GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	1 

SENATE BILL 1237

Short Title:  Complete S Corporation Loss Relief.	(Public)
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Sponsors: Senator Daniel.
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Referred to:  Finance.
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June 8, 1992

A BILL TO BE ENTITLED
AN ACT TO PROVIDE THE REMAINDER OF THE PARTIAL RELIEF ALLOWED IN 1990 TO SUBCHAPTER S CORPORATIONS FOR LOSS CARRYFORWARDS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-131.4(e) reads as rewritten:
"(e)	Each shareholder's pro rata share of the reduction of an S Corporation's income because of the allowance of a carryforward loss to the S Corporation under this subsection shall be taken into account by the shareholder as a transitional adjustment under G.S. 105-134.7.  Notwithstanding the provisions of subsection (a) of this section, an S Corporation that sustained a net economic loss in a taxable year beginning before January 1, 1989, may carry the loss forward to a taxable year beginning on or after January 1, 1989, and before July 1, 1991, and may deduct the loss in each year to the extent it could have carried forward and deducted the loss pursuant to G.S. 105-130.5(b)(4) and G.S. 105-130.8 if the S Corporation Income Tax Act had not become effective until taxable years beginning on or after July 1, 1991.  Any loss carryforward allowed as a deduction by this subsection may not exceed the S Corporation's net income, as defined in the Code subject to the adjustments provided in G.S. 105-130.5 other than the adjustment provided in G.S. 105-130.5(b)(4), and is subject to the limitations provided in G.S. 105-131.4(b) and (d).  Notwithstanding the provisions of G.S. 105-131.3, the basis of a shareholder in the stock of an S Corporation shall be adjusted for the shareholder's pro rata share of the carryforward loss allowed as a deduction to the S Corporation under this subsection.  Notwithstanding the provisions of G.S. 105-131.6(c)(2), the accumulated adjustments account maintained for each resident shareholder shall be adjusted for the shareholder's pro rata share of the carryforward loss allowed as a deduction to the S Corporation under this subsection."
Sec. 2.  This act is effective retroactively for taxable years beginning on or after January 1, 1989, and expires for taxable years beginning on or after July 1, 1991.