To amend the Internal Revenue Code of 1986 to allow for a 5-year carryback of operating losses of small businesses, and for other purposes.

I 116TH CONGRESS 2D SESSION H. R. 6391 To amend the Internal Revenue Code of 1986 to allow for a 5-year carryback of operating losses of small businesses, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 25, 2020 Mr. SCHNEIDER introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to allow for a 5-year carryback of operating losses of small busi- nesses, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. 5-YEAR CARRYBACK OF OPERATING LOSSES OF 3 SMALL BUSINESSES. 4 (a) IN GENERAL.—Section 172(b)(1) of the Internal 5 Revenue Code of 1986 is amended by adding at the end 6 the following new subparagraph: 7 ‘‘(D) CARRYBACK FOR 2020 NET OPER- 8 ATING LOSSES OF SMALL BUSINESSES DUE TO 9 COVID-19.— 10 VerDate Sep 11 2014 23:24 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6391.IH H6391 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 6391 IH ‘‘(i) IN GENERAL.—If an eligible small 1 business elects the application of this sub- 2 paragraph with respect to an applicable 3 2020 net operating loss due to COVID-19, 4 subparagraph (A)(i) shall be applied by 5 substituting ‘shall be a net operating loss 6 carryback to each of the 5 taxable years 7 preceding the taxable year of such loss’ for 8 ‘shall not be a net operating loss carryback 9 to any taxable year preceding the taxable 10 year of such loss’. 11 ‘‘(ii) APPLICABLE 2020 NET OPER- 12 ATING LOSS.—For purposes of this sub- 13 paragraph, the term ‘applicable 2020 net 14 operating loss’ means— 15 ‘‘(I) the taxpayer’s net operating 16 loss for any taxable year ending in 17 2020, or 18 ‘‘(II) if the taxpayer elects to 19 have this subclause apply in lieu of 20 subclause (I), the taxpayer’s net oper- 21 ating loss for any taxable year begin- 22 ning in 2020. 23 ‘‘(iii) ELECTION.—Any election under 24 this subparagraph shall be made in such 25 VerDate Sep 11 2014 23:24 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6391.IH H6391 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 6391 IH manner as may be prescribed by the Sec- 1 retary, and shall be made by the due date 2 (including extension of time) for filing the 3 taxpayer’s return for the taxable year of 4 the net operating loss. Any such election, 5 once made, shall be irrevocable. Any elec- 6 tion under this subparagraph may be made 7 only with respect to 1 taxable year. 8 ‘‘(iv) ELIGIBLE SMALL BUSINESS.— 9 For purposes of this subparagraph, the 10 term ‘eligible small business’ means a 11 small business with fewer than 250 em- 12 ployees that is a small business concern as 13 defined in section 3(a) of the Small Busi- 14 ness Act (15 U.S.C. 632(a)).’’. 15 (b) ANTI-ABUSE RULES.—The Secretary of the 16 Treasury or the Secretary’s designee shall prescribe such 17 rules as are necessary to prevent the abuse of the purposes 18 of the amendments made by this section, including anti- 19 stuffing rules, anti-churning rules (including rules relating 20 to sale-leasebacks), and rules similar to the rules under 21 section 1091 of the Internal Revenue Code of 1986 relat- 22 ing to losses from wash sales. 23 VerDate Sep 11 2014 22:50 Apr 15, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6391.IH H6391 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 6391 IH (c) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to net operating losses arising in 2 taxable years ending after December 31, 2019. 3 Æ VerDate Sep 11 2014 23:24 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H6391.IH H6391 pamtmann on DSKBC07HB2PROD with BILLS