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Section 172 generally governs the computation and operation of the net operating loss deduction.  The Tax Cuts and Jobs Act amended section 172 to provide that a deduction for net operating losses is limited to 80% of taxable income.  The CARES Act further amended section 172 to provide that a deduction for net operating losses is limited to 80% of taxable income computed without regard to the deductions under sections 199A, 250, and the net operating loss deduction itself.  However, certain other deductions that are themselves limited based on taxable income, such as the deductions under sections 170 and 613, are still taken into account in computing the 80% net operating loss deduction limitation.

The proposed regulations provide methods for computing the 80% net operating loss deduction limitation.