(1)(B), substituted “45B” for “45” in heading.
Subsec. (d)(7). Pub. L. 104–188, § 1205(c), added par. (7).
1993—Subsec. (d)(4). Pub. L. 103–66, § 13302(a)(2), added par. (4).
Subsec. (d)(5). Pub. L. 103–66, § 13322(d), added par. (5).
Subsec. (d)(6). Pub. L. 103–66, § 13443(b)(2), added par. (6).
1992—Subsec. (d). Pub. L. 102–486 redesignated par. (5), relating to carryback of enhanced oil recovery credit, as (1), redesignated par. (5), relating to carryback of section 44 credit, as (2), and added par. (3).
1990—Subsec. (d)(1) to (4). Pub. L. 101–508, § 11801(a)(2), struck out par. (1) which related to carryforwards from an unused credit year which did not expire before first taxable year beginning after
Subsec. (d)(5). Pub. L. 101–508, § 11611(b)(2), added par. (5) relating to carryback of section 44 credit.
Pub. L. 101–508, § 11511(b)(2), added par. (5) relating to carryback of enhanced oil recovery credit.
1988—Subsec. (d)(4). Pub. L. 100–647 added par. (4).
1986—Subsec. (d)(1)(A). Pub. L. 99–514, § 1846(1), inserted “(as in effect before the enactment of the Tax Reform Act of 1984)”.
Subsec. (d)(2)(B). Pub. L. 99–514, § 1846(2), substituted “as defined in section 26(b)” for “as so defined in section 25(b)”.
Subsec. (d)(3). Pub. L. 99–514, § 231(d)(3)(C)(i), added par. (3).
Effective Date Of Amendment
Pub. L. 111–240, title II, § 2012(c),
Pub. L. 108–357, title II, § 245(b)(2),
Amendment by section 245(b) of Pub. L. 108–357 applicable to taxable years beginning after
Amendment by section 341(c) of Pub. L. 108–357 applicable to production in taxable years beginning after
Amendment by Pub. L. 107–16 applicable to costs paid or incurred in taxable years beginning after
Amendment by Pub. L. 106–554 applicable to investments made after
Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.
Pub. L. 105–34, title VII, § 701(d),
Pub. L. 105–34, title X, § 1083(b),
Amendment by section 1205(c) of Pub. L. 104–188 applicable to amounts paid or incurred in taxable years ending after
Pub. L. 104–188, title I, § 1703(o),
Amendment by section 13322(d) of Pub. L. 103–66 applicable to wages paid or incurred after
Amendment by section 13443(b)(2) of Pub. L. 103–66 applicable with respect to taxes paid after
Amendment by Pub. L. 102–486 applicable to taxable years ending after
Amendment by section 11511(b)(2) of Pub. L. 101–508 applicable to costs paid or incurred in taxable years beginning after
Amendment by section 11611(b)(2) of Pub. L. 101–508 applicable to expenditures paid or incurred after
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Amendment by section 231(d)(3)(C)(i) of Pub. L. 99–514 applicable to taxable years beginning after
Amendment by section 1846 of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Effective Date
Section applicable to taxable years beginning after
Savings
For provisions that nothing in amendment by section 11801(a)(2) of Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to
Miscellaneous
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after