[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3640 Introduced in Senate (IS)]

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116th CONGRESS
  2d Session
                                S. 3640

To amend the Internal Revenue Code of 1986 to allow certain taxpayers a 
   2-year carryback of net operating losses and to restore and make 
  permanent the limitation on excess business losses of non-corporate 
                               taxpayers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 7, 2020

  Mr. Whitehouse (for himself, Mr. Brown, Mr. Leahy, Mr. Sanders, Mr. 
  Udall, Mr. Blumenthal, Mr. Durbin, Mr. Markey, Mr. Van Hollen, Mr. 
King, Ms. Warren, Ms. Harris, Mr. Carper, Ms. Klobuchar, Mr. Coons, Mr. 
Reed, Mr. Murphy, Mrs. Gillibrand, Mr. Booker, Ms. Baldwin, Ms. Smith, 
Ms. Hirono, Mr. Schatz, and Mr. Merkley) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to allow certain taxpayers a 
   2-year carryback of net operating losses and to restore and make 
  permanent the limitation on excess business losses of non-corporate 
                               taxpayers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``CARES Windfall for the Wealthiest 
Repeal Act''.

SEC. 2. LIMITATION ON EXCESS BUSINESS LOSSES OF NON-CORPORATE TAXPAYERS 
              RESTORED AND MADE PERMANENT.

    (a) In General.--Section 461(l)(1) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(1) Limitation.--In the case of taxable year of a 
        taxpayer other than a corporation beginning after December 31, 
        2017, any excess business loss of the taxpayer for the taxable 
        year shall not be allowed.''.
    (b) Conforming Amendment.--Section 461 of such Code is amended by 
striking subsection (j).
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 2304(a) of the Coronavirus Aid, 
Relief, and Economic Security Act.

SEC. 3. CERTAIN TAXPAYERS ALLOWED 2-YEAR CARRYBACK OF NET OPERATING 
              LOSSES ARISING IN CERTAIN PERIODS.

    (a) Two-Year Carryback of Losses Arising in Certain Periods.--
            (1) In general.--Section 172(b)(1)(D)(i) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) by striking ``arising in a taxable year 
                beginning after December 31, 2017, and ending before 
                January 1, 2021'' and inserting ``arising in the first 
                taxable year beginning after August 31, 2019'', and
                    (B) by striking ``5 taxable years'' in subclause 
                (I) and inserting ``2 taxable years''.
            (2) Conforming amendments.--
                    (A) The heading for section 172(b)(1)(D) of such 
                Code is amended by striking ``2018, 2019, and 2020'' 
                and inserting ``certain periods''.
                    (B) Section 172(b)(1)(D)(v) of such Code is 
                amended--
                            (i) by striking subclause (II), and
                            (ii) by striking ``Special rules'' and all 
                        that follows through ``If the 5-year carryback 
                        period'' and inserting the following: ``Special 
                        rule for election under paragraph (3) to 
                        exclude section 965 years.--If the 2-year 
                        carryback period''.
    (b) Carryback Only Allowed for Small Businesses.--
            (1) In general.--Section 172(b)(1)(D)(i) of such Code is 
        amended by striking ``net operating loss arising'' and 
        inserting ``net operating loss of an eligible small business 
        arising''.
            (2) Eligible small business.--Section 172(b)(1)(D) of such 
        Code is amended by adding at the end the following new clause:
                            ``(vi) Eligible small business.--For 
                        purposes of clause (i), the term `eligible 
                        small business' means a corporation or 
                        partnership which--
                                    ``(I) meets the gross receipts test 
                                of section 448(c) (applied by 
                                substituting `$15,000,000' for 
                                `$25,000,000' each place it appears) 
                                for the taxable year in which the loss 
                                arose (or, in the case of a sole 
                                proprietorship, which would meet such 
                                test if such proprietorship were a 
                                corporation), and
                                    ``(II) elects the application of 
                                this subparagraph.
                        Any election under subclause (II) shall be made 
                        in such manner as may be prescribed by the 
                        Secretary, and shall be made by the due date 
                        (including extension of time) for filing the 
                        return for the taxpayer's the taxable year in 
                        which the loss arose. Any such election, once 
                        made, shall be irrevocable.''.
    (c) Disallowed for Certain Taxpayers.--Section 172(b)(1)(D) of such 
Code, as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new clauses:
                            ``(vii) Carryback disallowed for certain 
                        taxpayers.--Clause (i) shall not apply with 
                        respect to any loss arising in a taxable year 
                        in which--
                                    ``(I) the taxpayer (or any related 
                                person) is not allowed a deduction 
                                under this chapter for the taxable year 
                                by reason of section 162(m) or section 
                                280G, or
                                    ``(II) the taxpayer (or any related 
                                person) is a specified corporation for 
                                the taxable year.
                            ``(viii) Specified corporation.--For 
                        purposes of clause (vii)--
                                    ``(I) In general.--The term 
                                `specified corporation' means, with 
                                respect to any taxable year, a 
                                corporation the aggregate distributions 
                                (including redemptions) of which during 
                                all taxable years ending after December 
                                31, 2017, exceed the sum of applicable 
                                stock issued by such corporation and 5 
                                percent of the fair market value of the 
                                stock of such corporation as of the 
                                last day of the taxable year.
                                    ``(II) Applicable stock issued.--
                                The term `applicable stock issued' 
                                means, with respect to any corporation, 
                                the aggregate value of stock issued by 
                                the corporation during all taxable 
                                years ending after December 31, 2017, 
                                in exchange for money or property other 
                                than stock in such corporation.
                                    ``(III) Certain preferred stock 
                                disregarded.--For purposes of subclause 
                                (I), stock described in section 
                                1504(a)(4), and distributions 
                                (including redemptions) with respect to 
                                such stock, shall be disregarded.
                            ``(ix) Related person.--For purposes of 
                        clause (vii), a person is a related person to a 
                        taxpayer if the related person bears a 
                        relationship to the taxpayer specified in 
                        section 267(b) or section 707(b)(1).''.
    (d) Advance Carryback of Estimated Net Operating Losses Arising in 
2020.--
            (1) In general.--In the case of any taxpayer expecting a 
        net operating loss for the first taxable year beginning after 
        August 31, 2019, such taxpayer may file an application with the 
        Secretary of the Treasury for an advance carryback adjustment 
        of the tax for a prior taxable year that would be affected, by 
        reason of the amendments made by this section, by so much of 
        such expected net operating loss as does not exceed $100,000.
            (2) Application.--The application filed under paragraph (1) 
        shall set forth in such detail and with such supporting data 
        and explanation as the Secretary may require an estimate of the 
        taxpayer's net operating loss that will arise in such taxable 
        year.
            (3) Due date for application.--An application under this 
        subsection may not be filed later than the due date (including 
        extensions of time) of the return for the first taxable year 
        beginning after August 31, 2019.
            (4) Allowance of adjustments.--Not later than 30 days after 
        the date on which an application for an advance carryback 
        adjustment is filed under paragraph (1), the Secretary shall 
        dispose of such application under rules similar to the rules of 
        section 6411 of the Internal Revenue Code of 1986.
            (5) Reduction of net operating loss for application year.--
        The amount of any net operating loss (determined without regard 
        to this paragraph) of the taxpayer for any taxable year from 
        which an advance carryback adjustment is made under this 
        subsection shall be reduced (but not below zero) by the amount 
        of estimated net operating loss taken into account in 
        determining an advance carryback adjustment of the taxpayer 
        under this subsection.
            (6) Recapture.--The taxpayer's tax imposed by chapter 1 for 
        such taxable year shall be increased by the excess (if any) 
        of--
                    (A) the reduction in tax for all prior taxable 
                years by reason of an advance carryback adjustment 
                under this subsection, over
                    (B) the reduction in tax for all prior taxable 
                years by reason of a net operating loss finally arising 
                in the taxable year to which the application under this 
                subsection relates.
            (7) Denial of double benefit.--The Secretary shall provide 
        such rules or guidance as is necessary for coordination of the 
        application of this section with the provision of section 6164 
        of the Internal Revenue Code of 1986.
            (8) References to secretary.--Any reference to the 
        Secretary of the Treasury in this subsection shall be treated 
        as including a reference to the Secretary's delegate.
    (e) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 2303(b) of the 
Coronavirus Aid, Relief, and Economic Security Act.
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