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(A) Any amount allowable as a deduction
under section 162 or 165 which is attributable
to--
(i) product liability, or
(ii) expenses incurred in the
investigation or settlement of, or
opposition to, claims against the
taxpayer on account of product liability.
(B) Any amount (not described in
subparagraph (A)) allowable as a deduction
under this chapter with respect to a liability
which arises under a Federal or State law or
out of any tort of the taxpayer if–-
(i) in the case of a liability
arising out of a Federal or State
law, the act (or failure to act)
giving rise to such liability
occurs at least 3 years before the
beginning of the taxable year, or
(ii) in the case of a liability
arising out of a tort, such liability
arises out of a series of actions (or
failures to act) over an extended period
of time a substantial portion of which
occurs at least 3 years before the
beginning of the taxable year.
A liability shall not be taken into account under
subparagraph (B) unless the taxpayer used an
accrual method of accounting throughout the period
or periods during which the acts or failures to
act giving rise to such liability occurred.
(2) Limitation.--The amount of the specified
liability loss for any taxable year shall not exceed
the amount of the net operating loss for such taxable
year.
In sum, a taxpayer is entitled to the 10-year carryback for
specified liability losses under section 172(f)(1)(B) if: (1)
The specified liability loss is taken into account in computing
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Last modified: May 25, 2011