subsection 404(2)(e)(ii), and not including receipts, or the net income, gains or losses attributable thereto which are allocable within or without Philadelphia under Section 406.
Application of Fraction. The amount of apportioned net income or loss to be included in the measure of the tax is determined by multiplying the percentage equivalent of the fraction by the apportionable net income or loss.
SECTION 411. NET OPERATING LOSSES.
For taxpayers who have elected to report net income under Method I, a net operating loss means a net loss as computed under Section 403.
For taxpayers who have elected to report net income under Method II, a net operating loss means any net loss incurred from the operation of a business, as properly returned to and ascertained by the Federal Government prior to giving effect to the exclusion for dividends received and net operating losses from other tax periods, subject to the same adjustments made applicable to net income, and as allocated and apportioned in accordance with the provisions of Sections 406, 407, 408, 409 and 410. The net operating loss must be apportioned by use of the apportionment factors applicable to the period in which the net operating loss was incurred.
Deduction of Net Operating Losses. Apportioned net operating losses may be deducted from apportioned net income in the tax year to which the apportioned net operating loss is carried forward.
Carry Forward Period. An apportioned net operating loss may be carried forward for three tax years following the tax year for which it was first reported. The earliest apportioned net operating loss must be carried over to the earliest taxable year in which the taxpayer reports taxable apportioned net income before deducting an apportioned net operating loss carried forward. The amount of any apportioned net operating loss in excess of the apportioned net income for any tax year to which it is carried forward may be carried forward to subsequent tax years but may not be carried forward past the third tax year following the tax year for which it was first reported.
Effective Dates for Net Operating Loss Carryforwards.
The 1986 tax year shall be the first tax year to which a net operating loss reported for a prior tax year may be carried forward and deducted from net income.
The first net operating loss which may be carried forward to a succeeding tax year shall be a net operating loss reported on the 1985 Business Privilege Tax Return. No net operating losses for periods prior to the tax period used as the measure of net income or loss for the 1995 Business Privilege Tax Return may be carried forward and deducted from net income on any Business Privilege Tax Returns.