1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," in personal income tax, providing for
11carryforward of losses by individual taxpayers and further
12providing for limitation of pass-thru of losses to

14The General Assembly of the Commonwealth of Pennsylvania
15hereby enacts as follows:

16Section 1. The act of March 4, 1971 (P.L.6, No.2), known as 
17the Tax Reform Code of 1971, is amended by adding a section to

19Section 304.2. Carryforward of Losses by Individual 
20Taxpayers.--(a) For a tax year beginning after December 31, 
212013, except as set forth in subsection (b), all of the 
22following apply:

23(1) An individual taxpayer required to file a return under

1this article shall be entitled to carry forward loss within a 
2class of income enumerated under section 303.

3(2) A taxpayer may not offset a gain within one class of
4income with a loss carried forward from a prior year in another
5class of income.

6(3) There shall be a carryforward period which may not 
7exceed three tax years.

8(b) This section shall not apply to losses relating to 
9income under section 303(a)(7).

10(c) Notwithstanding 1 Pa.C.S. § 1937(a) (relating to
11references to statutes and regulations), this section shall not
12affect a change in any of the following provisions as they exist
13on June 30, 2013:

14(1) The definitions of "earned income" and "net profits" in
15section 501 of the act of December 31, 1965 (P.L.1257, No.511),
16known as "The Local Tax Enabling Act."

17(2) The definition of "personal income" in section 302 of
18the act of June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known
19as the "Taxpayer Relief Act."

20Section 2. Section 307.10 of the act, added December 23,
211983 (P.L.370, No.90), is amended to read:

22Section 307.10. Limitation on Pass-thru of Losses to
23Shareholders.--(a) The aggregate amount of losses taken into
24account by a shareholder of a Pennsylvania S corporation under
25section 307.9 shall not exceed the sum of the adjusted basis of
26the shareholder's stock in the Pennsylvania S corporation,
27determined after applying section 307.11(a) for the taxable year
28and the shareholder's adjusted basis of any indebtedness of the
29Pennsylvania S corporation to the shareholder, determined before
30applying section 307.11(d) for the taxable year.

1(b) [There] Except as provided under section 304.2, there
2shall be no carryover of losses by the shareholders of the
3Pennsylvania S corporation.

4Section 3. This act shall take effect immediately.