II 110th CONGRESS 2d Session S. 2650 IN THE SENATE OF THE UNITED STATES February 14, 2008 Mr. Specter (for himself, Mrs. Dole, Mr. Ensign, Mr. Martinez, Mr. Cornyn, Ms. Stabenow, and Mrs. Hutchison) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To provide for a 5-year carryback of certain net operating losses and to suspend the 90 percent alternative minimum tax limit on certain net operating losses.

1.

Carryback of certain net operating losses allowed for 5 years; temporary suspension of 90 percent AMT limit

(a)

In general

Subparagraph (H) of section 172(b)(1) of the Internal Revenue Code of 1986 is amended to read as follows: (H)

5-year carryback of certain losses

(i)

Taxable years ending during 2001 and 2002

In the case of a net operating loss for any taxable year ending during 2001 or 2002, subparagraph (A)(i) shall be applied by substituting 5 for 2 and subparagraph (F) shall not apply. (ii)

Taxable years beginning or ending during 2006, 2007, and 2008

In the case of a net operating loss for any taxable year beginning or ending during 2006, 2007, or 2008— (I)subparagraph (A)(i) shall be applied by substituting 5 for 2, (II)subparagraph (E)(ii) shall be applied by substituting 4 for 2, and (III)subparagraph (F) shall not apply. . (b)

Temporary suspension of 90 percent limit on certain NOL carrybacks and carryovers

(1)

In general

Section 56(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (3)

Additional adjustments

For purposes of paragraph (1)(A), the amount described in clause (I) of paragraph (1)(A)(ii) shall be increased by the amount of the net operating loss deduction allowable for the taxable year under section 172 attributable to the sum of— (A)carrybacks of net operating losses from taxable years beginning or ending during 2006, 2007, and 2008, and (B)carryovers of net operating losses to taxable years beginning or ending during 2006, 2007, or 2008. . (2)

Conforming amendment

Subclause (I) of section 56(d)(1)(A)(i) of such Code is amended by inserting amount of such before deduction described in clause (ii)(I). (c)

Anti-abuse rules

The Secretary of the Treasury or the Secretary's designee shall prescribe such rules as are necessary to prevent the abuse of the purposes of the amendments made by this section, including anti-stuffing rules, anti-churning rules (including rules relating to sale-leasebacks), and rules similar to the rules under section 1091 of the Internal Revenue Code of 1986 relating to losses from wash sales. (d)

Effective dates

(1)

Subsection (a)

(A)

In general

Except as provided in subparagraph (B), the amendments made by subsection (a) shall apply to net operating losses arising in taxable years beginning or ending in 2006, 2007, or 2008. (B)

Election

In the case of a net operating loss for a taxable year beginning or ending during 2006 or 2007— (i)any election made under section 172(b)(3) of the Internal Revenue Code of 1986 may (notwithstanding such section) be revoked before November 1, 2008, and (ii)any election made under section 172(j) of such Code shall (notwithstanding such section) be treated as timely made if made before November 1, 2008. (2)

Subsection (b)

The amendments made by subsection (b) shall apply to taxable years ending after December 31, 1995.