(1) The net operating loss deduction is allowed in accordance with the IRC (1954), as amended, for taxable periods ending on or before December 3, 1970. For taxable periods which begin on and after January 1, 1971, the net operating loss deduction is allowed as provided in the rules contained in this subchapter.
(2)(a) The term "net operating loss deduction" means the aggregate of the net operating loss carryovers plus the net operating loss carrybacks applicable to the taxable period.
(b) The term "net operating loss" means the excess of deductions over the gross income for a particular taxable period with the following modifications:
(i) No deduction is allowed for any net operating loss carryover or carryback from another year.
(ii) Any excess of percentage depletion over cost depletion must be added back to net income.