Page:United States Statutes at Large Volume 94 Part 3.djvu/746

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PUBLIC LAW 96-000—MMMM. DD, 1980

94 STAT. 3390

PUBLIC LAW 96-589—DEC. 24, 1980 applies, the amount excluded under paragraph (1)(B) shall not exceed the amount by which the taxpayer is insolvent.

11 USC 101 et seq.

"(b) REDUCTION OF TAX ATTRIBUTES IN TITLE 11 CASE OR INSOLVENCY.—

"(1) IN GENERAL.—The amount excluded from gross income under subparagraph (A) or (B) of subsection (a)(1) shall be applied to reduce the tax attributes of the taxpayer as provided in paragraph (2). "(2) TAX ATTRIBUTES AFFECTED; ORDER OF REDUCTION.—Except

as provided in paragraph (5), the reduction referred to in paragraph (1) shall be made in the following tax attributes in the following order: "(A) NOL.—Any net operating loss for the taxable year of the discharge, and any net operating loss carryover to such taxable year. "(B) CERTAIN CREDIT CARRYOVERS.—Any carryover to or

from the taxable year of the discharge of an amount for purposes of determining the amount of a credit allowable under— "(i) section 38 (relating to investment in certain depreciable property), "(ii) section 40 (relating to expenses of work incentive programs), "(iii) section 44B (relating to credit for employment of certain new employees), or "(iv) section 44E (relating to alcohol used as a fuel). For purposes of clause (i), there shall not be taken into account any portion of a carryover which is attributable to the employee plan credit (within the meaning of section 48(o)(3)). "(C) CAPITAL LOSS CARRYOVERS.—Any net capital loss for the taxable year of the discharge, and any capital loss carryover to such taxable year under section 1212. "(D) BASIS REDUCTION.—

"(i) IN GENERAL.—The basis of the property of the taxpayer.

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"(ii) C R O S S REFERENCE.—

"For provisions for making the reduction described In clause (i), see section 1017. "(E) FOREIGN TAX CREDIT CARRYOVERS.—Any carryover to

or from the taxable year of the discharge for purposes of determining the amount of the credit allowable under section 33. "(3) AMOUNT OF REDUCTION.—

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"(A) IN GENERAL.—Except as provided in subparagraph (B), the reductions described in paragraph (2) shall be one dollar for each dollar excluded by subsection (a). "(B) CREDIT CARRYOVER REDUCTION.—The reductions described in subparagraphs (B) and (E) of paragraph (2) shall be 50 cents for each dollar excluded by subsection (a). "(4) ORDERING RULES.— "(A) REDUCTIONS MADE AFTER DETERMINATION OF TAX FOR

YEAR.—The reductions described in paragraph (2) shall be made after the determination of the tax imposed by this chapter for the taxable year of the discharge. "(B) REDUCTIONS UNDER SUBPARAGRAPH (A) OR (O OF PARA-

GRAPH (2).—The reductions described in subparagraph (A) or (C) of paragraph (2) (as the case may be) shall be made first in