Current through Register Vol. 54, No. 50, December 14, 2024
Section 158.3 - Net operating loss(a)General. For the calendar year 1983 and fiscal year beginning in 1983 and each year thereafter, a net operating loss shall be allowed as a deduction and carried forward 3 succeeding years. Each prior year's loss shall be carried to the earliest year to which the loss may be first carried, and if not utilized in the 3 succeeding years, the loss will expire. A net operating loss deduction is permitted only to the extent of net earnings or income and may not be utilized in the current year to decrease net earnings or income below zero or to increase a net loss. The amount of a prior year's loss may be determined with respect to time limitations imposed with respect to the tax report for the year in which the net operating loss is claimed as a deduction against net earnings or income.(b)Change in ownership.(1) Under section 1052(e.1) of the TRC (72 P. S. § 8502(e.1)), in the case of a change in the ownership of a mutual thrift institution effected in a manner described in 381 or 382 of the IRC (26 U.S.C.A. §§ 381 or 382), a net operating loss from a year prior to the change in ownership may be utilized, but subject to certain limitations provided in the IRC with respect to the use of net operating losses after a change in ownership shall apply for the purpose of computing the portion of the net operating loss carryover recognized for purposes of the Mutual Thrift Institutions Tax, whether the change is effected by purchase, liquidation, acquisition of stock or reorganization. The applicable limitations include limitations imposed by the IRC solely on account of a change in ownership, including, but not limited to, sections 269, 318 (insofar as it defines the scope of IRC 382), 381 and 382 of the IRC (26 U.S.C.A. §§ 269, 318, 381 and 382).(2) Because the computation of income and loss for purposes of the tax differs in many respects from the computation of taxable income and loss for Federal and Pennsylvania Corporate Net Income Tax purposes, the carryover of losses is not limited by the Federal consolidated return regulations or 338 of the IRC (26 U.S.C.A. § 338), providing for the considered termination of corporate existence upon the making of certain elections for Federal income tax purposes.