CH. 1—NORMAL TAXES AND SURTAXES
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obligation held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. (e) D E A L E R S IN T A X - E X E M P T SECURITIES.— For special rules applicable, in the case of dealers in securities, with respect to premium attributable to certain wholly tax-exempt securities, see section 75. SEC. 172. NET OPERATING LOSS DEDUCTION. (a) DEDUCTION ALLOWED.—There shall be allowed as a deduction
for the taxable year an amount equal to the aggregate of (1) the net operating loss carryovers to such year, plus (2) the net operating loss carrybacks to such year. For purposes of this subtitle, the term "net operating loss deduction" means the deduction allowed by this subsection. (b) N E T OPERATING Loss CARRYBACKS AND CARRYOVERS.— (1) YEARS TO WHICH LOSS MAY BE CARRIED.—A net operating
t loss for any taxable year ending after December 31, 1953, shall c; be— (A) a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss, and (B) a net operating loss carryover to each of the 5 taxable 1 years following the taxable year of such loss. (2) AMOUNT OP CARRYBACKS AND CARRYOVERS.—Except as provided in subsection (f), the entire amount of the net operating loss for any taxable year (hereinafter in this section referred to as the I "loss year") shall be carried to the earliest of the 7 taxable years to which (by reason of subparagraphs (A) and (B) of paragraph (1)) such loss may be carried. The portion of such loss which shall be carried to each of the other 6 taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable income for each of the prior taxable years to which such loss may be carried. For purposes of the preceding sentence, the taxable income for any such prior taxable year shall be computed— (A) with the modifications specified in subsection (d) other than paragraphs (1), (4), and (6) thereof; and (B) by determining the amount of the net operating loss deduction without regard to the net operating loss for the loss year or for any taxable year thereafter, and the taxable income so computed shall not be considered to be less than zero. (c) N E T OPERATING Loss D E F I N E D. — For purposes of this section, the term "net operating loss" means (for any taxable year ending after December 31, 1953) the excess of the deductions allowed by this chapter over the gross income. Such excess shall be computed with the modifications specified in subsection (d). (d) MODIFICATIONS.—The modifications referred to in this section are as follows: (1) N E T OPERATING LOSS DEDUCTION.—No net operating loss deduction shall be allowed. (2) CAPITAL GAINS AND LOSSES OF TAXPAYERS OTHER
THAN
CORPORATIONS.—In the case of a taxpayer other than a corporation— § 172(d)(2)
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