SECTION 1. PURPOSE

.01 The Job Creation and Worker Assistance Act of 2002 (the Act) added § 172(b)(1)(H) to the Internal Revenue Code to provide a 5-year carryback period for net operating losses (NOLs) for any taxable year ending during 2001 and 2002. Pub. L. No. 107–147, § 102(a), 116 Stat. 21 (March 9, 2002). Consistent with the intent of Congress as reflected in correspondence to the Treasury Department subsequent to the Act’s enactment, this revenue procedure provides qualifying taxpayers who filed returns for a taxable year ending during 2001 and 2002 without taking advantage of the new 5-year carryback with a limited opportunity to

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do so and to apply for a tentative carryback adjustment if they act on or before October 31, 2002.

.02 Specifically, this revenue procedure allows taxpayers that incurred an NOL in a taxable year ending during 2001 or 2002 and elected under § 172(b)(3) to forgo the NOL carryback period to revoke their elections in order to apply the 5-year carryback period. This revenue procedure also allows such taxpayers, as well as taxpayers who used a 2-year carryback period for an NOL in a taxable year ending during 2001 or 2002, to file an application for a tentative carryback adjustment under § 6411(a) based on a 5-year NOL carryback period even if the 12-month period for filing such an application has expired. A revocation and/or application for tentative carryback adjustment under this revenue procedure must be made on or before October 31, 2002. Finally, this revenue procedure allows taxpayers that filed returns for a taxable year ending in 2001 or 2002, and who neither elected to forgo the carryback period, nor used the 2-year carryback period, to elect to relinquish the 5-year carryback period (and thereby retain the ability to use the 2-year carryback period) if they act on or before October 31, 2002.

.03 In connection with these rules allowing taxpayers to reevaluate options regarding the carryback period, the Internal Revenue Service and Treasury Department intend to provide relief for consolidated groups that failed to waive the portion of the carryback period for consolidated net operating losses attributable to certain acquired members for which such members were members of another group. The scope of such relief will be announced shortly in separate guidance.