SECTION 8. AFSI ADJUSTMENTS

FOR NONLIFE INSURANCE COMPANY NOL CARRYBACKS

.01 Purpose . In response to comments received on the CAMT Proposed Regulations, the Treasury Department and the IRS anticipate that the forthcoming proposed regulations will include proposed regulations under § 56A(c)(15) and (e) consistent with the guidance provided in this section 8 to allow an eligible CAMT entity to make certain adjustments to AFSI for nonlife insurance company NOL carrybacks. In addition, the Treasury Department and the IRS anticipate that the forthcoming proposed regulations will propose a modification to proposed § 1.59-2(c) to provide that, for purposes of applying the average annual AFSI test in § 59(k)(1)(B) or proposed § 1.59-2(c), AFSI is determined without regard to the AFSI adjustments provided in this section 8.

.02 Definitions . For purposes of this section 8:

(1) Eligible CAMT entity . The term eli- gible CAMT entity means a CAMT entity that is a nonlife insurance company.

(2) Eligible return . The term eligible return means either an amended return for

an NOL carryback year or an application for tentative carryback adjustment that includes the carryback of a nonlife insurance company NOL to an NOL carryback year.

(3) Financial statement net operating loss (FSNOL) . The term financial statement net operating loss has the meaning provided in proposed § 1.56A-23(b).

(4) Loss year . The term loss year means the taxable year in which an NOL arose for regular tax purposes.

(5) NOL carryback year . The term NOL carryback year means a taxable year to which a nonlife insurance company NOL is carried under § 172(b)(1)(C)(i).

(6) Nonlife insurance company . The term nonlife insurance company means an insurance company, as defined in § 816(a), other than a life insurance company.

(7) Nonlife insurance company NOL . The term nonlife insurance company NOL means a net operating loss of a nonlife insurance company subject to § 172(b)(1) (C) for regular tax purposes.

.03 AFSI adjustments for nonlife insur- ance companies .

(1) AFSI adjustment for an NOL car- ryback year . If an eligible CAMT entity takes an NOL deduction for regular tax purposes on an eligible return for an NOL carryback year, the AFSI for such taxable year is reduced by an amount equal to the NOL deduction taken for regular tax purposes for such taxable year (NOL carryback amount).

(2) AFSI adjustment for taxable years succeeding a loss year .

(a) In general . If an eligible CAMT entity reduces AFSI by an NOL carryback amount for an NOL carryback year under section 8.03(1) of this notice, that CAMT entity has a corresponding increase to AFSI in one or more later taxable years under section 8.03(2)(b) of this notice equal to the absolute value of the reduction to AFSI for the NOL carryback year under section 8.03(1) of this notice (NOL inclusion). If a nonlife insurance company NOL results in an NOL deduction for more than one NOL carryback year, the NOL inclusions resulting from those NOL carryback amounts must be combined and treated as a single NOL inclusion for purposes of section 8.03(2)(b) of this notice.

(b) Timing and amount of NOL inclu- sion .

Bulletin No. 2025–44 641 October 27, 2025