Editor's Note:
Pub. L. 117-169,
Sec. 13801, amended Sec. 39 with a delayed effective date as indicated
below.
I.R.C. § 39(a) In General —
I.R.C. § 39(a)(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—
I.R.C. § 39(a)(1)(A) —
a business credit carryback to the taxable
year preceding the unused credit year, and
I.R.C. § 39(a)(1)(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).
I.R.C. § 39(a)(2) Amount Carried To Each Year
I.R.C. § 39(a)(2)(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.
I.R.C. § 39(a)(2)(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).
I.R.C. § 39(a)(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—
I.R.C. § 39(a)(3)(A) —
this section shall be applied separately
from the business credit (other than the marginal oil and gas well
production credit),
I.R.C. § 39(a)(3)(B) —
paragraph (1) shall be applied by substituting “each
of the 5 taxable years” for “the taxable year” in
subparagraph (A) thereof, and
I.R.C. § 39(a)(3)(C) —
paragraph (2) shall be applied—
I.R.C. § 39(a)(3)(C)(i) —
by substituting “25 taxable years”
for “21 taxable years” in subparagraph (A) thereof, and
I.R.C. § 39(a)(3)(C)(ii) —
by substituting “24 taxable years”
for “20 taxable years” in subparagraph (B) thereof.
Editor's Note: Sec. 39(a)(4), below,
after being added by Pub. L. 117-169,
Sec. 13801(d), is effective for taxable years beginning after December
31, 2022.
I.R.C. § 39(a)(4) 3-Year Carryback For Applicable Credits —
Notwithstanding subsection (d), in the case of any applicable
credit (as defined in section 6417(b))—
I.R.C. § 39(a)(4)(A) —
this section shall be applied separately
from the business credit (other than the applicable credit),
I.R.C. § 39(a)(4)(B) —
paragraph (1) shall be applied by substituting “each
of the 3 taxable years” for “the taxable year” in
subparagraph (A) thereof, and
I.R.C. § 39(a)(4)(C) —
paragraph (2) shall be applied—
I.R.C. § 39(a)(4)(C)(i) —
by substituting “23 taxable years”
for “21 taxable years” in subparagraph (A) thereof, and
I.R.C. § 39(a)(4)(C)(ii) —
by substituting “22 taxable years”
for “20 taxable years” in subparagraph (B) thereof.
I.R.C. § 39(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—
I.R.C. § 39(b)(1) —
the amounts determined under paragraphs (1) and (2) of section 38(a) for such taxable year,
plus
I.R.C. § 39(b)(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.
I.R.C. § 39(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.
I.R.C. § 39(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)).
(Added by Pub. L. 98-369, div. A, title IV,
Sec. 473, July 18, 1984, 98 Stat. 828,
and 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. 2776; Pub. L. 103-66, title XIII, Sec.
13302, 13322, 13443, Aug. 10, 1993, 107
Stat. 312; Pub. L. 104-188,
title I, Sec. 1205(c), 1703(n)(1), Aug. 20, 1996, 110 Stat. 1755; Pub. L. 105-34, title VII, X, Sec.
701(b)(1), 1083(a), Aug. 5, 1997, 111
Stat 788; Pub. L. 105-206,
title VI, Sec. 6010(n), July 22, 1998, 112
Stat. 685; Pub. L. 106-554,
Sec. 121, Dec. 21, 2000, 114
Stat. 2763; Pub. L. 107-16,
title VI, Sec. 619(c)(1), June 7, 2001, 115
Stat. 38; Pub. L. 108-357,
title II, III, Sec. 245(b)(1), Sec. 341(c), Oct. 22, 2004, 118 Stat. 1418; Pub. L. 109-135, title IV, Sec.
412(g), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 111-240, title II, Sec.
2012, Sept. 27, 2010, 124 Stat. 2504; Pub. L. 115-141, Div. U, title IV, Sec.
401(b)(5)(E), (5)(F), Mar. 23, 2018, 132
Stat. 348; Pub. L. 117-169,
title I, Sec. 13801(d), Aug. 16, 2022, 136 Stat. 1818.)
BACKGROUND NOTES
AMENDMENTS
2022 —
Subsec. (a). Pub. L. 117-169,
Sec. 13801(d), added par. (4).
2018 — Subsec. (a). Pub. L. 115-141, Div. U, Sec. 401(b)(5)(E),
amended subsec. (a) by striking par. (4). Before being struck, par.
(4) read as follows:
“(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
purpose of this subsection, the term ‘eligible small business
credits’ has the meaning given such term by section 38(c)(5)(B).”
Subsec. (a)(3)(A). Pub.
L. 115-141, Div. U, Sec. 401(b)(5)(F), amended subpar. (A)
by striking “or the eligible business credits”.
2010 — Subsec. (a)(3)(A). Pub. L. 111-240, Sec. 2012(b),
amended subpar. (A) by inserting “or the eligible small business
credits” after “credit)”.
Subsec. (a)(4). Pub. L. 111-240, Sec. 2012(a),
amended subsec. (a) by adding par. (4).
2005 — Subsec. (a)(1)(A). Pub. L. 109-135, Sec. 412(g)(1),
amended subpar. (A) by substituting “the taxable year”
for “each of the 1 taxable years”.
Subsec. (a)(3)(B). Pub. L. 109-135, Sec. 412(g)(2),
amended subpar. (B). Before amendment it read as follows:
“(B) paragraph (1) shall be applied by substituting
‘5 taxable years’ for ‘1 taxable years’ in subparagraph (A) thereof,
and”.
2004 — Subsec. (c)(3). Pub. L. 108-357, Sec. 341(c),
added par. (3)
Subsec. (d). Pub. L. 108-357, Sec. 245(b)(1),
amended subsec. (d). Before amendment, it read as follows:
“(d) Transitional Rules.—
“(1) No Carryback Of Enhanced Oil Recovery
Credit Before 1991.—No portion of the unused business credit
for any taxable year which is attributable to the credit determined
under section 43(a) (relating to enhanced oil recovery credit) may
be carried to a taxable year beginning before January 1, 1991.
“(2) No Carryback Of Section 44 Credit Before
Enactment.—No portion of the unused business credit for any
taxable year which is attributable to the disabled access credit determined
under section 44 may be carried to a taxable year ending before the
date of the enactment of section 44.
“(3) No Carryback Of Renewable Electricity
Production Credit Before Effective Date.—No portion of the unused
business credit for any taxable year which is attributable to the
credit determined under section 45 (relating to electricity produced
from certain renewable resources) may be carried back to any taxable
year ending before January 1, 1993 (before January 1, 1994, to the
extent such credit is attributable to wind as a qualified energy resource).
“(4) Empowerment Zone Employment Credit.—No
portion of the unused business credit which is attributable to the
credit determined under section 1396 (relating to empowerment zone
employment credit) may be carried to any taxable year ending before
January 1, 1994.
“(5) No Carryback Of Section 45A Credit Before
Enactment.—No portion of the unused business credit for any
taxable year which is attributable to the Indian employment credit
determined under section 45A may be carried to a taxable year ending
before the date of the enactment of section 45A.
“(6) No Carryback Of Section 45B Credit Before
Enactment.—No portion of the unused business credit for any
taxable year which is attributable to the employer social security
credit determined under section 45B may be carried back to a taxable
year ending before the date of the enactment of section 45B.
“(7) No Carryback Of Section 45C Credit Before
July 1, 1996.—No portion of the unused business credit for any
taxable year which is attributable to the orphan drug credit determined
under section 45C may be carried back to a taxable year ending before
July 1, 1996.
“(8) No Carryback Of DC Zone Credits Before
Effective Date.—No portion of the unused business credit for
any taxable year which is attributable to the credits allowable under
subchapter U by reason of section 1400 may be carried back to a taxable
year ending before the date of the enactment of section 1400 [enacted:
Aug. 5, 1997].
“(9) No Carryback Of New Markets Tax Credit
Before January 1, 2001.—No portion of the unused business credit
for any taxable year which is attributable to the credit under section
45D may be carried back to a taxable year ending before January 1,
2001.
“(10) No Carryback Of Small Employer Pension
Plan Startup Cost Credit Before January 1, 2002.—No portion
of the unused business credit for any taxable year which is attributable
to the small employer pension plan startup cost credit determined
under section 45E may be carried back to a taxable year beginning
before January 1, 2002.”
2001 — Subsec. (d)(10). Pub. L. 107-16, Sec. 619(c)(1),
added par. (10).
2000 — Subsec. (d)(9). Pub. L. 106-554, Sec.
121(b)(2), added par. (9).
1997 — Subsec. (a)(1). Pub. L. 105-34, Sec. 1083(a)(1),
substituted “1” for “3” each place it appeared
and substituted “20” for “15” each place it
appeared.
Subsec. (a)(2). Pub. L. 105-34, Sec. 1083(a)(2),
as amended by Pub. L. 105-206,
Sec. 6010(n), substituted “21” for “18” each
place it appeared and substituted “20” for “17”
each place it appeared.
Subsec. (d)(8). Pub. L. 105-34, Sec. 701(b)(1),
added par. (8).
1996 — Subsec. (d). Pub. L. 104-188, Sec.
1703(n)(1), struck “45” in heading and inserting “45A”;
and struck “45” in the heading of paragraph (6) and inserted “45B”.
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), amended subsection (d) by adding at the end a new paragraph
(4).
Subsec. (d)(5). Pub. L. 103-66, Sec. 13322(d),
amended subsection (d) by adding at the end thereof a new paragraph
(5).
Subsec. (d)(6). Pub. L. 103-66, Sec.
13443(b)(2), amended subsection (d) by adding at the end a new paragraph
(6).
1992 — Subsec. (d). Pub. L. 102-486, Sec. 1914(c),
amended subsec. (d) by redesignating the paragraph added by section
11511(b)(2) of the Revenue Reconciliation Act of 1990 as paragraph
(1), by redesignating the paragraph added by section 11611(b)(2) of
such Act as paragraph (2), and by adding a new paragraph (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, Sec.
1002(1)(26), 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 2022
AMENDMENTS
Amendment by Section 13801(d)
of Pub. L. 117-169 is
applicable to taxable years beginning after December 31, 2022.
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L.
115-141, Div. U, Sec. 401(b)(5)(E), (5)(F), effective March
23, 2018.
EFFECTIVE DATE OF 2010 AMENDMENTS
Amendments by Section 2012 of Pub. L. 111-240 effective for credits
determined in taxable years beginning after December 31, 2009.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by Section 412(g) of Pub. L. 109-135 is applicable on
the date of the enactment of this Act [Enacted: Dec. 21, 2005].
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Section 245(b)(1) of Pub. L. 108-357 is applicable to
taxable years ending after December 31, 2003.
Amendment by Section 341(c) of Pub. L. 108-357 is applicable to
production in taxable years beginning after December 31, 2004.
EFFECTIVE DATE OF 2001 AMENDMENTS
Section 619(d) of Pub.
L. 107-16, as amended by Pub. L. 107-147, Sec. 411(n)(2),
provided that: “The amendments mae by this section shall apply
to costs paid or incurred in taxable years beginning after December
31, 2001 with respect to qualified employer plans first effective
after such date.”
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358, provided that:
“(a) In General.—All provisions of,
and amendments made by, this Act shall not apply—
“(1) to taxable, plan, or limitation years
beginning after December 31, 2010, or
“(2) in the case of title V, to estates of
decedents dying, gifts made, or generation skipping transfers, after
December 31, 2010.
“(b) Application Of Certain Laws.—The
Internal Revenue Code of 1986 and the Employee Retirement Income Security
Act of 1974 shall be applied and administered to years, estates, gifts,
and transfers described in subsection (a) as if the provisions and
amendments described in subsection (a) had never been enacted.
“(c) Exception.—Subsection (a) shall
not apply to section 803 (relating to no federal income tax on restitution
received by victims of the Nazi regime or their heirs or estates).”
PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT
PROVISIONS OF ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF
2001 MADE PERMANENT
Section 811 of Pub.
L. 109-280 provided that:
“Title IX of the Economic Growth and Tax
Relief Reconciliation Act of 2001 [Pub.
L. 107-16] shall not apply to the provisions of,
and amendments made by, subtitles A through F [Sections 601-666] of
title VI of such Act (relating to pension and individual retirement
arrangement provisions).”
EFFECTIVE DATE OF 2000 AMENDMENTS
Amendment by section 121(b)(2) of Pub. L. 106-554 effective for investments
made after December 31, 2000.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by section 1803(a) of Pub. L. 105-34 effective for credits
arising in taxable years beginning after December 31, 1997.
Amendment by section 701(b)(1) of Pub. L. 105-34 effective on the date
of enactment [enacted: Aug. 5, 1997].
EFFECTIVE DATE OF 1996 AMENDMENTS
Section 1703(o) of Pub.
L. 104-188, provided that: “Any amendment made
by this section shall take effect as if included in the provision
of the Revenue Reconciliation Act of 1993 to which such amendment
relates.”
Section 1205(e) of Pub.
L. 104-188, provided that: “Any amendments
made by this section shall apply to amounts paid or incurred in taxable
years ending after June 30, 1996.”
EFFECTIVE DATE OF 1993 AMENDMENTS
Amendment by section 13302 of Pub. L. 103-66 effective as of the
date of enactment [enacted: Aug. 10, 1993].
Amendment by section 13322 of Pub. L. 103-66 applicable to wages
paid or incurred after Dec. 31, 1993.
Amendment by section 13443 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 [as amended by Pub. L. 104-188, Sec. 1112(a)(2)].
EFFECTIVE DATE OF 1992 AMENDMENTS
Amendment by section 1914(c) of Pub. L. 102-486 applicable to taxable
years ending after December 31, 1992.
EFFECTIVE DATE OF 1990 AMENDMENTS
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 AMENDMENTS
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 AMENDMENTS
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.
PRIOR PROVISIONS
A prior section 39 was renumbered section 34 of
this title.
Another prior section 39 was renumbered section
35 of this title.
