Sec. 3-7.1. General

(a) Except as provided in section 3-7.4 of this Subpart, a taxpayer sustaining a net capital loss is permitted to carry back or carry forward such loss to the same extent and to the same years as is allowed under section 1212 of the Internal Revenue Code, or which would have been allowed if the taxpayer had not made an election under subchapter S of chapter one of the Internal Revenue Code, in computing entire net income for purposes of article 9-A. A corporation which reports as part of a consolidated group for Federal income tax purposes but on a separate basis for purposes of article 9-A must compute its net capital loss and the amount of such capital loss which is allowed as if it were filing on a separate basis for Federal income tax purposes.

(b) A taxpayer may carry back a net capital loss sustained in a taxable year beginning after December 31, 1969 to each of the three taxable years preceding the loss year. Any excess of such capital loss may be carried forward to the five taxable years succeeding the loss year. A net capital loss sustained in a taxable year beginning before January 1, 1970 may not be carried back and may be carried forward only five years. The amount that a taxpayer may carry back or carry forward to any taxable year may not exceed the amount of loss which may be allowed pursuant to the Internal Revenue Code, or which would have been allowed if the taxpayer had not made an election under subchapter S.