(a) A taxpayer is allowed a deduction similar to that allowed under section 172 of the Internal Revenue Code, or which would have been allowed if the taxpayer had not made an election under subchapter S of chapter one of the Internal Revenue Code, in computing entire net income for the purposes of article 9-A. A corporation which reports as part of a consolidated group for Federal income tax purposes but on a separate basis for purposes of article 9-A computes its net operating loss and its net operating loss deduction as if it were filing on a separate basis for Federal income tax purposes.

(b) A taxpayer which has made an election under subchapter S of chapter one of the Internal Revenue Code will not be allowed a deduction for any net operating loss occurring during a taxable year for which every shareholder has made the election provided for in section 660 of the Tax Law.

(c) For purposes of article 9-A, as for Federal income tax purposes, except as provided in subdivision (b) of section 3-8.2 of this Subpart, a net operating loss may be carried back three years. The loss is first carried to the earliest of the three taxable years. If it is not entirely used to offset income in that year, it is carried to the second taxable year preceding the loss year, and any remaining amount is carried to the taxable year immediately preceding the loss year. Any unused amount of loss then remaining may be carried forward for as many as 15 taxable years following the loss year. If the Federal taxable income for the three years preceding the loss year is smaller than the entire loss, the remaining loss is carried forward first to the taxable year immediately following the loss year, then to the second taxable year following the loss year, and so on for 15 years or until the loss is used up.

(d) Any taxpayer described in subdivision (a) of this section may elect to waive the entire carryback period with respect to a net operating loss for any taxable year ending after December 31, 1975. Such election shall be made in writing by the due date (including extensions of time) for filing the report for the taxable year of the net operating loss for which the election is to be in effect. Once an election is made for a taxable year, it shall be irrevocable for that taxable year. A separate election must be made for each loss year. If a taxpayer qualifies to make the election for Federal income tax purposes and does not make such election, it may not make the election for article 9-A purposes. The filing of the election for Federal income tax purposes is binding on the taxpayer for article 9-A purposes. A copy of such election must be submitted with the taxpayer's article 9-A franchise tax report for the loss year and shall be deemed to be its election for article 9-A purposes.