Internal Revenue Code:Sec. 39. Carryback and carryforward of unused credits

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

(Redirected from Sec. 39)
Jump to: navigation, search

Contents


Location in Internal Revenue Code


     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
        

Statute

    Sec. 39. Carryback and carryforward of unused credits
 
    (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 (FOOTNOTE 
           1) preceding the unused credit year, and (FOOTNOTE 1) So in original.
         (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 <<NOTE: Applicability.>> 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),
         (B) paragraph (1) <<NOTE: Applicability.>> 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.''.

    (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 rules.--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).


       

Sources

    (Added Pub. L. 98-369, div.  A, title IV, Sec. 473, July 18, 1984,
    98 Stat. 828; amended Pub. L. 99-514, title II, Sec.
    231(d)(3)(C)(i), title XVIII, Sec. 1846, Oct. 22, 1986, 100 Stat.
    2179, 2856; Pub. L. 100-647, title I, Sec. 1002(l)(26), Nov. 10,
    1988, 102 Stat. 3381; Pub. L. 101-508, title XI, Sec. 11511(b)(2),
    11611(b)(2), 11801(a)(2), Nov. 5, 1990, 104 Stat. 1388-485,
    1388-503, 1388-520; Pub. L. 102-486, title XIX, Sec. 1914(c), Oct.
    24, 1992, 106 Stat. 3023; Pub. L. 103-66, title XIII, Sec.
    13302(a)(2), 13322(d), 13443(b)(2), Aug. 10, 1993, 107 Stat. 555,
    563, 569; Pub. L. 104-188, title I, Sec. 1205(c), 1703(n)(1), Aug.
    20, 1996, 110 Stat. 1775, 1877; Pub. L. 105-34, title VII, Sec.
    701(b)(1), title X, Sec. 1083(a), Aug. 5, 1997, 111 Stat. 869, 951;
    Pub. L. 105-206, title VI, Sec. 6010(n), July 22, 1998, 112 Stat.
    816; Pub. L. 106-554, Sec. 1(a)(7) (title I, Sec. 121(b)(2)), Dec.
    21, 2000, 114 Stat. 2763, 2763A-610; Pub. L. 107-16, title VI, Sec.
    619(c)(1), June 7, 2001, 115 Stat. 110.)
 

Amendment of Section

                            AMENDMENT OF SECTION
2005 - P.L. 109-135, Section 412
  (g)(1) Subparagraph (A) of section 39(a)(1) is amended by striking 
``each of the 1 taxable years'' and inserting ``the taxable year''.
    (2) Subparagraph (B) of section 39(a)(3) is amended to read as 
follows:
                    ``(B) paragraph (1) <<NOTE: Applicability.>> shall 
                be applied by substituting `each of the 5 taxable years' 
                for `the taxable year' in subparagraph (A) thereof, 
                and''.

        For termination of amendment by section 901 of Pub. L. 107-16,
      see Effective and Termination Dates of 2001 Amendment note below.
 

References in Text

                             REFERENCES IN TEXT
      The date of the enactment of section 44, referred to in subsec.
    (d)(2), means the date of the enactment of Pub. L. 101-508, which
    was approved Nov. 5, 1990.
      The date of the enactment of section 45A, referred to in subsec.
    (d)(5), means the date of the enactment of Pub. L. 103-66, which
    was approved Aug. 10, 1993.
      The date of the enactment of section 45B, referred to in subsec.
    (d)(6), means the date of the enactment of Pub. L. 103-66, which
    was approved Aug. 10, 1993.
      The date of the enactment of section 1400, referred to in subsec.
    (d)(8), means the date of enactment of Pub. L. 105-34, which was
    approved Aug. 5, 1997.
 

Miscellaneous

                              PRIOR PROVISIONS
      A prior section 39 was renumbered section 34 of this title.
      Another prior section 39 was renumbered section 35 of this title.
                                 AMENDMENTS
     2004 - Pub. L. 108-357, Sec 341(c).  Subsection (a) of section 39
    (relating to carryback and carryforward of unused credits generally)
    is amended by adding at the end the following new paragraph:
    "(3) 5-year carryback for marginal oil and gas well production credit."

      2004 - Subsec.245(b)(1),Pub.L.108-357, amended Sec.39(d) by 
    redefining the "Transitional Rule".
      2001 - Subsec. (d)(10). Pub. L. 107-16, Sec. 619(c)(1), 901,
    temporarily added par. (10). See Effective and Termination Dates of
    2001 Amendment note below.
      2000 - Subsec. (d)(9). Pub. L. 106-554 added par. (9).
      1998 - Subsec. (a)(2). Pub. L. 105-206 amended Pub. L. 105-34,
    Sec. 1083(a)(2). See 1997 Amendment note below.
      1997 - Subsec. (a)(1). Pub. L. 105-34, Sec. 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, Sec. 1083(a)(2), as amended by
    Pub. L. 105-206, Sec. 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, Sec. 701(b)(1), added par. (8).
      1996 - Subsec. (d)(5). Pub. L. 104-188, Sec. 1703(n)(1)(A),
    substituted ''45A'' for ''45'' in heading.
      Subsec. (d)(6). Pub. L. 104-188, Sec. 1703(n)(1)(B), substituted
    ''45B'' for ''45'' in heading.
      Subsec. (d)(7). Pub. L. 104-188, Sec. 1205(c), added par. (7).
      1993 - Subsec. (d)(4). Pub. L. 103-66, Sec. 13302(a)(2), added
    par. (4).
      Subsec. (d)(5). Pub. L. 103-66, Sec. 13322(d), added par. (5).
      Subsec. (d)(6). Pub. L. 103-66, Sec. 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, Sec. 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 Dec. 31, 1983, par. (2) which related to carrybacks
    in determining amount allowable as credit including net tax
    liability, par. (3) which related to similar rules for research
    credit under section 30, and par. (4) which provided for no
    carryback of low-income housing credit before 1987.
      Subsec. (d)(5). Pub. L. 101-508, Sec. 11611(b)(2), added par. (5)
    relating to carryback of section 44 credit.
      Pub. L. 101-508, Sec. 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, Sec. 1846(1), inserted
    ''(as in effect before the enactment of the Tax Reform Act of
    1984)''.
      Subsec. (d)(2)(B). Pub. L. 99-514, Sec. 1846(2), substituted ''as
    defined in section 26(b)'' for ''as so defined in section 25(b)''.
      Subsec. (d)(3). Pub. L. 99-514, Sec. 231(d)(3)(C)(i), added par.
    (3).
                     EFFECTIVE DATE OF 2004 AMENDMENT
      Amendment by Pub.L.108-357,Sec.245(b)(1), shall apply with  
      respect to taxable years ending after December 31, 2003.
        
             EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
      Amendment by Pub. L. 107-16 applicable to costs paid or incurred
    in taxable years beginning after Dec. 31, 2001, with respect to
    qualified employer plans established after such date, see section
    619(d) of Pub. L. 107-16, set out as a note under section 38 of
    this title.
      Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
    limitation years beginning after Dec. 31, 2010, and the Internal
    Revenue Code of 1986 to be applied and administered to such years
    as if such amendment had never been enacted, see section 901 of
    Pub. L. 107-16, set out as a note under section 1 of this title.
                      EFFECTIVE DATE OF 2000 AMENDMENT
      Amendment by Pub. L. 106-554 applicable to investments made after
    Dec. 31, 2000, see Sec. 1(a)(7) (title I, Sec. 121(e)) of Pub. L.
    106-554, set out as a note under section 38 of this title.
                      EFFECTIVE DATE OF 1998 AMENDMENT
      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.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 701(d) of Pub. L. 105-34 provided that: ''Except as
    provided in subsection (c) (amending table of subchapters for this
    chapter), the amendments made by this section (enacting subchapter
    W of this chapter and amending this section and section 1016 of
    this title) shall take effect on the date of the enactment of this
    Act (Aug. 5, 1997).''
      Section 1083(b) of Pub. L. 105-34 provided that: ''The amendments
    made by this section (amending this section) shall apply to credits
    arising in taxable years beginning after December 31, 1997.''
                      EFFECTIVE DATE OF 1996 AMENDMENT
      Amendment by section 1205(c) of Pub. L. 104-188 applicable to
    amounts paid or incurred in taxable years ending after June 30,
    1996, see section 1205(e) of Pub. L. 104-188, set out as a note
    under section 29 of this title.
      Section 1703(o) of Pub. L. 104-188 provided that: ''Any amendment
    made by this section (amending this section and sections 40, 59,
    108, 117, 135, 143, 163, 904, 956A, 958, 1017, 1044, 1201, 1245,
    1297, 1394, 1397B, 1561, 4001, 6033, 6427, 6501, 6655, and 9502 of
    this title, renumbering section 6714 of this title as section 6715,
    and amending provisions set out as notes under sections 38, 42,
    197, and 1258 of this title and section 401 of Title 42, The Public
    Health and Welfare) shall take effect as if included in the
    provision of the Revenue Reconciliation Act of 1993 (Pub. L.
    103-66, title XIII, ch.  I, Sec. 13001-13444) to which such
    amendment relates.''
                      EFFECTIVE DATE OF 1993 AMENDMENT
      Amendment by section 13322(d) of Pub. L. 103-66 applicable to
    wages paid or incurred after Dec. 31, 1993, see section 13322(f) of
    Pub. L. 103-66, set out as a note under section 38 of this title.
      Amendment by section 13443(b)(2) of Pub. L. 103-66 applicable
    with respect to taxes paid after Dec. 31, 1993, with respect to
    services performed before, on, or after such date, see section
    13443(d) of Pub. L. 103-66, as amended, set out as a note under
    section 38 of this title.
                      EFFECTIVE DATE OF 1992 AMENDMENT
      Amendment by Pub. L. 102-486 applicable to taxable years ending
    after Dec. 31, 1992, see section 1914(e) of Pub. L. 102-486, set
    out as a note under section 38 of this title.
                      EFFECTIVE DATE OF 1990 AMENDMENT
      Amendment by section 11511(b)(2) of Pub. L. 101-508 applicable to
    costs paid or incurred in taxable years beginning after Dec. 31,
    1990, see section 11511(d)(1) of Pub. L. 101-508, set out as an
    Effective Date note under section 43 of this title.
      Amendment by section 11611(b)(2) of Pub. L. 101-508 applicable to
    expenditures paid or incurred after Nov. 5, 1990, see section
    11611(e)(1) of Pub. L. 101-508, set out as a note under section 38
    of this title.
                      EFFECTIVE DATE OF 1988 AMENDMENT
      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.
                      EFFECTIVE DATE OF 1986 AMENDMENT
      Amendment by section 231(d)(3)(C)(i) of Pub. L. 99-514 applicable
    to taxable years beginning after Dec. 31, 1985, see section 231(g)
    of Pub. L. 99-514, set out as a note under section 41 of this
    title.
      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 Dec. 31,
    1983, and to carrybacks from such years, see section 475(a) of Pub.
    L. 98-369, set out as an Effective Date of 1984 Amendment note
    under section 21 of this title.
                             SAVINGS PROVISION
      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 Nov. 5,
    1990, for purposes of determining liability for tax for periods
    ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
    set out as a note under section 29 of this title.
             PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
      For provisions directing that if any amendments made by subtitle
    A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
    XVIII (Sec. 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 Jan. 1, 1989, see
    section 1140 of Pub. L. 99-514, as amended, set out as a note under
    section 401 of this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 38, 40, 41, 42, 45A, 45D,
    45F, 48, 50, 196, 383, 1374, 6411, 6511 of this title.
 

Personal tools