26 USC 39 - Carryback and carryforward of unused credits

View all text of Subpart D [§ 38 - § 45AA]

§ 39. Carryback and carryforward of unused credits

(a) In general

(1) 1-year carryback and 20-year carryforwardIf 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

(B) Amount carried to other 20 years

(3) 5-year carryback for marginal oil and gas well production creditNotwithstanding 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) shall be applied by substituting “each of the 5 taxable years” for “the taxable year” in subparagraph (A) thereof, and

(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) 3-year carryback for applicable creditsNotwithstanding subsection (d), in the case of any applicable credit (as defined in section 6417(b))—

(A) this section shall be applied separately from the business credit (other than the applicable credit),

(B) paragraph (1) shall be applied by substituting “each of the 3 taxable years” for “the taxable year” in subparagraph (A) thereof, and

(i) by substituting “23 taxable years” for “21 taxable years” in subparagraph (A) thereof, and

(ii) by substituting “22 taxable years” for “20 taxable years” in subparagraph (B) thereof.

(b) Limitation on carrybacksThe 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.

(d) Transitional rule

(Added Pub. L. 98–369, div. A, title IV, § 473, July 18, 1984, 98 Stat. 828; amended Pub. L. 99–514, title II, § 231(d)(3)(C)(i), title XVIII, § 1846, Oct. 22, 1986, 100 Stat. 2179, 2856; Pub. L. 100–647, title I, § 1002(l)(26), Nov. 10, 1988, 102 Stat. 3381; Pub. L. 101–508, title XI, §§ 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, § 1914(c), Oct. 24, 1992, 106 Stat. 3023; Pub. L. 103–66, title XIII, §§ 13302(a)(2), 13322(d), 13443(b)(2), Aug. 10, 1993, 107 Stat. 555, 563, 569; Pub. L. 104–188, title I, §§ 1205(c), 1703(n)(1), Aug. 20, 1996, 110 Stat. 1775, 1877; Pub. L. 105–34, title VII, § 701(b)(1), title X, § 1083(a), Aug. 5, 1997, 111 Stat. 869, 951; Pub. L. 105–206, title VI, § 6010(n), July 22, 1998, 112 Stat. 816; Pub. L. 106–554, § 1(a)(7) [title I, § 121(b)(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–610; Pub. L. 107–16, title VI, § 619(c)(1), June 7, 2001, 115 Stat. 110; Pub. L. 108–357, title II, § 245(b)(1), title III, § 341(c), Oct. 22, 2004, 118 Stat. 1447, 1487; Pub. L. 109–135, title IV, § 412(g), Dec. 21, 2005, 119 Stat. 2637; Pub. L. 111–240, title II, § 2012(a), (b), Sept. 27, 2010, 124 Stat. 2554; Pub. L. 115–141, div. U, title IV, § 401(b)(5)(E), (F), Mar. 23, 2018, 132 Stat. 1202; Pub. L. 117–169, title I, § 13801(d), Aug. 16, 2022, 136 Stat. 2012.)