prior revenue Acts). plus the amount of income, war-profits, or amount of income, war-profits, or excess-profits taxes paid during excess-profits taxes paid during such year in respect of preceding such year in respect of preceding taxable years, exceeds 90 per taxable years, exceeds 90 per centum of the taxpayer's net incentum of the taxpayer's net in- come for each such year, as comcome for each such year, as com- puted without the benefit of the [ puted without the benefit of the applicable subsection, then the 15 applicable subsection, then the 15 per centum limit imposed by secper centum limit imposed by sec- tion 23 (o) shall not be applicable. tion 23 (0) shall not be applicable. Sec. 121. Deduction of dividends paid on certain preferred stock of certain corporations. Sec. 121. Deduction of dividends paid on certain preferred stock of certain corporations. In computing the net income of In computing the net income of any national banking association, any national banking association, or of any bank or trust company or of any bank or trust company organized under the laws of any organized under the laws of any State, Territory, possession of the State, Territory, possession of the United States, or the Canal Zone, United States, or the Canal Zone, or of any other banking corpora- or of any other banking corporation engaged in the business of in- tion engaged in the business of industrial banking and under the dustrial banking and under the supervision of a State banking de- supervision of a State banking department or of the Comptroller of partment or of the Comptroller of the Currency, or of any incorpo- the Currency, or of any incorporated domestic insurance company, rated domestic insurance company, there shall be allowed as a deduc- there shall be allowed as a deduction from gross income, in addition tion from gross income, in addition to deductions otherwise provided to deductions otherwise provided for in this chapter, any dividend for in this chapter, any dividend (not including any distribution in (not including any distribution in liquidation) paid, within the tax- liquidation) paid, within the taxable year, to the United States or able year, to the United States or to any instrumentality thereof ex- to any instrumentality thereof exempt from Federal income taxes, empt from Federal income taxes, on the preferred stock of the cor- on the preferred stock of the corporation owned by the United poration owned by the United States or such instrumentality. The amount allowable as a deduction under this section shall be deducted from the basic surtax credit otherwise computed under. section 27 (b). Sec. 122. Net operating loss deduction. States or such instrumentality. Sec. 122. Net operating loss deduction. Sec. 122. (a) Definition of net Sec. 122. (a) Definition of net operating loss. As used in this operating loss. As used in this section, the term "net operating section, the term "net operating loss" means the excess of the de- loss" means the excess of the deducductions allowed by this chapter tions allowed by this chapter over over the gross income, with the ex- the gross income, with the excepceptions and limitations provided tions and limitations provided in in subsection (d). subsection (d). Taxable Years Beginning before 1939 Sec. 121. Deduction of dividends paid on certain preferred stock of certain corporations. See p. 228, Eighth Edition. Sec. 122. (b) (1) Net operating Sec. 122. (b) (1) Net operating Sec. 122. (b) (1) Net operating loss carry-back. If for any tax-loss carry-back.-If for any tax-loss carry-back.-If for any taxable year beginning after Decem-able year beginning after Decem-able year beginning after December 31, 1941, the taxpayer has a ber 31, 1941, the taxpayer has a ber 31, 1941, the taxpayer has a net operating loss, such net operat-net operating loss, such net operat- net operating loss, such net operating loss shall be a net operating loss ing loss shall be a net operating loss ing loss shall be a net operating loss carry-back for each of the two pre-carry-back for each of the two pre- carry-back for each of the two preceding taxable years, except that ceding taxable years, except that ceding taxable years, except that the carry-back in the case of the the carry-back in the case of the the carry-back in the case of the first preceding taxable year shall first preceding taxable year shall first preceding taxable year shall be the excess, if any, of the amount be the excess, if any, of the amount be the excess, if any, of the amount of such net operating loss over the of such net operating loss over the of such net operating loss over the net income for the second preced- net income for the second preced- net income for the second preced ing taxable year computed (A) with ing taxable year computed (A) with ing taxable year computed (A) with the exceptions, additions, and the exceptions, additions, and the exceptions, additions, and limitations provided in subsection limitations provided in subsection limitations provided in subsection (d) (1), (2), (4), and (6), and (d) (1), (2), (4), and (6), and (d) (1), (2), (4), and (6), and (B) by determining the net operat- (B) by determining the net operat- (B) by determining the net operat ing loss deduction for such second ing loss deduction for such second ing loss deduction for such second preceding taxable year without re- preceding taxable year without re- preceding taxable year without regard to such net operating loss. gard to such net operating loss. gard to such net operating loss. Sec. 122. (b) (2) Net operating Sec. 122. (b) (2) Net operating Sec. 122. (b) (2) Net operating loss carry-over.-If for any taxable loss carry-over.-If for any taxable loss carry-over.-If for any taxable year the taxpayer has a net operat-year the taxpayer has a net operat-year the taxpayer has a net operating loss, such net operating loss ing loss, such net operating loss ing loss, such net operating loss shall be a net operating loss carry-shall be a net operating loss carry-shall be a net operating loss carryover for each of the two succeeding over for each of the two succeeding over for each of the two succeeding taxable years, except that the carry-taxable years, except that the carry-taxable years, except that the carryover in the case of the second suc-over in the case of the second suc- over in the case of the second succeeding taxable year shall be the ceeding taxable year shall be the ceeding taxable year shall be the excess, if any, of the amount of excess, if any, of the amount of excess, if any, of the amount of such net operating loss over the net such net operating loss over the net such net operating loss over the net income for the intervening taxable income for the intervening taxable income for the intervening taxable year computed (A) with the ex-year computed (A) with the ex-year computed (A) with the exceptions, additions, and limitations ceptions, additions, and limitations ceptions, additions, and limitations provided in subsection (d) (1), (2), provided in subsection (d) (1), (2), provided in subsection (d) (1), (2), (4), and (6), and (B) by deter- (4), and (6), and (B) by deter- (4), and (6), and (B) by determining the net operating loss de-mining the net operating loss de- mining the net operating loss deduction for such intervening taxable duction for such intervening taxable duction for such intervening taxable year without regard to such net year without regard to such net year without regard to such net operating loss and without regard operating loss and without regard operating loss and without regard to any net operating loss carry- to any net operating loss carry to any net operating loss carryback. For the purposes of the pre-back. For the purposes of the pre-back. For the purposes of the preceding sentence, the net operating ceding sentence, the net operating ceding sentence, the net operating loss for any taxable year beginning loss for any taxable year beginning loss for any taxable year beginning after December 31, 1941 shall be after December 31, 1941 shall be after December 31, 1941 shall be reduced by the sum of the net in- reduced by the sum of the net in- reduced by the sum of the net income for each of the two preceding come for each of the two preceding come for each of the two preceding taxable years (computed for each taxable years (computed for each taxable years (computed for each such preceding taxable year with such preceding taxable year with such preceding taxable year with the exceptions, additions, and limi- the exceptions, additions, and limi- the exceptions, additions, and limitations provided in subsection (d) tations provided in subsection (d) tations provided in subsection (d) (1), (2), (4), and (6), and com- (1), (2), (4), and (6), and com- (1), (2), (4), and (6), and computed by determining the net op- puted by determining the net op- puted by determining the net operating loss deduction without re-erating loss deduction without re-erating loss deduction without regard to such net operating loss or gard to such net operating loss or gard to such net operating loss or to the net operating loss for the to the net operating loss for the to the net operating loss for the succeeding taxable year). succeeding taxable year). succeeding taxable year). Sec. 122 (b), I. R. C., supra, amended to read as above by Sec. 122 (b), I. R. C., supra, amended to read as above by Sec. 122 (b), I. R. C., supra, amended to read as above by Taxable Years Taxable Years Taxable Years Beginning before 1939 Sec. 122. (b) Amount of carryover. The term "net operating loss carry-over" means in the case of any taxable year the sum of: Sec. 122. (b) Amount of carryover.-The term "net operating loss carry-over" means in the case of any taxable year the sum of: Sec. 122. (b) (1) The amount, if Sec. 122. (b) (1) The amount, if any, of the net operating loss for any, of the net operating loss for the first preceding taxable year; the first preceding taxable year; and and Sec. 122. (b) (2) The amount of Sec. 122. (b) (2) The amount of the net operating loss, if any, for the net operating loss, if any, for the second preceding taxable year the second preceding taxable year reduced by the excess, if any, of the reduced by the excess, if any, of the net income (computed with the ex-net income (computed with the exceptions and limitations provided ceptions and limitations provided in in subsection (d) (1), (2), (3), subsection (d) (1), (2), (3), and and (4)) for the first preceding (4)) for the first preceding taxtaxable year over the net operat-able year over the net operating loss ing loss for the third preceding for the third preceding taxable year. taxable year. Sec. 122. (c) Amount of net op- Sec. 122. (c) Amount of net op- Sec. 122. (c) Amount of net operating loss deduction. The erating loss deduction. The erating loss deduction. The amount of the net operating loss amount of the net operating loss amount of the net operating loss deduction shall be the aggregate of deduction shall be the amount of deduction shall be the amount of the net operating loss carry-overs the net operating less carry over the net operating less carry over and of the net operating loss carry- aggregate of the net operating loss aggregate of the net operating loss backs to the taxable year reduced carry-overs and of the net operat-carry-overs and of the net operatby the amount, if any, by which the ing loss carry-backs to the taxable ing loss carry-backs to the taxable net income (computed with the ex-year reduced by the amount, if any, year reduced by the amount, if any, ceptions and limitations provided by which the net income (computed by which the net income (computed in subsection (d) (1), (2), (3), with the exceptions and limitations with the exceptions and limitations and (4)) exceeds, in the case of a provided in subsection (d) (1), provided in subsection (d) (1), taxpayer other than a corporation, (2), (3), and (4)) exceeds, in (2), (3), and (4)) exceeds, in the net income (computed without the case of a taxpayer other than the case of a taxpayer other than such deduction), or, in the case of a a corporation, the net income (com- a corporation, the net income (comcorporation, the normal-tax net in-puted without such deduction), or, puted without such deduction), or, come (computed without such de- in the case of a corporation, the in the case of a corporation, the duction and without the credit pro- normal-tax net income (computed normal-tax net income (computed vided in section 26 (e)); without such deduction and with- without such deduction); out the credit provided in section 23 (e)); Sec. 122 (c), I. R. C., supra, amended by Sec. 153 (b) and by Sec. 105 (e) (3) (B), R. A. of 1942, to read as above. See 1942 column for Sec. 122 (c), I. R. C., before amendment and for taxable years in respect of which amendments are applicable. Sec. 122 (c), I. R. C., supra, amended by Sec. 153 (b), R. A. of 1942, by omitting language in stricken through type and adding language in italics. Sec. 153 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1940. See 1940 column for Sec. 122 (c), I. R. C., before amendment. Sec. 122. (d) Exceptions, addi- Sec. 122. (d) Exceptions, addi- Sec. 122. (d) Exceptions and tions, and limitations.-The excep- tions, and limitations.-The excep- limitations. The exceptions and tions, additions, and limitations tions, additions, and limitations limitations referred to in subsecreferred to in subsections (a), (b), referred to in subsections (a), (b), tions (a), (b), and (c) shall be as and (c) shall be as follows: and (c) shall be as follows: Sec. 122. (d) (1) The deduction Sec. 122. (d) (1) The deduction for depletion shall not exceed the for depletion shall not exceed the amount which would be allowable amount which would be allowable if computed without reference to if computed without reference to discovery value or to percentage discovery value or to percentage depletion under section 114 (b) depletion under section 114 (b) (2), (3), or (4); (2), (3), or (4); follows: Sec. 122. (d) (1) The deduction for depletion shall not exceed the amount which would be allowable if computed without reference to discovery value or to percentage depletion under section 114 (b) (2), (3), or (4); 1 Taxable Years Taxable Years Taxable Years Beginning before 1939 Sec. 122. (c) Amount of net op- Sec. 122. (c) Amount of net operating loss deduction. The erating loss deduction.-The amount of the net operating loss amount of the net operating loss deduction shall be the amount of deduction shall be the amount of the the net operating loss carry-over net operating loss carry-over rereduced by the amount, if any, by duced by the amount, if any, by which the net income (computed which the net income (computed with the exceptions and limitations with the exceptions and limitations provided in subsection (d) (1), provided in subsection (d) (1), (2), (2), (3), and (4)) exceeds, in the (3), and (4)) exceeds, in the case of case of a taxpayer other than a a taxpayer other than a corporation, corporation, the net income (com- the net income (computed without puted without such deduction), or, such deduction), or, in the case of in the case of a corporation, the a corporation, the normal-tax net normal-tax net income (computed income (computed without such dewithout such deduction); duction); Sec. 122. (d) Exceptions and Sec. 122. (d) Exceptions and limitations. The exceptions and limitations.-The exceptions and limitations referred to in subsec- limitations referred to in subsections (a), (b), and (c) shall be as tions (a), (b), and (c) shall be as follows: follows: Sec. 122. (d) (1) The deduction Sec. 122. (d) (1) The deduction for depletion shall not exceed the for depletion shall not exceed the amount which would be allowable amount which would be allowable if computed without reference to if computed without reference to discovery value or to percentage discovery value or to percentage depletion under section 114 (b) depletion under section 114 (b) (2), (3), or (4); (2), (3), or (4); |