-CITE-
26 USC PART I - TAX ON INDIVIDUALS 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
PART I - TAX ON INDIVIDUALS
-MISC1-
Sec.
1. Tax imposed.
2. Definitions and special rules.
3. Tax tables for individuals having taxable income of
less than $20,000.(!1)
[4. Repealed.]
5. Cross references relating to tax on individuals.
AMENDMENTS
1976 - Pub. L. 94-455, title V, Sec. 501(c)(1), Oct. 4, 1976, 90
Stat. 1559, substituted "Tax tables for individuals having taxable
income of less than $20,000" for "Optional tax tables for
individuals" in item 3 and struck out item 4 relating to rules for
optional tax.
1969 - Pub. L. 91-172, title VIII, Sec. 803(d)(9), Dec. 30, 1969,
83 Stat. 685, substituted "Definitions and special rules" and
"Optional tax tables for individuals" for "Tax in case of joint
return or return of surviving spouse" and "Optional tax if adjusted
gross income is less than $5,000" in items 2 and 3, respectively.
-FOOTNOTE-
(!1) Section catchline amended by Pub. L. 95-30 without
corresponding amendment of analysis.
-End-
-CITE-
26 USC Sec. 1 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
Sec. 1. Tax imposed
-STATUTE-
(a) Married individuals filing joint returns and surviving spouses
There is hereby imposed on the taxable income of -
(1) every married individual (as defined in section 7703) who
makes a single return jointly with his spouse under section 6013,
and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:
If taxable income is: The tax is:
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Not over $36,900 15% of taxable income.
Over $36,900 but not over $5,535, plus 28% of the excess over
$89,150 $36,900.
Over $89,150 but not over $20,165, plus 31% of the excess
$140,000 over $89,150.
Over $140,000 but not $35,928.50, plus 36% of the excess
over $250,000 over $140,000.
Over $250,000 $75,528.50, plus 39.6% of the
excess over $250,000.
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(b) Heads of households
There is hereby imposed on the taxable income of every head of a
household (as defined in section 2(b)) a tax determined in
accordance with the following table:
If taxable income is: The tax is:
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Not over $29,600 15% of taxable income.
Over $29,600 but not over $4,440, plus 28% of the excess over
$76,400 $29,600.
Over $76,400 but not over $17,544, plus 31% of the excess
$127,500 over $76,400.
Over $127,500 but not $33,385, plus 36% of the excess
over $250,000 over $127,500.
Over $250,000 $77,485, plus 39.6% of the excess
over $250,000.
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(c) Unmarried individuals (other than surviving spouses and heads
of households)
There is hereby imposed on the taxable income of every individual
(other than a surviving spouse as defined in section 2(a) or the
head of a household as defined in section 2(b)) who is not a
married individual (as defined in section 7703) a tax determined in
accordance with the following table:
If taxable income is: The tax is:
--------------------------------------------------------------------
Not over $22,100 15% of taxable income.
Over $22,100 but not over $3,315, plus 28% of the excess over
$53,500 $22,100.
Over $53,500 but not over $12,107, plus 31% of the excess
$115,000 over $53,500.
Over $115,000 but not $31,172, plus 36% of the excess
over $250,000 over $115,000.
Over $250,000 $79,772, plus 39.6% of the excess
over $250,000.
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(d) Married individuals filing separate returns
There is hereby imposed on the taxable income of every married
individual (as defined in section 7703) who does not make a single
return jointly with his spouse under section 6013, a tax determined
in accordance with the following table:
If taxable income is: The tax is:
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Not over $18,450 15% of taxable income.
Over $18,450 but not over $2,767.50, plus 28% of the excess
$44,575 over $18,450.
Over $44,575 but not over $10,082.50, plus 31% of the excess
$70,000 over $44,575.
Over $70,000 but not over $17,964.25, plus 36% of the excess
$125,000 over $70,000.
Over $125,000 $37,764.25, plus 39.6% of the
excess over $125,000.
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(e) Estates and trusts
There is hereby imposed on the taxable income of -
(1) every estate, and
(2) every trust,
taxable under this subsection a tax determined in accordance with
the following table:
If taxable income is: The tax is:
--------------------------------------------------------------------
Not over $1,500 15% of taxable income.
Over $1,500 but not over $225, plus 28% of the excess over
$3,500 $1,500.
Over $3,500 but not over $785, plus 31% of the excess over
$5,500 $3,500.
Over $5,500 but not over $1,405, plus 36% of the excess over
$7,500 $5,500.
Over $7,500 $2,125, plus 39.6% of the excess
over $7,500.
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(f) Phaseout of marriage penalty in 15-percent bracket; adjustments
in tax tables so that inflation will not result in tax increases
(1) In general
Not later than December 15 of 1993, and each subsequent
calendar year, the Secretary shall prescribe tables which shall
apply in lieu of the tables contained in subsections (a), (b),
(c), (d), and (e) with respect to taxable years beginning in the
succeeding calendar year.
(2) Method of prescribing tables
The table which under paragraph (1) is to apply in lieu of the
table contained in subsection (a), (b), (c), (d), or (e), as the
case may be, with respect to taxable years beginning in any
calendar year shall be prescribed -
(A) except as provided in paragraph (8), by increasing the
minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed under such table by the cost-of-living
adjustment for such calendar year,
(B) by not changing the rate applicable to any rate bracket
as adjusted under subparagraph (A), and
(C) by adjusting the amounts setting forth the tax to the
extent necessary to reflect the adjustments in the rate
brackets.
(3) Cost-of-living adjustment
For purposes of paragraph (2), the cost-of-living adjustment
for any calendar year is the percentage (if any) by which -
(A) the CPI for the preceding calendar year, exceeds
(B) the CPI for the calendar year 1992.
(4) CPI for any calendar year
For purposes of paragraph (3), the CPI for any calendar year is
the average of the Consumer Price Index as of the close of the
12-month period ending on August 31 of such calendar year.
(5) Consumer Price Index
For purposes of paragraph (4), the term "Consumer Price Index"
means the last Consumer Price Index for all-urban consumers
published by the Department of Labor. For purposes of the
preceding sentence, the revision of the Consumer Price Index
which is most consistent with the Consumer Price Index for
calendar year 1986 shall be used.
(6) Rounding
(A) In general
If any increase determined under paragraph (2)(A), section
63(c)(4), section 68(b)(2) or section 151(d)(4) is not a
multiple of $50, such increase shall be rounded to the next
lowest multiple of $50.
(B) Table for married individuals filing separately
In the case of a married individual filing a separate return,
subparagraph (A) (other than with respect to sections 63(c)(4)
and 151(d)(4)(A)) shall be applied by substituting "$25" for
"$50" each place it appears.
(7) Special rule for certain brackets
(A) Calendar year 1994
In prescribing the tables under paragraph (1) which apply
with respect to taxable years beginning in calendar year 1994,
the Secretary shall make no adjustment to the dollar amounts at
which the 36 percent rate bracket begins or at which the 39.6
percent rate begins under any table contained in subsection
(a), (b), (c), (d), or (e).
(B) Later calendar years
In prescribing tables under paragraph (1) which apply with
respect to taxable years beginning in a calendar year after
1994, the cost-of-living adjustment used in making adjustments
to the dollar amounts referred to in subparagraph (A) shall be
determined under paragraph (3) by substituting "1993" for
"1992".
(8) Phaseout of marriage penalty in 15-percent bracket
(A) In general
With respect to taxable years beginning after December 31,
2002, in prescribing the tables under paragraph (1) -
(i) the maximum taxable income in the 15-percent rate
bracket in the table contained in subsection (a) (and the
minimum taxable income in the next higher taxable income
bracket in such table) shall be the applicable percentage of
the maximum taxable income in the 15-percent rate bracket in
the table contained in subsection (c) (after any other
adjustment under this subsection), and
(ii) the comparable taxable income amounts in the table
contained in subsection (d) shall be 1/2 of the amounts
determined under clause (i).
(B) Applicable percentage
For purposes of subparagraph (A), the applicable percentage
shall be determined in accordance with the following table:
For taxable years beginning The applicable
in calendar year - percentage is -
2003 and 2004 200
2005 180
2006 187
2007 193
2008 and thereafter 200.
(C) Rounding
If any amount determined under subparagraph (A)(i) is not a
multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.
(g) Certain unearned income of minor children taxed as if parent's
income
(1) In general
In the case of any child to whom this subsection applies, the
tax imposed by this section shall be equal to the greater of -
(A) the tax imposed by this section without regard to this
subsection, or
(B) the sum of -
(i) the tax which would be imposed by this section if the
taxable income of such child for the taxable year were
reduced by the net unearned income of such child, plus
(ii) such child's share of the allocable parental tax.
(2) Child to whom subsection applies
This subsection shall apply to any child for any taxable year
if -
(A) such child has not attained age 14 before the close of
the taxable year, and
(B) either parent of such child is alive at the close of the
taxable year.
(3) Allocable parental tax
For purposes of this subsection -
(A) In general
The term "allocable parental tax" means the excess of -
(i) the tax which would be imposed by this section on the
parent's taxable income if such income included the net
unearned income of all children of the parent to whom this
subsection applies, over
(ii) the tax imposed by this section on the parent without
regard to this subsection.
For purposes of clause (i), net unearned income of all children
of the parent shall not be taken into account in computing any
exclusion, deduction, or credit of the parent.
(B) Child's share
A child's share of any allocable parental tax of a parent
shall be equal to an amount which bears the same ratio to the
total allocable parental tax as the child's net unearned income
bears to the aggregate net unearned income of all children of
such parent to whom this subsection applies.
(C) Special rule where parent has different taxable year
Except as provided in regulations, if the parent does not
have the same taxable year as the child, the allocable parental
tax shall be determined on the basis of the taxable year of the
parent ending in the child's taxable year.
(4) Net unearned income
For purposes of this subsection -
(A) In general
The term "net unearned income" means the excess of -
(i) the portion of the adjusted gross income for the
taxable year which is not attributable to earned income (as
defined in section 911(d)(2)), over
(ii) the sum of -
(I) the amount in effect for the taxable year under
section 63(c)(5)(A) (relating to limitation on standard
deduction in the case of certain dependents), plus
(II) the greater of the amount described in subclause (I)
or, if the child itemizes his deductions for the taxable
year, the amount of the itemized deductions allowed by this
chapter for the taxable year which are directly connected
with the production of the portion of adjusted gross income
referred to in clause (i).
(B) Limitation based on taxable income
The amount of the net unearned income for any taxable year
shall not exceed the individual's taxable income for such
taxable year.
(5) Special rules for determining parent to whom subsection
applies
For purposes of this subsection, the parent whose taxable
income shall be taken into account shall be -
(A) in the case of parents who are not married (within the
meaning of section 7703), the custodial parent (within the
meaning of section 152(e)) of the child, and
(B) in the case of married individuals filing separately, the
individual with the greater taxable income.
(6) Providing of parent's TIN
The parent of any child to whom this subsection applies for any
taxable year shall provide the TIN of such parent to such child
and such child shall include such TIN on the child's return of
tax imposed by this section for such taxable year.
(7) Election to claim certain unearned income of child on
parent's return
(A) In general
If -
(i) any child to whom this subsection applies has gross
income for the taxable year only from interest and dividends
(including Alaska Permanent Fund dividends),
(ii) such gross income is more than the amount described in
paragraph (4)(A)(ii)(I) and less than 10 times the amount so
described,
(iii) no estimated tax payments for such year are made in
the name and TIN of such child, and no amount has been
deducted and withheld under section 3406, and
(iv) the parent of such child (as determined under
paragraph (5)) elects the application of subparagraph (B),
such child shall be treated (other than for purposes of this
paragraph) as having no gross income for such year and shall
not be required to file a return under section 6012.
(B) Income included on parent's return
In the case of a parent making the election under this
paragraph -
(i) the gross income of each child to whom such election
applies (to the extent the gross income of such child exceeds
twice the amount described in paragraph (4)(A)(ii)(I)) shall
be included in such parent's gross income for the taxable
year,
(ii) the tax imposed by this section for such year with
respect to such parent shall be the amount equal to the sum
of -
(I) the amount determined under this section after the
application of clause (i), plus
(II) for each such child, 10 percent of the lesser of the
amount described in paragraph (4)(A)(ii)(I) or the excess
of the gross income of such child over the amount so
described, and
(iii) any interest which is an item of tax preference under
section 57(a)(5) of the child shall be treated as an item of
tax preference of such parent (and not of such child).
(C) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this
paragraph.
(h) Maximum capital gains rate
(1) In general
If a taxpayer has a net capital gain for any taxable year, the
tax imposed by this section for such taxable year shall not
exceed the sum of -
(A) a tax computed at the rates and in the same manner as if
this subsection had not been enacted on the greater of -
(i) taxable income reduced by the net capital gain; or
(ii) the lesser of -
(I) the amount of taxable income taxed at a rate below 25
percent; or
(II) taxable income reduced by the adjusted net capital
gain;
(B) 5 percent (0 percent in the case of taxable years
beginning after 2007) of so much of the adjusted net capital
gain (or, if less, taxable income) as does not exceed the
excess (if any) of -
(i) the amount of taxable income which would (without
regard to this paragraph) be taxed at a rate below 25
percent, over
(ii) the taxable income reduced by the adjusted net capital
gain;
(C) 15 percent of the adjusted net capital gain (or, if less,
taxable income) in excess of the amount on which a tax is
determined under subparagraph (B);
(D) 25 percent of the excess (if any) of -
(i) the unrecaptured section 1250 gain (or, if less, the
net capital gain), over
(ii) the excess (if any) of -
(I) the sum of the amount on which tax is determined
under subparagraph (A) plus the net capital gain, over
(II) taxable income; and
(E) 28 percent of the amount of taxable income in excess of
the sum of the amounts on which tax is determined under the
preceding subparagraphs of this paragraph.
(2) Net capital gain taken into account as investment income
For purposes of this subsection, the net capital gain for any
taxable year shall be reduced (but not below zero) by the amount
which the taxpayer takes into account as investment income under
section 163(d)(4)(B)(iii).
(3) Adjusted net capital gain
For purposes of this subsection, the term "adjusted net capital
gain" means the sum of -
(A) net capital gain (determined without regard to paragraph
(11)) reduced (but not below zero) by the sum of -
(i) unrecaptured section 1250 gain, and
(ii) 28-percent rate gain, plus
(B) qualified dividend income (as defined in paragraph (11)).
(4) 28-percent rate gain
For purposes of this subsection, the term "28-percent rate
gain" means the excess (if any) of -
(A) the sum of -
(i) collectibles gain; and
(ii) section 1202 gain, over
(B) the sum of -
(i) collectibles loss;
(ii) the net short-term capital loss; and
(iii) the amount of long-term capital loss carried under
section 1212(b)(1)(B) to the taxable year.
(5) Collectibles gain and loss
For purposes of this subsection -
(A) In general
The terms "collectibles gain" and "collectibles loss" mean
gain or loss (respectively) from the sale or exchange of a
collectible (as defined in section 408(m) without regard to
paragraph (3) thereof) which is a capital asset held for more
than 1 year but only to the extent such gain is taken into
account in computing gross income and such loss is taken into
account in computing taxable income.
(B) Partnerships, etc.
For purposes of subparagraph (A), any gain from the sale of
an interest in a partnership, S corporation, or trust which is
attributable to unrealized appreciation in the value of
collectibles shall be treated as gain from the sale or exchange
of a collectible. Rules similar to the rules of section 751
shall apply for purposes of the preceding sentence.
(6) Unrecaptured section 1250 gain
For purposes of this subsection -
(A) In general
The term "unrecaptured section 1250 gain" means the excess
(if any) of -
(i) the amount of long-term capital gain (not otherwise
treated as ordinary income) which would be treated as
ordinary income if section 1250(b)(1) included all
depreciation and the applicable percentage under section
1250(a) were 100 percent, over
(ii) the excess (if any) of -
(I) the amount described in paragraph (5)(B); over
(II) the amount described in paragraph (5)(A).
(B) Limitation with respect to section 1231 property
The amount described in subparagraph (A)(i) from sales,
exchanges, and conversions described in section 1231(a)(3)(A)
for any taxable year shall not exceed the net section 1231 gain
(as defined in section 1231(c)(3)) for such year.
(7) Section 1202 gain
For purposes of this subsection, the term "section 1202 gain"
means the excess of -
(A) the gain which would be excluded from gross income under
section 1202 but for the percentage limitation in section
1202(a), over
(B) the gain excluded from gross income under section 1202.
(8) Coordination with recapture of net ordinary losses under
section 1231
If any amount is treated as ordinary income under section
1231(c), such amount shall be allocated among the separate
categories of net section 1231 gain (as defined in section
1231(c)(3)) in such manner as the Secretary may by forms or
regulations prescribe.
(9) Regulations
The Secretary may prescribe such regulations as are appropriate
(including regulations requiring reporting) to apply this
subsection in the case of sales and exchanges by pass-thru
entities and of interests in such entities.
(10) Pass-thru entity defined
For purposes of this subsection, the term "pass-thru entity"
means -
(A) a regulated investment company;
(B) a real estate investment trust;
(C) an S corporation;
(D) a partnership;
(E) an estate or trust;
(F) a common trust fund;
(G) a foreign investment company which is described in
section 1246(b)(1) and for which an election is in effect under
section 1247; and
(H) a qualified electing fund (as defined in section 1295).
(11) Dividends taxed as net capital gain
(A) In general
For purposes of this subsection, the term "net capital gain"
means net capital gain (determined without regard to this
paragraph) increased by qualified dividend income.
(B) Qualified dividend income
For purposes of this paragraph -
(i) In general
The term "qualified dividend income" means dividends
received during the taxable year from -
(I) domestic corporations, and
(II) qualified foreign corporations.
(ii) Certain dividends excluded
Such term shall not include -
(I) any dividend from a corporation which for the taxable
year of the corporation in which the distribution is made,
or the preceding taxable year, is a corporation exempt from
tax under section 501 or 521,
(II) any amount allowed as a deduction under section 591
(relating to deduction for dividends paid by mutual savings
banks, etc.), and
(III) any dividend described in section 404(k).
(iii) Coordination with section 246(c)
Such term shall not include any dividend on any share of
stock -
(I) with respect to which the holding period requirements
of section 246(c) are not met (determined by substituting
in section 246(c)(1) "60 days" for "45 days" each place it
appears and by substituting "120-day period" for "90-day
period"), or
(II) to the extent that the taxpayer is under an
obligation (whether pursuant to a short sale or otherwise)
to make related payments with respect to positions in
substantially similar or related property.
(C) Qualified foreign corporations
(i) In general
Except as otherwise provided in this paragraph, the term
"qualified foreign corporation" means any foreign corporation
if -
(I) such corporation is incorporated in a possession of
the United States, or
(II) such corporation is eligible for benefits of a
comprehensive income tax treaty with the United States
which the Secretary determines is satisfactory for purposes
of this paragraph and which includes an exchange of
information program.
(ii) Dividends on stock readily tradable on United States
securities market
A foreign corporation not otherwise treated as a qualified
foreign corporation under clause (i) shall be so treated with
respect to any dividend paid by such corporation if the stock
with respect to which such dividend is paid is readily
tradable on an established securities market in the United
States.
(iii) Exclusion of dividends of certain foreign corporations
Such term shall not include any foreign corporation which
for the taxable year of the corporation in which the dividend
was paid, or the preceding taxable year, is a foreign
personal holding company (as defined in section 552), a
foreign investment company (as defined in section 1246(b)),
or a passive foreign investment company (as defined in
section 1297).
(iv) Coordination with foreign tax credit limitation
Rules similar to the rules of section 904(b)(2)(B) shall
apply with respect to the dividend rate differential under
this paragraph.
(D) Special rules
(i) Amounts taken into account as investment income
Qualified dividend income shall not include any amount
which the taxpayer takes into account as investment income
under section 163(d)(4)(B).
(ii) Extraordinary dividends
If an individual receives, with respect to any share of
stock, qualified dividend income from 1 or more dividends
which are extraordinary dividends (within the meaning of
section 1059(c)), any loss on the sale or exchange of such
share shall, to the extent of such dividends, be treated as
long-term capital loss.
(iii) Treatment of dividends from regulated investment
companies and real estate investment trusts
A dividend received from a regulated investment company or
a real estate investment trust shall be subject to the
limitations prescribed in sections 854 and 857.
(i) Rate reductions after 2000
(1) 10-percent rate bracket
(A) In general
In the case of taxable years beginning after December 31,
2000 -
(i) the rate of tax under subsections (a), (b), (c), and
(d) on taxable income not over the initial bracket amount
shall be 10 percent, and
(ii) the 15 percent rate of tax shall apply only to taxable
income over the initial bracket amount but not over the
maximum dollar amount for the 15-percent rate bracket.
(B) Initial bracket amount
For purposes of this paragraph, the initial bracket amount is
-
(i) $14,000 ($12,000 in the case of taxable years beginning
after December 31, 2004, and before January 1, 2008) in the
case of subsection (a),
(ii) $10,000 in the case of subsection (b), and
(iii) 1/2 the amount applicable under clause (i) (after
adjustment, if any, under subparagraph (C)) in the case of
subsections (c) and (d).
(C) Inflation adjustment
In prescribing the tables under subsection (f) which apply
with respect to taxable years beginning in calendar years after
2000 -
(i) except as provided in clause (ii), the Secretary shall
make no adjustment to the initial bracket amounts for any
taxable year beginning before January 1, 2009,
(ii) there shall be an adjustment under subsection (f) of
such amounts which shall apply only to taxable years
beginning in 2004, and such adjustment shall be determined
under subsection (f)(3) by substituting "2002" for "1992" in
subparagraph (B) thereof,
(iii) the cost-of-living adjustment used in making
adjustments to the initial bracket amounts for any taxable
year beginning after December 31, 2008, shall be determined
under subsection (f)(3) by substituting "2007" for "1992" in
subparagraph (B) thereof, and
(iv) the adjustments under clauses (ii) and (iii) shall not
apply to the amount referred to in subparagraph (B)(iii).
If any amount after adjustment under the preceding sentence is
not a multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.
(D) Coordination with acceleration of 10 percent rate bracket
benefit for 2001
This paragraph shall not apply to any taxable year to which
section 6428 applies.
(2) Reductions in rates after June 30, 2001
In the case of taxable years beginning in a calendar year after
2000, the corresponding percentage specified for such calendar
year in the following table shall be substituted for the
otherwise applicable tax rate in the tables under subsections
(a), (b), (c), (d), and (e).
The corresponding percentages shall be substituted
for
the following percentages:
28% 31% 36% 39.6%
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2001 27.5% 30.5% 35.5% 39.1%
2002 27.0% 30.0% 35.0% 38.6%
2003 and thereafter 25.0% 28.0% 33.0% 35.0%
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(3) Adjustment of tables
The Secretary shall adjust the tables prescribed under
subsection (f) to carry out this subsection.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 5; Pub. L. 88-272, title I, Sec.
111, Feb. 26, 1964, 78 Stat. 19; Pub. L. 89-809, title I, Sec.
103(a)(2), Nov. 13, 1966, 80 Stat. 1550; Pub. L. 91-172, title
VIII, Sec. 803(a), Dec. 30, 1969, 83 Stat. 678; Pub. L. 95-30,
title I, Sec. 101(a), May 23, 1977, 91 Stat. 127; Pub. L. 95-600,
title I, Sec. 101(a), Nov. 6, 1978, 92 Stat. 2767; Pub. L. 97-34,
title I, Secs. 101(a), 104(a), Aug. 13, 1981, 95 Stat. 176, 188;
Pub. L. 97-448, title I, Sec. 101(a)(3), Jan. 12, 1983, 96 Stat.
2366; Pub. L. 99-514, title I, Sec. 101(a), title III, Sec. 302(a),
title XIV, Sec. 1411(a), Oct. 22, 1986, 100 Stat. 2096, 2218, 2714;
Pub. L. 100-647, title I, Secs. 1001(a)(3), 1014(e)(1)-(3), (6),
(7), title VI, Sec. 6006(a), Nov. 10, 1988, 102 Stat. 3349, 3561,
3562, 3686; Pub. L. 101-239, title VII, Secs. 7811(j)(1), 7816(b),
7831(a), Dec. 19, 1989, 103 Stat. 2411, 2420, 2425; Pub. L.
101-508, title XI, Secs. 11101(a)-(c), (d)(1)(A), (2), 11103(c),
11104(b), Nov. 5, 1990, 104 Stat. 1388-403 to 1388-406, 1388-408;
Pub. L. 103-66, title XIII, Secs. 13201(a), (b)(3)(A), (B),
13202(a), 13206(d)(2), Aug. 10, 1993, 107 Stat. 457, 459, 461, 467;
Pub. L. 104-188, title I, Sec. 1704(m)(1), (2), Aug. 20, 1996, 110
Stat. 1882, 1883; Pub. L. 105-34, title III, Sec. 311(a), Aug. 5,
1997, 111 Stat. 831; Pub. L. 105-206, title V, Sec. 5001(a)(1)-(4),
title VI, Secs. 6005(d)(1), 6007(f)(1), July 22, 1998, 112 Stat.
787, 788, 800, 810; Pub. L. 105-277, div. J, title IV, Sec.
4002(i)(1), (3), Oct. 21, 1998, 112 Stat. 2681-907, 2681-908; Pub.
L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(b)(1)], Dec. 21, 2000,
114 Stat. 2763, 2763A-604; Pub. L. 107-16, title I, Sec. 101(a),
(c)(1), (2), title III, Secs. 301(c)(1), 302(a), (b), June 7, 2001,
115 Stat. 41, 43, 54; Pub. L. 108-27, title I, Secs. 102(a),
(b)(1), 104(a), (b), 105(a), title III, Secs. 301(a)(1), (2)(A),
(b)(1), 302(a), (e)(1), May 28, 2003, 117 Stat. 754, 755, 758, 760,
763.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by sections 107 and 303 of Pub. L.
108-27, see Effective and Termination Dates of 2003 Amendment note
below.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
TAX TABLES FOR TAXABLE YEARS BEGINNING IN 2004
Revenue Procedure 2003-85 provided:
Section 1. Purpose
This revenue procedure sets forth inflation adjusted items for
2004.
Section 2. Changes
.01 The initial bracket amounts for the 10% tax rate for married
individuals filing joint returns and surviving spouses under Sec.
1(a) of the Internal Revenue Code, and heads of households under
Sec. 1(b) are adjusted for inflation under Sec. 1(i)(1)(C)(ii).
Under Sec. 1(i)(1)(B)(iii) the initial bracket amounts for Sec.
1(c) (unmarried individuals (other than surviving spouses and heads
of households)) and Sec. 1(d) (married individuals filing separate
returns) are equal to the initial bracket amount of Sec. 1(a)
(married individuals filing joint returns and surviving spouses)
after adjustment for inflation.
.02 The amounts deemed substantiated when paid by eligible
employers in the transportation mainline pipeline construction
industry under an accountable plan to employees in accordance with
Rev. Proc. 2002-41, 2002-1 C.B. 1098, are adjusted for inflation.
(Section 3.09).
.03 The dollar amount in Sec. 179(b)(1) used to determine the
dollar limitation of the aggregate cost that may be taken into
account under Sec. 179(a) and the dollar amount in Sec. 179(b)(2)
used to calculate a reduction in the dollar limitation are adjusted
for inflation. (Section 3.17).
.04 The generation-skipping transfer tax exemption under Sec.
2631, which is allowed in determining the "inclusion ratio" defined
in Sec. 2642, is no longer adjusted for inflation and has been
deleted.
Section 3. 2004 Adjusted Items
.01 Tax Rate Tables. For taxable years beginning in 2004, the tax
rate tables under Sec. 1 are as follows:
TABLE 1 - SECTION 1(A). - MARRIED INDIVIDUALS FILING JOINT RETURNS
AND SURVIVING SPOUSES
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $14,300 10% of the taxable income
Over $14,300 but not over $1,430 plus 15% of excess over
$58,100 $14,300
Over $58,100 but not over $8,000 plus 25% of excess over
$117,250 $58,100
Over $117,250 but not over $22,787.50 plus 28% of excess over
$178,650 $117,250
Over $178,650 but not over $39,979.50 plus 33% of excess over
$319,100 $178,650
Over $319,100 $86,328 plus 35% of excess over
$319,100
--------------------------------------------------------------------
TABLE 2 - SECTION 1(B). - HEADS OF HOUSEHOLDS
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $10,200 10% of the taxable income
Over $10,200 but not over $1,020 plus 15% of excess over
$38,900 $10,200
Over $38,900 but not over $5,325 plus 25% of the excess over
$100,500 $38,900
Over $100,500 but not over $20,725 plus 28% of the excess
$162,700 over $100,500
Over $162,700 but not over $38,141 plus 33% of the excess
$319,100 over $162,700
Over $319,100 $89,753 plus 35% of the excess
over $319,100
--------------------------------------------------------------------
TABLE 3 - SECTION 1(C). - UNMARRIED INDIVIDUALS (OTHER THAN
SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS)
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $7,150 10% of the taxable income
Over $7,150 but not over $715 plus 15% of the excess over
$29,050 $7,150
Over $29,050 but not over $4,000 plus 25% of the excess over
$70,350 $29,050
Over $70,350 but not over $14,325 plus 28% of the excess
$146,750 over $70,350
Over $146,750 but not over $35,717 plus 33% of the excess
$319,100 over $146,750
Over $319,100 $92,592.50 plus 35% of the excess
over $319,100
--------------------------------------------------------------------
TABLE 4 - SECTION 1(D). - MARRIED INDIVIDUALS FILING SEPARATE
RETURNS
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $7,150 10% of the taxable income
Over $7,150 but not over $715 plus 15% of the excess over
$29,050 $7,150
Over $29,050 but not over $4,000 plus 25% of the excess over
$58,625 $29,050
Over $58,625 but not over $11,393.75 plus 28% of the excess
$89,325 over $58,625
Over $89,325 but not over $19,989.75 plus 33% of the excess
$159,550 over $89,325
Over $159,550 $43,164 plus 35% of the excess
over $159,550
--------------------------------------------------------------------
TABLE 5 - SECTION 1(E). - ESTATES AND TRUSTS
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $1,950 15% of the taxable income
Over $1,950 but not over $292.50 plus 25% of the excess
$4,600 over $1,950
Over $4,600 but not over $955 plus 28% of the excess over
$7,000 $4,600
Over $7,000 but not over $1,627 plus 33% of the excess over
$9,550 $7,000
Over $9,550 $2,468.50 plus 35% of the excess
over $9,550
--------------------------------------------------------------------
.02 Unearned Income of Minor Children Taxed as if Parent's Income
(the "Kiddie Tax"). For taxable years beginning in 2004, the amount
in Sec. 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned
income reported on the child's return that is subject to the
"kiddie tax," is $800. (This amount is the same as the $800
standard deduction amount provided in section 3.10(2) of this
revenue procedure.) The same $800 amount is used for purposes of
Sec. 1(g)(7) (that is, in determining whether a parent may elect to
include a child's gross income in the parent's gross income and for
calculating the "kiddie tax"). For example, one of the requirements
for the parental election is that a child's gross income is more
than the amount referenced in Sec. 1(g)(4)(A)(ii)(I) but less than
10 times such amount; thus, a child's gross income for 2004 must be
more than $800 but less than $8,000 to satisfy that requirement.
.03 Adoption Credit. For taxable years beginning in 2004, under
Sec. 23(a)(3) the maximum credit allowed for an adoption of a child
with special needs is $10,390. For taxable years beginning in 2004,
under Sec. 23(b)(1) the maximum credit allowed with regard to other
adoptions is the amount of qualified adoption expenses up to
$10,390. The available adoption credit begins to phase out under
Sec. 23(b)(2)(A) for taxpayers with modified adjusted gross income
in excess of $155,860 and is completely phased out for taxpayers
with modified adjusted gross income of $195,860. (See section 3.14
for the adjusted items relating to adoption assistance programs.)
.04 Child Tax Credit. For taxable years beginning in 2004, the
value used in Sec. 24(d)(1)(B)(i) in determining the amount of
credit under Sec. 24 that may be refundable is $10,750.
.05 Hope and Lifetime Learning Credits.
(1) For taxable years beginning in 2004, 100 percent of qualified
tuition and related expenses not in excess of $1,000 and 50 percent
of such expenses in excess of $1,000 are taken into account in
determining the amount of the Hope Scholarship Credit under Sec.
25A(b)(1).
(2) For taxable years beginning in 2004, a taxpayer's modified
adjusted gross income in excess of $42,000 ($85,000 for a joint
return) is taken into account in determining the reduction under
Sec. 25A(d)(2)(A)(ii) in the amount of the Hope Scholarship and
Lifetime Learning Credits otherwise allowable under Sec. 25A(a).
.06 Earned Income Credit.
(1) In general. For taxable years beginning in 2004, the
following amounts are used to determine the earned income credit
under Sec. 32(b). The "earned income amount" is the amount of
earned income at or above which the maximum amount of the earned
income credit is allowed. The "threshold phaseout amount" is the
amount of adjusted gross income (or, if greater, earned income)
above which the maximum amount of the credit begins to phase out.
The "completed phaseout amount" is the amount of adjusted gross
income (or if greater, earned income) at or above which no credit
is allowed.
Item Number of Qualifying Children
One Two or None
More
--------------------------------------------------------------------
Earned Income Amount $ 7,660 $10,750 $ 5,100
Maximum Amount of Credit $ 2,604 $ 4,300 $ 390
Threshold Phaseout Amount $14,040 $14,040 $ 6,390
Completed Phaseout Amount $30,338 $34,458 $11,490
Threshold Phaseout Amount $15,040 $15,040 $ 7,390
(Married Filing Jointly)
Completed Phaseout Amount $31,338 $35,458 $12,490
(Married Filing Jointly)
--------------------------------------------------------------------
The instructions for the Form 1040 series provide tables showing
the amount of the earned income credit for each type of taxpayer.
(2) Excessive investment income. For taxable years beginning in
2004, the earned income tax credit is denied under Sec. 32(i) if
the aggregate amount of certain investment income exceeds $2,650.
.07 Low-Income Housing Credit. For calendar years beginning in
2004, the amounts used under Sec. 42(h)(3)(C)(ii) to calculate the
State housing credit ceiling for the low-income housing credit is
the greater of $1.80 multiplied by the State population or
$2,075,000.
.08 Alternative Minimum Tax Exemption for a Child Subject to the
"Kiddie Tax." For taxable years beginning in 2004, for a child to
whom the Sec. 1(g) "kiddie tax" applies, the exemption amount under
Secs. 55 and 59(j) for purposes of the alternative minimum tax
under Sec. 55 may not exceed the sum of (A) such child's earned
income for the taxable year, plus (B) $5,750.
.09 Transportation Mainline Pipeline Construction Industry
Optional Expense Substantiation Rules for Payments to Employees
under Accountable Plans. For calendar years beginning in 2004, an
eligible employer may pay certain welders and heavy equipment
mechanics an amount of up to $13 per hour for rig-related expenses
that is deemed substantiated under an accountable plan when paid in
accordance with Rev. Proc. 2002-41. If the employer provides fuel
or otherwise reimburses fuel expenses, up to $8 per hour is deemed
substantiated when paid under Rev. Proc. 2002-41.
.10 Standard Deduction.
(1) In general. For taxable years beginning in 2004, the standard
deduction amounts under Sec. 63(c)(2) are as follows:
Filing Status Standard
Deduction
--------------------------------------------------------------------
Married Individuals Filing Joint Returns and $9,700
Surviving Spouses (Sec. 1(a))
Heads of Households (Sec. 1(b)) $7,150
Unmarried Individuals (other than Surviving Spouses $4,850
and Heads of Households) (Sec. 1(c))
Married Individuals Filing Separate Returns (Sec. $4,850
1(d))
--------------------------------------------------------------------
(2) Dependent. For taxable years beginning in 2004, the standard
deduction amount under Sec. 63(c)(5) for an individual who may be
claimed as a dependent by another taxpayer may not exceed the
greater of $800, or the sum of $250 and the individual's earned
income.
(3) Aged and blind. For taxable years beginning in 2004, the
additional standard deduction amounts under Sec. 63(f) for the aged
and for the blind are $950 for each. These amounts are increased to
$1,200 if the individual is also unmarried and not a surviving
spouse.
.11 Overall Limitation on Itemized Deductions. For taxable years
beginning in 2004, the "applicable amount" of adjusted gross income
under Sec. 68(b), above which the amount of otherwise allowable
itemized deductions is reduced under Sec. 68, is $142,700 (or
$71,350 for a separate return filed by a married individual).
.12 Qualified Transportation Fringe. For taxable years beginning
in 2004, the monthly limitation under Sec. 132(f)(2)(A), regarding
the aggregate fringe benefit exclusion amount for transportation in
a commuter highway vehicle and any transit pass, is $100. The
monthly limitation under Sec. 132(f)(2)(B) regarding the fringe
benefit exclusion amount for qualified parking is $195.
.13 Income from United States Savings Bonds for Taxpayers Who Pay
Qualified Higher Education Expenses. For taxable years beginning in
2004, the exclusion under Sec. 135, regarding income from United
States savings bonds for taxpayers who pay qualified higher
education expenses, begins to phase out for modified adjusted gross
income above $89,750 for joint returns and $59,850 for other
returns. This exclusion completely phases out for modified adjusted
gross income of $119,750 or more for joint returns and $74,850 or
more for other returns.
.14 Adoption Assistance Programs. For taxable years beginning in
2004, under Sec. 137(a)(2) the maximum amount that can be excluded
from an employee's gross income in connection with the adoption by
the employee of a child with special needs is $10,390. For taxable
years beginning in 2004, under Sec. 137(b)(1) the maximum amount
that can be excluded from an employee's gross income for the
amounts paid or expenses incurred by the employer for qualified
adoption expenses furnished pursuant to an adoption assistance
program in connection with other adoptions by the employee is
$10,390. The amount excludable from an employee's gross income
begins to phase out under Sec. 137(b)(2)(A) for taxpayers with
modified adjusted gross income in excess of $155,860 and is
completely phased out for taxpayers with modified adjusted gross
income of $195,860. (See section 3.03 for the adjusted items
relating to the adoption credit.)
.15 Private Activity Bonds Volume Cap. For calendar years
beginning in 2004, the amounts used under Sec. 146(d)(1) to
calculate the State ceiling for the volume cap for private activity
bonds is the greater of $80 multiplied by the State population or
$233,795,000.
.16 Personal Exemption.
(1) Exemption amount. For taxable years beginning in 2004, the
personal exemption amount under Sec. 151(d) is $3,100.
(2) Phase out. For taxable years beginning in 2004, the personal
exemption amount begins to phase out at, and is completely phased
out after, the following adjusted gross income amounts:
Filing Status AGI - AGI -
Beginning Exemption
of Phaseout Fully Phased
Out
--------------------------------------------------------------------
Married Individuals Filing $214,050 $336,550
Joint Returns and
Surviving Spouse (Sec. 1(a)
Heads of Households (Sec. $178,350 $300,850
1(b))
Unmarried Individuals $142,700 $265,200
(other than Surviving
Spouses and Heads of
Households) (Sec. 1(c))
Married Individuals Filing $107,025 $168,275
Separate Returns (Sec. 1(d)
--------------------------------------------------------------------
.17 Election to Expense Certain Depreciable Assets. For taxable
years beginning in 2004, under Sec. 179(b)(1), the aggregate cost
of any Sec. 179 property a taxpayer may elect to treat as an
expense shall not exceed $102,000. Under Sec. 179(b)(2), the
$102,000 limitation shall be reduced (but not below zero) by the
amount by which the cost of Sec. 179 property placed in service
during the 2004 taxable year exceeds $410,000.
.18 Eligible Long-Term Care Premiums. For taxable years beginning
in 2004, the limitations under Sec. 213(d)(10), regarding eligible
long-term care premiums includible in the term "medical care," are
as follows:
Attained age before the close of the taxable year Limi
tation
on
prem
iums
--------------------------------------------------------------------
40 or less $ 260
More than 40 but not more than 50 $ 490
More than 50 but not more than 60 $ 980
More than 60 but not more than 70 $2,600
More than 70 $3,250
--------------------------------------------------------------------
.19 Medical Savings Accounts.
(1) Self-only coverage. For taxable years beginning in 2004, the
term "high deductible health plan" as defined in Sec. 220(c)(2)(A)
means, for self-only coverage, a health plan that has an annual
deductible that is not less than $1,700 and not more than $2,600,
and under which the annual out-of-pocket expenses required to be
paid (other than for premiums) for covered benefits does not exceed
$3,450.
(2) Family coverage. For taxable years beginning in 2004, the
term "high deductible health plan" means, for family coverage, a
health plan that has an annual deductible that is not less than
$3,450 and not more than $5,150, and under which the annual
out-of-pocket expenses required to be paid (other than for
premiums) for covered benefits does not exceed $6,300.
.20 Interest on Education Loans. For taxable years beginning in
2004, the $2,500 maximum deduction for interest paid on qualified
education loans under Sec. 221 is reduced under Sec. 221(b)(2)(B)
when modified adjusted gross income exceeds $50,000 ($100,000 for
joint returns), and is completely eliminated when modified adjusted
gross income is $65,000 ($130,000 for joint returns).
.21 Treatment of Dues Paid to Agricultural or Horticultural
Organizations. For taxable years beginning in 2004, the limitation
under Sec. 512(d)(1), regarding the exemption of annual dues
required to be paid by a member to an agricultural or horticultural
organization, is $124.
.22 Insubstantial Benefit Limitations for Contributions
Associated with Charitable Fund-Raising Campaigns.
(1) Low cost article. For taxable years beginning in 2004, the
unrelated business income of certain exempt organizations under
Sec. 513(h)(2) does not include a "low cost article" of $8.20 or
less.
(2) Other insubstantial benefits. For taxable years beginning in
2004, the $5, $25, and $50 guidelines in section 3 of Rev. Proc.
90-12, 1990-1 C.B. 471 (as amplified and modified), for
disregarding the value of insubstantial benefits received by a
donor in return for a fully deductible charitable contribution
under Sec. 170, are $8.20, $41 and $82, respectively.
.23 Funeral Trusts. For a contract entered into during calendar
year 2004 for a "qualified funeral trust," as defined in Sec. 685,
the trust may not accept aggregate contributions by or for the
benefit of an individual in excess of $8,000.
.24 Expatriation to Avoid Tax. For calendar year 2004, the
amounts used under Sec. 877(a)(2), regarding whether an
individual's loss of United States citizenship had the avoidance of
United States taxes as one of its principal purposes, are more than
$124,000 for "average annual net income tax" and $622,000 or more
for "net worth."
.25 Valuation of Qualified Real Property in Decedent's Gross
Estate. For an estate of a decedent dying in calendar year 2004, if
the executor elects to use the special use valuation method under
Sec. 2032A for qualified real property, the aggregate decrease in
the value of qualified real property resulting from electing to use
Sec. 2032A that is taken into account for purposes of the estate
tax may not exceed $850,000.
.26 Annual Exclusion for Gifts.
(1) For calendar year 2004, the first $11,000 of gifts to any
person (other than gifts of future interests in property) are not
included in the total amount of taxable gifts under Sec. 2503 made
during that year.
(2) For calendar year 2004, the first $114,000 of gifts to a
spouse who is not a citizen of the United States (other than gifts
of future interests in property) are not included in the total
amount of taxable gifts under Secs. 2503 and 2523(i)(2) made during
that year.
.27 Passenger Air Transportation Excise Tax. For calendar year
2004, the tax under Sec. 4261(b) on the amount paid for each
domestic segment of taxable transportation by air is $3.10. For
calendar year 2004, the tax under Sec. 4261(c) on any amount paid
(whether within or without the United States) for any
transportation of any person by air, if such transportation begins
or ends in the United States, generally is $13.70. However, in the
case of a domestic segment beginning or ending in Alaska or Hawaii
as described in Sec. 4261(c)(3), the tax only applies to departures
and is at the rate of $6.90.
.28 Reporting Exception for Certain Exempt Organizations with
Nondeductible Lobbying Expenditures. For taxable years beginning in
2004, the annual per person, family, or entity dues limitation to
qualify for the reporting exception under Sec. 6033(e)(3) (and
section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding
certain exempt organizations with nondeductible lobbying
expenditures, is $86 or less.
.29 Notice of Large Gifts Received from Foreign Persons. For
taxable years beginning in 2004, recipients of gifts from certain
foreign persons may be required to report these gifts under Sec.
6039F if the aggregate value of gifts received in a taxable year
exceeds $12,097.
.30 Persons Against Which a Federal Tax Lien Is Not Valid. For
calendar year 2004, a federal tax lien is not valid against (1)
certain purchasers under Sec. 6323(b)(4) who purchased personal
property in a casual sale for less than $1,180 or (2) a mechanic's
lienor under Sec. 6323(b)(7) that repaired or improved certain
residential property if the contract price with the owner is not
more than $5,890.
.31 Property Exempt from Levy. For calendar year 2004, the value
of property exempt from levy under Sec. 6334(a)(2) (fuel,
provisions, furniture, and other household personal effects, as
well as arms for personal use, livestock, and poultry) may not
exceed $7,040. The value of property exempt from levy under Sec.
6334(a)(3) (books and tools necessary for the trade, business, or
profession of the taxpayer) may not exceed $3,520.
.32 Interest on a Certain Portion of the Estate Tax Payable in
Installments. For an estate of a decedent dying in calendar year
2004, the dollar amount used to determine the "2-percent portion"
(for purposes of calculating interest under Sec. 6601(j)) of the
estate tax extended as provided in Sec. 6166 is $1,140,000.
.33 Attorney Fee Awards. For fees incurred in calendar year 2004,
the attorney fee award limitation under Sec. 7430(c)(1)(B)(iii) is
$150 per hour.
.34 Periodic Payments Received under Qualified Long-Term Care
Insurance Contracts or under Certain Life Insurance Contracts. For
calendar year 2004, the stated dollar amount of the per diem
limitation under Sec. 7702B(d)(4), regarding periodic payments
received under a qualified long-term care insurance contract or
periodic payments received under a life insurance contract that are
treated as paid by reason of the death of a chronically ill
individual, is $230.
Section 4. Effective Date
.01 General Rule. Except as provided in section 4.02, this
revenue procedure applies to taxable years beginning in 2004.
.02 Calendar Year Rule. This revenue procedure applies to
transactions or events occurring in calendar year 2004 for purposes
of sections 3.07 (low-income housing credit), 3.09 (pipeline
construction industry optional expense substantiation rules), 3.15
(private activity bond volume cap), 3.23 (funeral trusts), 3.24
(expatriation to avoid tax), 3.25 (valuation of qualified real
property in decedent's gross estate), 3.26 (annual exclusion for
gifts), 3.27 (passenger air transportation excise tax), 3.30
(persons against which a federal tax lien is not valid), 3.31
(property exempt from levy), 3.32 (interest on a certain portion of
the estate tax payable in installments), 3.33 (attorney fee
awards), and 3.34 (periodic payments received under qualified
long-term care insurance contracts or under certain life insurance
contracts).
Section 5. Drafting Information
[Omitted-related to author of this revenue procedure.]
TAX TABLES FOR PRIOR TAX YEARS
Inflation adjusted items for certain prior tax years were
contained in the following:
Revenue Procedure 2002-70 provided inflation adjusted items for
tax years beginning in 2003.
Revenue Procedure 2001-59 provided inflation adjusted items for
tax years beginning in 2002.
Revenue Procedure 2001-13 provided inflation adjusted items for
tax years beginning in 2001.
Revenue Procedure 99-42 provided inflation adjusted items for tax
years beginning in 2000.
Revenue Procedure 98-61 provided inflation adjusted items for tax
years beginning in 1999.
Revenue Procedure 97-57 provided inflation adjusted items for tax
years beginning in 1998.
Revenue Procedure 96-59 provided inflation adjusted items for tax
years beginning in 1997.
Revenue Procedure 95-53 provided inflation adjusted items for tax
years beginning in 1996.
Revenue Procedure 94-72 provided inflation adjusted items for tax
years beginning in 1995.
Revenue Procedure 93-49 provided inflation adjusted items for tax
years beginning in 1994.
Revenue Procedure 92-102 provided inflation adjusted items for
tax years beginning in 1993.
Revenue Procedure 91-65 provided inflation adjusted items for tax
years beginning in 1992.
Revenue Procedure 90-64 provided inflation adjusted items for tax
years beginning in 1991.
Revenue Procedure 90-7 provided inflation adjusted items for tax
years beginning in 1990.
Revenue Procedure 88-56 provided inflation adjusted items for tax
years beginning in 1989.
Revenue Procedure 85-55 provided income tax cost-of-living
adjustment (indexing) factor with respect to taxable years
beginning in 1986.
Revenue Procedure 84-79 provided income tax cost-of-living
adjustment (indexing) factor with respect to taxable years
beginning in 1985.
-REFTEXT-
REFERENCES IN TEXT
The enactment of this clause, referred to in subsec.
(h)(13)(A)(iii), means the date of enactment of Pub. L. 105-206,
which was approved July 22, 1998.
-MISC1-
AMENDMENTS
2003 - Subsec. (f)(8)(A). Pub. L. 108-27, Secs. 102(b)(1), 107,
temporarily substituted "2002" for "2004". See Effective and
Termination Dates of 2003 Amendment note below.
Subsec. (f)(8)(B). Pub. L. 108-27, Secs. 102(a), 107, temporarily
inserted table item relating to years 2003 and 2004. See Effective
and Termination Dates of 2003 Amendment note below.
Subsec. (h)(1)(B). Pub. L. 108-27, Secs. 301(a)(1), 303,
temporarily substituted "5 percent (0 percent in the case of
taxable years beginning after 2007)" for "10 percent". See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(1)(C). Pub. L. 108-27, Secs. 301(a)(2)(A), 303,
temporarily substituted "15 percent" for "20 percent". See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(2). Pub. L. 108-27, Secs. 301(b)(1)(A), (B), 303,
temporarily redesignated par. (3) as (2) and struck out heading and
text of former par. (2). Text read as follows:
"(A) Reduction in 10-percent rate. - In the case of any taxable
year beginning after December 31, 2000, the rate under paragraph
(1)(B) shall be 8 percent with respect to so much of the amount to
which the 10-percent rate would otherwise apply as does not exceed
qualified 5-year gain, and 10 percent with respect to the remainder
of such amount.
"(B) Reduction in 20-percent rate. - The rate under paragraph
(1)(C) shall be 18 percent with respect to so much of the amount to
which the 20-percent rate would otherwise apply as does not exceed
the lesser of -
"(i) the excess of qualified 5-year gain over the amount of
such gain taken into account under subparagraph (A) of this
paragraph; or
"(ii) the amount of qualified 5-year gain (determined by taking
into account only property the holding period for which begins
after December 31, 2000),
and 20 percent with respect to the remainder of such amount. For
purposes of determining under the preceding sentence whether the
holding period of property begins after December 31, 2000, the
holding period of property acquired pursuant to the exercise of an
option (or other right or obligation to acquire property) shall
include the period such option (or other right or obligation) was
held." See Effective and Termination Dates of 2003 Amendment note
below.
Subsec. (h)(3). Pub. L. 108-27, Secs. 302(e)(1), 303, temporarily
amended heading and text of par. (3) generally. Prior to amendment,
text read as follows: "For purposes of this subsection, the term
'adjusted net capital gain' means net capital gain reduced (but not
below zero) by the sum of -
"(A) unrecaptured section 1250 gain; and
"(B) 28-percent rate gain." See Effective and Termination Dates
of 2003 Amendment note below.
Pub. L. 108-27, Secs. 301(b)(1)(B), 303, temporarily redesignated
par. (4) as (3). Former par. (3) temporarily redesignated (2). See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(4) to (7). Pub. L. 108-27, Secs. 301(b)(1)(B), 303,
temporarily redesignated pars. (5) to (8) as (4) to (7),
respectively. Former par. (4) temporarily redesignated (3). See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(8). Pub. L. 108-27, Secs. 301(b)(1)(C), 303,
temporarily redesignated par. (10) as (8). Former par. (8)
temporarily redesignated (7). See Effective and Termination Dates
of 2003 Amendment note below.
Subsec. (h)(9). Pub. L. 108-27, Secs. 301(b)(1)(A), (C), 303,
temporarily redesignated par. (11) as (9) and struck out heading
and text of former par. (9). Text read as follows: "For purposes of
this subsection, the term 'qualified 5-year gain' means the
aggregate long-term capital gain from property held for more than 5
years. The determination under the preceding sentence shall be made
without regard to collectibles gain, gain described in paragraph
(7)(A)(i), and section 1202 gain." See Effective and Termination
Dates of 2003 Amendment note below.
Subsec. (h)(10). Pub. L. 108-27, Secs. 301(b)(1)(C), 303,
temporarily redesignated par. (12) as (10). Former par. (10)
temporarily redesignated (8). See Effective and Termination Dates
of 2003 Amendment note below.
Subsec. (h)(11). Pub. L. 108-27, Secs. 302(a), 303, temporarily
added par. (11). See Effective and Termination Dates of 2003
Amendment note below.
Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated
par. (11) as (9). See Effective and Termination Dates of 2003
Amendment note below.
Subsec. (h)(12). Pub. L. 108-27, Secs. 301(b)(1)(C), 303,
temporarily redesignated par. (12) as (10). See Effective and
Termination Dates of 2003 Amendment note below.
Subsec. (i)(1)(B)(i). Pub. L. 108-27, Secs. 104(a), 107,
temporarily substituted "($12,000 in the case of taxable years
beginning after December 31, 2004, and before January 1, 2008)" for
"($12,000 in the case of taxable years beginning before January 1,
2008)". See Effective and Termination Dates of 2003 Amendment note
below.
Subsec. (i)(1)(C). Pub. L. 108-27, Secs. 104(b), 107, temporarily
amended heading and text of subpar. (C) generally. Text read as
follows: "In prescribing the tables under subsection (f) which
apply with respect to taxable years beginning in calendar years
after 2000 -
"(i) the Secretary shall make no adjustment to the initial
bracket amount for any taxable year beginning before January 1,
2009,
"(ii) the cost-of-living adjustment used in making adjustments
to the initial bracket amount for any taxable year beginning
after December 31, 2008, shall be determined under subsection
(f)(3) by substituting '2007' for '1992' in subparagraph (B)
thereof, and
"(iii) such adjustment shall not apply to the amount referred
to in subparagraph (B)(iii).
If any amount after adjustment under the preceding sentence is not
a multiple of $50, such amount shall be rounded to the next lowest
multiple of $50." See Effective and Termination Dates of 2003
Amendment note below.
Subsec. (i)(2). Pub. L. 108-27, Secs. 105(a), 107, temporarily
amended table generally. Prior to amendment, table read as follows:
The corresponding percentages shall be
substituted for
the following percentages:
28% 31% 36% 39.6%
--------------------------------------------------------------------
2001 27.5% 30.5% 35.5% 39.1%
2002 and 2003 27.0% 30.0% 35.0% 38.6%
2004 and 2005 26.0% 29.0% 34.0% 37.6%
2006 and thereafter 25.0% 28.0% 33.0% 35.0%"
--------------------------------------------------------------------
See Effective and Termination Dates of 2003 Amendment note below.
2001 - Subsec. (f). Pub. L. 107-16, Secs. 302(b)(2), 901,
temporarily substituted "Phaseout of marriage penalty in 15-percent
bracket; adjustments" for "Adjustments" in heading. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (f)(2)(A). Pub. L. 107-16, Secs. 302(b)(1), 901,
temporarily inserted "except as provided in paragraph (8)," before
"by increasing". See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (f)(6)(B). Pub. L. 107-16, Secs. 301(c)(1), 901,
temporarily substituted "(other than with respect to sections
63(c)(4) and 151(d)(4)(A)) shall be applied" for "(other than with
respect to subsection (c)(4) of section 63 (as it applies to
subsections (c)(5)(A) and (f) of such section) and section
151(d)(4)(A)) shall be applied". See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (f)(8). Pub. L. 107-16, Secs. 302(a), 901, temporarily
added par. (8). See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (g)(7)(B)(ii)(II). Pub. L. 107-16, Secs. 101(c)(1), 901,
which directed amendment of subcl. (II) by temporarily substituting
"10 percent." for "15 percent", was executed by temporarily
substituting "10 percent" for "15 percent", to reflect the probable
intent of Congress. See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (h)(1)(A)(ii)(I), (B)(i). Pub. L. 107-16, Secs.
101(c)(2)(A), 901, temporarily substituted "25 percent" for "28
percent". See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (h)(13). Pub. L. 107-16, Secs. 101(c)(2)(B), 901,
temporarily struck out par. (13), which set out special rules for
determination of 28-percent rate gain, unrecaptured section 1250
gain, pass-thru entities, and charitable remainder trusts. See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (i). Pub. L. 107-16, Secs. 101(a), 901, temporarily added
subsec. (i). See Effective and Termination Dates of 2001 Amendment
note below.
2000 - Subsec.(h)(8). Pub. L. 106-554 substituted "means the
excess of - " and subpars. (A) and (B) for "means an amount equal
to the gain excluded from gross income under section 1202(a)."
1998 - Subsec. (g)(3)(C), (D). Pub. L. 105-206, Sec. 6007(f)(1),
redesignated subpar. (D) as (C) and struck out heading and text of
former subpar. (C). Text read as follows: "If tax is imposed under
section 644(a)(1) with respect to the sale or exchange of any
property of which the parent was the transferor, for purposes of
applying subparagraph (A) to the taxable year of the parent in
which such sale or exchange occurs -
"(i) taxable income of the parent shall be increased by the
amount treated as included in gross income under section
644(a)(2)(A)(i), and
"(ii) the amount described in subparagraph (A)(ii) shall be
increased by the amount of the excess referred to in section
644(a)(2)(A)."
Subsec. (h). Pub. L. 105-206, Sec. 6005(d)(1), reenacted subsec.
heading without change and amended text of subsec. (h) generally,
substituting present provisions comprising pars. (1) to (13) for
former similar provisions comprising pars. (1) to (11).
Subsec. (h)(5). Pub. L. 105-206, Sec. 5001(a)(1), amended par.
(5) generally. Prior to amendment, par. (5) read as follows:
"(5) 28-percent rate gain. - For purposes of this subsection -
"(A) In general. - The term '28-percent rate gain' means the
excess (if any) of -
"(i) the sum of -
"(I) the aggregate long-term capital gain from property
held for more than 1 year but not more than 18 months;
"(II) collectibles gain; and
"(III) section 1202 gain, over
"(ii) the sum of -
"(I) the aggregate long-term capital loss (not described in
subclause (IV)) from property referred to in clause (i)(I);
"(II) collectibles loss;
"(III) the net short-term capital loss; and
"(IV) the amount of long-term capital loss carried under
section 1212(b)(1)(B) to the taxable year.
"(B) Special rules. -
"(i) Short sale gains and holding periods. - Rules similar to
the rules of section 1233(b) shall apply where the
substantially identical property has been held more than 1 year
but not more than 18 months; except that, for purposes of such
rules -
"(I) section 1233(b)(1) shall be applied by substituting
'18 months' for '1 year' each place it appears; and
"(II) the holding period of such property shall be treated
as being 1 year on the day before the earlier of the date of
the closing of the short sale or the date such property is
disposed of.
"(ii) Long-term losses. - Section 1233(d) shall be applied
separately by substituting '18 months' for '1 year' each place
it appears.
"(iii) Options. - A rule similar to the rule of section
1092(f) shall apply where the stock was held for more than 18
months.
"(iv) Section 1256 contracts. - Amounts treated as long-term
capital gain or loss under section 1256(a)(3) shall be treated
as attributable to property held for more than 18 months."
Subsec. (h)(6)(A). Pub. L. 105-206, Sec. 5001(a)(2), substituted
"1 year" for "18 months".
Subsec. (h)(7)(A)(i), (ii). Pub. L. 105-206, Sec. 5001(a)(3),
amended cls. (i) and (ii) generally. Prior to amendment, cls. (i)
and (ii) read as follows:
"(i) the amount of long-term capital gain (not otherwise treated
as ordinary income) which would be treated as ordinary income if -
"(I) section 1250(b)(1) included all depreciation and the
applicable percentage under section 1250(a) were 100 percent, and
"(II) only gain from property held for more than 18 months were
taken into account, over
"(ii) the excess (if any) of -
"(I) the amount described in paragraph (5)(A)(ii), over
"(II) the amount described in paragraph (5)(A)(i)."
Subsec. (h)(13). Pub. L. 105-206, Sec. 5001(a)(4), struck out
"for periods during 1997" after "Special rules" in par. heading and
amended headings and text of subpars. (A) and (B) generally. Prior
to amendment, subpars. (A) and (B) read as follows:
"(A) Determination of 28-percent rate gain. - In applying
paragraph (5) -
"(i) the amount determined under subclause (I) of paragraph
(5)(A)(i) shall include long-term capital gain (not otherwise
described in paragraph (5)(A)(i)) which is properly taken into
account for the portion of the taxable year before May 7, 1997;
"(ii) the amounts determined under subclause (I) of paragraph
(5)(A)(ii) shall include long-term capital loss (not otherwise
described in paragraph (5)(A)(ii)) which is properly taken into
account for the portion of the taxable year before May 7, 1997;
and
"(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A) shall be
applied by not taking into account any gain and loss on property
held for more than 1 year but not more than 18 months which is
properly taken into account for the portion of the taxable year
after May 6, 1997, and before July 29, 1997.
"(B) Other special rules. -
"(i) Determination of unrecaptured section 1250 gain not to
include pre-may 7, 1997 gain. - The amount determined under
paragraph (7)(A)(i) shall not include gain properly taken into
account for the portion of the taxable year before May 7, 1997.
"(ii) Other transitional rules for 18-month holding period. -
Paragraphs (6)(A) and (7)(A)(i)(II) shall be applied by
substituting '1 year' for '18 months' with respect to gain
properly taken into account for the portion of the taxable year
after May 6, 1997, and before July 29, 1997."
Subsec. (h)(13)(B). Pub. L. 105-277, Sec. 4002(i)(1), substituted
"paragraph (7)(A)(i)" for "paragraph (7)(A)" in introductory
provisions.
Subsec. (h)(13)(D). Pub. L. 105-277, Sec. 4002(i)(3), added
subpar. (D).
1997 - Subsec. (h). Pub. L. 105-34 amended heading and text of
subsec. (h) generally. Prior to amendment, text read as follows:
"If a taxpayer has a net capital gain for any taxable year, then
the tax imposed by this section shall not exceed the sum of -
"(1) a tax computed at the rates and in the same manner as if
this subsection had not been enacted on the greater of -
"(A) taxable income reduced by the amount of the net capital
gain, or
"(B) the amount of taxable income taxed at a rate below 28
percent, plus
"(2) a tax of 28 percent of the amount of taxable income in
excess of the amount determined under paragraph (1).
For purposes of the preceding sentence, the net capital gain for
any taxable year shall be reduced (but not below zero) by the
amount which the taxpayer elects to take into account as investment
income for the taxable year under section 163(d)(4)(B)(iii)."
1996 - Subsec. (g)(7)(A)(ii). Pub. L. 104-188, Sec. 1704(m)(1),
amended cl. (ii) generally. Prior to amendment, cl. (ii) read as
follows: "such gross income is more than $500 and less than
$5,000,".
Subsec. (g)(7)(B)(i). Pub. L. 104-188, Sec. 1704(m)(2)(A),
substituted "twice the amount described in paragraph (4)(A)(ii)(I)"
for "$1,000".
Subsec. (g)(7)(B)(ii)(II). Pub. L. 104-188, Sec. 1704(m)(2)(B),
amended subcl. (II) generally. Prior to amendment, subcl. (II) read
as follows: "for each such child, the lesser of $75 or 15 percent
of the excess of the gross income of such child over $500, and".
1993 - Subsecs. (a) to (e). Pub. L. 103-66, Secs. 13201(a),
13202(a), amended subsecs. (a) to (e) generally, substituting
five-tiered tax tables for all categories applicable to tax years
after December 31, 1992, for prior three-tiered tax tables.
Subsec. (f)(1). Pub. L. 103-66, Sec. 13201(b)(3)(A)(i),
substituted "1993" for "1990".
Subsec. (f)(3)(B). Pub. L. 103-66, Sec. 13201(b)(3)(A)(ii),
substituted "1992" for "1989".
Subsec. (f)(7). Pub. L. 103-66, Sec. 13201(b)(3)(B), added par.
(7).
Subsec. (h). Pub. L. 103-66, Sec. 13206(d)(2), inserted as
concluding provision at end "For purposes of the preceding
sentence, the net capital gain for any taxable year shall be
reduced (but not below zero) by the amount which the taxpayer
elects to take into account as investment income for the taxable
year under section 163(d)(4)(B)(iii)."
1990 - Subsecs. (a) to (e). Pub. L. 101-508, Sec. 11101(a),
amended subsecs. (a) to (e) generally, substituting three-tiered
tax tables for all categories applicable to tax years after Dec.
31, 1990, for prior two-tiered tax tables.
Subsec. (f)(1). Pub. L. 101-508, Sec. 11101(d)(1)(A)(i),
substituted "1990" for "1988".
Subsec. (f)(3)(B). Pub. L. 101-508, Sec. 11101(d)(1)(A)(ii),
substituted "1989" for "1987".
Subsec. (f)(6)(A). Pub. L. 101-508, Sec. 11104(b)(1), substituted
"section 151(d)(4)" for "section 151(d)(3)".
Pub. L. 101-508, Sec. 11103(c), inserted reference to section
68(b)(2).
Pub. L. 101-508, Sec. 11101(b)(2), struck out "subsection
(g)(4)," after "paragraph (2)(A),".
Subsec. (f)(6)(B). Pub. L. 101-508, Sec. 11104(b)(2), substituted
"section 151(d)(4)(A)" for "section 151(d)(3)".
Subsec. (g). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (i) as (g).
Pub. L. 101-508, Sec. 11101(b)(1), struck out subsec. (g) which
provided for phaseout of 15-percent rate and personal exemptions.
Subsec. (h). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (j) as (h) and struck out former subsec. (h) which provided
tax schedules for taxable years beginning in 1987.
Subsec. (i). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (i) as (g).
Subsec. (j). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (j) as (h).
Pub. L. 101-508, Sec. 11101(c), amended subsec. (j) generally.
Prior to amendment, subsec. (j) read as follows:
"(1) In general. - If a taxpayer has a net capital gain for any
taxable year to which this subsection applies, then the tax imposed
by this section shall not exceed the sum of -
"(A) a tax computed at the rates and in the same manner as if
this subsection had not been enacted on the greater of -
"(i) the taxable income reduced by the amount of net capital
gain, or
"(ii) the amount of taxable income taxed at a rate below 28
percent, plus
"(B) a tax of 28 percent of the amount of taxable income in
excess of the amount determined under subparagraph (A), plus
"(C) the amount of increase determined under subsection (g).
"(2) Years to which subsection applies. - This subsection shall
apply to -
"(A) any taxable year beginning in 1987, and
"(B) any taxable year beginning after 1987 if the highest rate
of tax set forth in subsection (a), (b), (c), (d), or (e)
(whichever applies) for such taxable year exceeds 28 percent."
1989 - Subsec. (f)(6)(B). Pub. L. 101-239, Sec. 7831(a),
substituted "subsection (c)(4) of section 63 (as it applies to
subsections (c)(5)(A) and (f) of such section) and section
151(d)(3)" for "section 63(c)(4)".
Subsec. (i)(3)(C), (D). Pub. L. 101-239, Sec. 7811(j)(1),
redesignated subpar. (C), relating to special rule where parent has
different taxable year, as (D).
Subsec. (i)(7)(A). Pub. L. 101-239, Sec. 7816(b), inserted
"(other than for purposes of this paragraph)" after "shall be
treated" in concluding provisions.
1988 - Subsec. (g)(2). Pub. L. 100-647, Sec. 1001(a)(3), inserted
provision relating to application of subpar. (B) at end of last
sentence.
Subsec. (i)(3)(A). Pub. L. 100-647, Sec. 1014(e)(2), substituted
"any exclusion, deduction, or credit" for "any deduction or
credit".
Subsec. (i)(3)(C). Pub. L. 100-647, Sec. 1014(e)(7), added
subpar. (C) relating to special rule where parent has different
taxable year.
Pub. L. 100-647, Sec. 1014(e)(1), added subpar. (C) relating to
coordination with section 644.
Subsec. (i)(4)(A)(i). Pub. L. 100-647, Sec. 1014(e)(3)(A),
substituted "adjusted gross income" for "gross income" and inserted
"attributable to" after "which is not".
Subsec. (i)(4)(A)(ii)(II). Pub. L. 100-647, Sec.
1014(e)(3)(B)-(D), substituted "his deductions" for "his
deduction", "the itemized deductions allowed" for "the deductions
allowed", and "adjusted gross income" for "gross income".
Subsec. (i)(5)(A). Pub. L. 100-647, Sec. 1014(e)(6), substituted
"custodial parent (within the meaning of section 152(e))" for
"custodial parent".
Subsec. (i)(7). Pub. L. 100-647, Sec. 6006(a), added par. (7).
1986 - Subsecs. (a) to (e). Pub. L. 99-514, Sec. 101(a), in
amending subsecs. (a) to (e) generally, substituted a general tax
table for tax tables (1), (2), and (3) in each subsec. applicable
to taxable years beginning in 1982, 1983, and after 1983,
respectively.
Subsec. (f). Pub. L. 99-514, Sec. 101(a), in amending subsec. (f)
generally, in par. (1) substituted "1988," for "1984" and struck
out "paragraph (3) of" before "subsections", in par. (2) struck out
"paragraph (3) of" before "subsection" in introductory provisions,
substituted subpars. (A) to (C) for former subpars. (A) to (C)
which read as follows:
"(A) by increasing -
"(i) the maximum dollar amount on which no tax is imposed
under such table, and
"(ii) the minimum and maximum dollar amounts for each rate
bracket for which a tax is imposed under such table,
by the cost-of-living adjustment for such calendar year,
"(B) by not changing the rate applicable to any rate bracket as
adjusted under subparagraph (A)(ii), and
"(C) by adjusting the amounts setting forth the tax to the
extent necessary to reflect the adjustments in the rate
brackets.",
and struck out concluding provisions which read as follows: "If any
increase determined under subparagraph (A) is not a multiple of
$10, such increase shall be rounded to the nearest multiple of $10
(or if such increase is a multiple of $5, such increase shall be
increased to the next highest multiple of $10).", in par. (3)(B)
substituted "1987" for "1983", in par. (4) substituted "August 31"
for "September 30", in par. (5) inserted requirement that the
Consumer Price Index most consistent with such Index for calendar
year 1986 be used, and added par. (6).
Subsecs. (g), (h). Pub. L. 99-514, Sec. 101(a), in amending
section generally, added subsecs. (g) and (h).
Subsec. (i). Pub. L. 99-514, Sec. 1411(a), added subsec. (i).
Subsec. (j). Pub. L. 99-514, Sec. 302(a), added subsec. (j).
1982 - Subsecs. (d), (e). Pub. L. 97-448, Sec. 101(a)(3), set out
as a note below, provided for amendment of the tables applying to
married individuals filing separately or to estates and trusts so
as to correct any figure differing by not more than 50 cents from
the correct amount under the formula used in constructing such
table. Corrections to the tables in subsecs. (d) and (e) appeared
in Announcement 83-50 contained in Internal Revenue Bulletin No.
1983-12 of Mar. 21, 1983.
1981 - Subsecs. (a) to (e). Pub. L. 97-34, Sec. 101(a), generally
revised tax tables downward providing for cumulative
across-the-board reductions of 23 percent on a three phase schedule
under which different new rates were set for taxable years
beginning in 1982, for taxable years beginning in 1983, and for
taxable years beginning after 1983.
Subsec. (f). Pub. L. 97-34, Sec. 104(a), added subsec. (f).
1978 - Subsec. (a). Pub. L. 95-600 generally made a downward
revision of tax table for married individuals filing joint returns
and surviving spouses resulting in a table under which, among other
changes, a bottom bracket imposing no tax on taxable income of
$3,400 or less was substituted for a bottom bracket imposing no tax
on taxable income of $3,200 or less.
Subsec. (b). Pub. L. 95-600 generally made a downward revision of
tax table for heads of household resulting in a table under which,
among other changes, a bottom bracket imposing no tax on taxable
income of $2,300 or less was substituted for a bottom bracket
imposing no tax on taxable income of $2,200 or less.
Subsec. (c). Pub. L. 95-600 generally made a downward revision of
tax table for unmarried individuals other than surviving spouses
and heads of households resulting in a table under which, among
other changes, a bottom bracket imposing no tax on taxable income
of $2,300 or less was substituted for a bottom bracket imposing no
tax on taxable income of $2,200 or less.
Subsec. (d). Pub. L. 95-600 generally made a downward revision of
tax tables for married individuals filing separate returns
resulting in a table under which, among other changes, a bottom
bracket imposing no tax on taxable income of $1,700 or less was
substituted for a bottom bracket imposing no tax on taxable income
of $1,600 or less.
Subsec. (e). Pub. L. 95-600 generally made a downward revision of
tax tables for estates and trusts resulting in a table under which,
among other changes, a bottom bracket under which a tax of 14% is
imposed on taxable income of $1,050 for a bottom bracket under
which a tax of 14% was imposed on taxable income of $500 or less.
1977 - Subsec. (a). Pub. L. 95-30 generally made a downward
revision of tax table for married individuals filing joint returns
and surviving spouses resulting in a table under which, among other
changes, a bottom bracket imposing no tax on taxable income of
$3,200 or less was substituted for a bottom bracket under which a
tax of 14% had been imposed on a taxable income of $1,000 or less.
Subsec. (b). Pub. L. 95-30 generally made a downward revision of
tax table for heads of households resulting in a table under which,
among other changes, a bottom bracket imposing no tax on taxable
income of $2,200 or less was substituted for a bottom bracket under
which a tax of 14% had been imposed on a taxable income of $1,000
or less.
Subsec. (c). Pub. L. 95-30 generally made a downward revision of
tax table for unmarried individuals other than surviving spouses
and heads of households resulting in a table under which, among
other changes, a bottom bracket imposing no tax on taxable income
of $2,200 or less was substituted for a bottom bracket under which
a tax of 14% had been imposed on a taxable income of $500 or less.
Subsec. (d). Pub. L. 95-30 generally made a downward revision of
tax table for married individuals filing separate returns resulting
in a table under which, among other changes, a bottom bracket
imposing no tax on taxable income of $1,600 or less was substituted
for a bottom bracket under which a tax of 14% had been imposed on a
taxable income of $500 or less. Provisions making table applicable
to estates and trusts were struck out. See subsec. (e).
Subsec. (e). Pub. L. 95-30 added subsec. (e) consisting of table
formerly contained in subsec. (d) but without any downward revision
and limited so as to apply only to estates and trusts.
1969 - Subsec. (a). Pub. L. 91-172 substituted a table of rates
of tax for married individuals filing joint returns and surviving
spouses for the tables of rates of tax on individuals. For rates of
taxes on unmarried individuals and married persons filing separate
returns, see subsecs. (c) and (d) of this section.
Subsec. (b). Pub. L. 91-172 generally revised rates of tax of
heads of household downwards and struck out provisions defining
head of household, determination of status, and limitations. For
definition of head of household, determination of status, and
limitations, see section 2(b) of this title.
Subsec. (c). Pub. L. 91-172 substituted rates of tax on unmarried
individuals (other than surviving spouses and heads of household)
for special rules explaining the rates of tax imposed under former
subsecs. (a) and (b)(1) and prescribing a maximum limit of 87
percent of the taxable year.
Subsec. (d). Pub. L. 91-172 substituted a table of rates of tax
for married individuals filing separate returns for provision
prescribing the applicability of the rates to non-resident aliens.
For applicability of rates of tax to non-resident aliens, see
section 2(d) of this title.
Subsec. (e). Pub. L. 91-172 struck out cross reference to section
63. See section 2(e) of this title.
1966 - Subsecs. (d), (e). Pub. L. 89-809 added subsec. (d) and
redesignated former subsec. (d) as (e).
1964 - Pub. L. 88-272 amended section generally by splitting the
former first bracket which started at $2,000 into four new
brackets, the 14 percent bracket representing a 30 percent
reduction, the 15 percent bracket a 25 percent cut, and the 16
percent bracket a 20 percent cut, and reducing all other brackets
by cuts averaging about 20 percent and effectuated these cuts in
two steps, one in 1964, and one in 1965.
EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT
Pub. L. 108-27, title I, Sec. 102(c), May 28, 2003, 117 Stat.
754, provided that: "The amendments made by this section [amending
this section and provisions set out as a note under this section]
shall apply to taxable years beginning after December 31, 2002."
Pub. L. 108-27, title I, Sec. 104(c), May 28, 2003, 117 Stat.
755, provided that:
"(1) In general. - The amendments made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2002.
"(2) Tables for 2003. - The Secretary of the Treasury shall
modify each table which has been prescribed under section 1(f) of
the Internal Revenue Code of 1986 for taxable years beginning in
2003 and which relates to the amendment made by subsection (a) to
reflect such amendment."
Pub. L. 108-27, title I, Sec. 105(b), May 28, 2003, 117 Stat.
755, provided that: "The amendment made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2002."
Pub. L. 108-27, title I, Sec. 107, May 28, 2003, 117 Stat. 755,
provided that: "Each amendment made by this title [enacting section
6429 of this title, amending this section and sections 24, 55, and
63 of this title, and amending provisions set out as notes under
this section] shall be subject to title IX of the Economic Growth
and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec.
901, set out as an Effective and Termination Dates of 2001
Amendment note below] to the same extent and in the same manner as
the provision of such Act to which such amendment relates."
Pub. L. 108-27, title III, Sec. 301(d), May 28, 2003, 117 Stat.
760, provided that:
"(1) In general. - Except as otherwise provided by this
subsection, the amendments made by this section [amending this
section, sections 55, 57, 1445, and 7518 of this title, and section
1177 of Title 46, Appendix, Shipping] shall apply to taxable years
ending on or after May 6, 2003.
"(2) Withholding. - The amendment made by subsection (a)(2)(C)
[amending section 1445 of this title] shall apply to amounts paid
after the date of the enactment of this Act [May 28, 2003].
"(3) Small business stock. - The amendments made by subsection
(b)(3) [amending section 57 of this title] shall apply to
dispositions on or after May 6, 2003."
Pub. L. 108-27, title III, Sec. 302(f), May 28, 2003, 117 Stat.
764, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
163, 301, 306, 338, 467, 531, 541, 584, 702, 854, 857, 1255, and
1257 of this title and repealing section 341 of this title] shall
apply to taxable years beginning after December 31, 2002.
"(2) Regulated investment companies and real estate investment
trusts. - In the case of a regulated investment company or a real
estate investment trust, the amendments made by this section shall
apply to taxable years ending after December 31, 2002; except that
dividends received by such a company or trust on or before such
date shall not be treated as qualified dividend income (as defined
in section 1(h)(11)(B) of the Internal Revenue Code of 1986, as
added by this Act)."
Pub. L. 108-27, title III, Sec. 303, May 28, 2003, 117 Stat. 764,
provided that: "All provisions of, and amendments made by, this
title [amending this section, sections 55, 57, 163, 301, 306, 338,
467, 531, 541, 584, 702, 854, 857, 1255, 1257, 1445, and 7518 of
this title, and section 1177 of Title 46, Appendix, Shipping,
repealing section 341 of this title, and enacting provisions set
out as notes under this section] shall not apply to taxable years
beginning after December 31, 2008, and the Internal Revenue Code of
1986 shall be applied and administered to such years as if such
provisions and amendments had never been enacted."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title I, Sec. 101(d), June 7, 2001, 115 Stat. 44,
provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting section 6428 of this
title and amending this section and sections 15, 531, 541, 3402,
and 3406 of this title] shall apply to taxable years beginning
after December 31, 2000.
"(2) Amendments to withholding provisions. - The amendments made
by paragraphs (6), (7), (8), (9), (10), and (11) of subsection (c)
[amending sections 3402 and 3406 of this title] shall apply to
amounts paid after the 60th day after the date of the enactment of
this Act [June 7, 2001]. References to income brackets and rates of
tax in such paragraphs shall be applied without regard to section
1(i)(1)(D) of the Internal Revenue Code of 1986."
Pub. L. 107-16, title III, Sec. 301(d), June 7, 2001, 115 Stat.
54, as amended by Pub. L. 108-27, title I, Sec. 103(b), May 28,
2003, 117 Stat. 754, provided that: "The amendments made by this
section [amending this section and section 63 of this title] shall
apply to taxable years beginning after December 31, 2002."
Pub. L. 107-16, title III, Sec. 302(c), June 7, 2001, 115 Stat.
54, as amended by Pub. L. 108-27, title I, Sec. 102(b)(2), May 28,
2003, 117 Stat. 754, provided that: "The amendments made by this
section [amending this section] shall apply to taxable years
beginning after December 31, 2002."
Pub. L. 107-16, title IX, Sec. 901, June 7, 2001, 115 Stat. 150,
as amended by Pub. L. 107-358, Sec. 2, Dec. 17, 2002, 116 Stat.
3015, provided that:
"(a) In General. - All provisions of, and amendments made by,
this Act [see Tables for classification] shall not apply -
"(1) to taxable, plan, or limitation years beginning after
December 31, 2010, or
"(2) in the case of title V [see Tables for classification], to
estates of decedents dying, gifts made, or generation skipping
transfers, after December 31, 2010.
"(b) Application of Certain Laws. - The Internal Revenue Code of
1986 and the Employee Retirement Income Security Act of 1974 [29
U.S.C. 1001 et seq.] shall be applied and administered to years,
estates, gifts, and transfers described in subsection (a) as if the
provisions and amendments described in subsection (a) had never
been enacted."
"(c) Exception. - Subsection (a) shall not apply to section 803
[set out as a note preceding section 101 of this title] (relating
to no federal income tax on restitution received by victims of the
Nazi regime or their heirs or estates)."
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(c)], Dec. 21,
2000, 114 Stat. 2763, 2763A-605, provided that: "The amendments
made by this section [amending this section and section 1202 of
this title] shall apply to stock acquired after the date of the
enactment of this Act [Dec. 21, 2000]."
EFFECTIVE DATE OF 1998 AMENDMENTS
Pub. L. 105-277, div. J, title IV, Sec. 4002(k), Oct. 21, 1998,
112 Stat. 2681-908, provided that: "The amendments made by this
section [amending this section and sections 408A, 6015, 6103, 6159,
7421, 7443A, and 7491 of this title and amending provisions set out
as a note under section 6601 of this title] shall take effect as if
included in the provisions of the 1998 Act [Pub. L. 105-206] to
which they relate."
Pub. L. 105-206, title V, Sec. 5001(b), July 22, 1998, 112 Stat.
788, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
1223 and 1235 of this title] shall apply to taxable years ending
after December 31, 1997.
"(2) Subsection (a)(5). - The amendments made by subsection
(a)(5) [amending sections 1223 and 1235 of this title] shall take
effect on January 1, 1998."
Pub. L. 105-206, title VI, Sec. 6024, July 22, 1998, 112 Stat.
826, provided that: "Except as otherwise provided in this title
[see Tables for classification], the amendments made by this title
shall take effect as if included in the provisions of the Taxpayer
Relief Act of 1997 [Pub. L. 105-34] to which they relate."
EFFECTIVE DATE OF 1997 AMENDMENT
Section 311(d) of Pub. L. 105-34 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section, sections
55, 57, 904, 1445, and 7518 of this title, and section 1177 of
Title 46, Appendix, Shipping] shall apply to taxable years ending
after May 6, 1997.
"(2) Withholding. - The amendment made by subsection (c)(1)
[amending section 1445 of this title] shall apply only to amounts
paid after the date of the enactment of this Act [Aug. 5, 1997]."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1704(m)(4) of Pub. L. 104-188 provided that: "The
amendments made by this subsection [amending this section and
section 59 of this title] shall apply to taxable years beginning
after December 31, 1995."
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13201(c) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 41, 63,
68, 132, 151, 453A, 513, 531, and 541 of this title] shall apply to
taxable years beginning after December 31, 1992."
Section 13202(c) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 531 and
541 of this title] shall apply to taxable years beginning after
December 31, 1992."
Section 13206(d)(3) of Pub. L. 103-66 provided that: "The
amendments made by this subsection [amending this section and
section 163 of this title] shall apply to taxable years beginning
after December 31, 1992."
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11101(e) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section, sections
32, 41, 59, 63, 135, 151, 513, 691, 904, 6103, and 7518 of this
title, and section 1177 of Title 46, Appendix, Shipping] shall
apply to taxable years beginning after December 31, 1990."
Section 11103(e) of Pub. L. 101-508 provided that: "The
amendments made by this section [enacting section 68 of this title
and amending this section and section 56 of this title] shall apply
to taxable years beginning after December 31, 1990."
Section 11104(c) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section and section
151 of this title] shall apply to taxable years beginning after
December 31, 1990."
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7817 of Pub. L. 101-239 provided that: "Except as
otherwise provided in this part [part I (Secs. 7811-7817) of
subtitle H of title VII of Pub. L. 101-239, see Tables for
classification], any amendment made by this part shall take effect
as if included in the provision of the 1988 Act [Pub. L. 100-647]
to which such amendment relates."
Section 7831(g) of Pub. L. 101-239 provided that: "Any amendment
made by this section [amending this section and sections 42, 406,
407, and 1250 of this title and provisions set out as notes under
sections 141 and 263A of this title] shall take effect as if
included in the provision of the Tax Reform Act of 1986 [Pub. L.
99-514] to which such amendment relates."
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1019 of title I of Pub. L. 100-647 provided that:
"(a) General Rule. - Except as otherwise provided in this title,
any amendment made by this title [see Tables for classification],
shall take effect as if included in the provision of the Reform Act
[Pub. L. 99-514] to which such amendment relates.
"(b) Waiver of Estimated Tax Penalties. - No addition to tax
shall be made under section 6654 or 6655 of the 1986 Code for any
period before April 16, 1989 (March 16, 1989 in the case of a
taxpayer subject to section 6655 of the 1986 Code) with respect to
any underpayment to the extent such underpayment was created or
increased by any provision of this title or title II [see Tables
for classification]."
Section 6006(b) of Pub. L. 100-647 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1988."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 151 of title I of Pub. L. 99-514 provided that:
"(a) General Rule. - Except as otherwise provided in this
section, the amendments made by this title [enacting section 67 of
this title, amending this section, sections 3, 5, 15, 21, 32, 62,
63, 74, 85, 86, 102, 108, 117, 129, 151, 152, 164, 170, 172, 183,
213, 265, 274, 280A, 402, 441, 443, 527, 541, 613A, 642, 667, 861,
862, 901, 904, 1398, 1441, 2032A, 3121, 3231, 3306, 3401, 3402,
3507, 4941, 4945, 6012 to 6014, 6212, 6504, 6511, and 7871 of this
title, and section 409 of Title 42, The Public Health and Welfare,
renumbering section 223 of this title as section 220 of this title,
repealing sections 24, 221, 222, and 1301 to 1305 of this title,
and enacting provisions set out as a note under section 32 of this
title] shall apply to taxable years beginning after December 31,
1986.
"(b) Unemployment Compensation. - The amendment made by section
121 [amending section 85 of this title] shall apply to amounts
received after December 31, 1986, in taxable years ending after
such date.
"(c) Prizes and Awards. - The amendments made by section 122
[amending sections 74, 102, 274, 3121, 3231, 3306, 3401, 4941, and
4945 of this title and section 409 of Title 42, The Public Health
and Welfare] shall apply to prizes and awards granted after
December 31, 1986.
"(d) Scholarships. - The amendments made by section 123 [amending
sections 74, 117, 1441, and 7871 of this title] shall apply to
taxable years beginning after December 31, 1986, but only in the
case of scholarships and fellowships granted after August 16, 1986.
"(e) Parsonage and Military Housing Allowances. - The amendment
made by section 144 [amending section 265 of this title] shall
apply to taxable years beginning before, on, or after, December 31,
1986."
Section 302(b) of Pub. L. 99-514 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1986."
Section 1411(c) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and section 6103 of
this title] shall apply to taxable years beginning after December
31, 1986."
EFFECTIVE DATE OF 1983 AMENDMENT
Section 109 of title I of Pub. L. 97-448 provided that: "Except
as otherwise provided in this title, any amendment made by this
title [see Tables for classification] shall take effect as if it
had been included in the provision of the Economic Recovery Tax Act
of 1981 [Pub. L. 97-34, Aug. 13, 1981, 95 Stat. 172] to which such
amendment relates."
EFFECTIVE DATE OF 1981 AMENDMENT
Section 101(f)(1) of Pub. L. 97-34, as amended by Pub. L. 97-448,
title I, Sec. 101(a)(1), Jan. 12, 1983, 96 Stat. 2365, provided
that: "The amendments made by subsections (a), (c), and (d)
[amending this section and sections 3, 21, 55, 541, and 1304 of
this title and repealing section 1348 of this title] shall apply to
taxable years beginning after December 31, 1981; except that the
amendment made by paragraph (3) of subsection (d) [amending section
21 of this title] shall apply to taxable years ending after
December 31, 1981."
Section 104(e) of Pub. L. 97-34 provided that: "The amendments
made by this section [amending this section and sections 63, 151,
6012, and 6013 of this title] shall apply to taxable years
beginning after December 31, 1984."
EFFECTIVE DATE OF 1978 AMENDMENT
Section 101(f)(1) of Pub. L. 95-600 provided that: "The
amendments made by subsections (a), (b), (c), and (d) [amending
sections 63, 402, 1302, and 6012 of this title] shall apply to
taxable years beginning after December 31, 1978."
EFFECTIVE DATE OF 1977 AMENDMENT
Section 106(a) of Pub. L. 95-30 provided that: "The amendments
made by sections 101, 102, and 104 [amending this section and
sections 3, 21, 42, 57, 63, 143, 161, 172, 211, 402, 441, 443, 511,
584, 613A, 641, 642, 667, 703, 861, 862, 873, 904, 911, 931, 1034,
1211, 1302, 6012, 6014, 6212, 6504, and 6654 of this title and
repealing sections 36, 141, 142, 144, and 145 of this title] shall
apply to taxable years beginning after December 31, 1976."
EFFECTIVE DATE OF 1969 AMENDMENT
Section 803(f) of Pub. L. 91-172, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by subsections (a) [amending this section], (b)
[amending section 2 of this title], and (d) (other than paragraphs
(1) and (8)) [amending sections 5, 511, 632, 641, 1347, and 6015 of
this title] shall apply to taxable years beginning after December
31, 1970, except that section 2(c) of the Internal Revenue Code of
1986 [formerly I.R.C. 1954] [section 2(c) of this title], as
amended by subsection (b), shall also apply to taxable years
beginning after December 31, 1969. The amendments made by
subsections (c) [amending section 3 of this title], (d)(1)
[amending section 6014 of this title], and (d)(8) [amending section
1304 of this title] shall apply to taxable years beginning after
December 31, 1969".
EFFECTIVE DATE OF 1966 AMENDMENT
Section 103(n) of Pub. L. 89-809 provided that:
"(1) The amendments made by this section (other than the
amendments made by subsections (h), (i), and (k)) [enacting
section 877 of this title, amending this section and sections
116, 154, 871, 872, 873, 874, 875, 932, 6015, and 7701 of this
title, renumbering section 877 as 878, and repealing section 1493
of this title] shall apply with respect to taxable years
beginning after December 31, 1966.
"(2) The amendments made by subsection (h) [amending section
1441 of this title] shall apply with respect to payments made in
taxable years of recipients beginning after December 31, 1966.
"(3) The amendments made by subsection (i) [amending section
1461 of this title] shall apply with respect to payments
occurring after December 31, 1966.
"(4) The amendments made by subsection (k) [amending section
3401 of this title] shall apply with respect to remuneration paid
after December 31, 1966."
EFFECTIVE DATE OF 1964 AMENDMENT
Section 131 of Pub. L. 88-272, as amended by Pub. L. 99-514, Sec.
2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Except for
purposes of section 21 of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] (relating to effect of changes in rates
during a taxable year), the amendments made by parts I and II of
this title [amending this section and sections 2, 11, 37, 141, 144,
242, 821, 871, 963, 6016, 6074, 6154, 6212, 6504, and 6655 of this
title] shall apply with respect to taxable years beginning after
December 31, 1963."
SHORT TITLE OF 2003 AMENDMENTS
Pub. L. 108-121, Sec. 1(a), Nov. 11, 2003, 117 Stat. 1335,
provided that: "This Act [amending sections 5, 62, 101, 121, 132,
134, 162, 501, 530, 692, 2201, 3121, 3306, 3401, 6013, and 7508 of
this title, section 1478 of Title 10, Armed Forces, and section 58c
of Title 19, Customs Duties, and enacting provisions set out as
notes under sections 5, 62, 101, 121, 132, 134, 501, 530, 2201, and
7508 of this title and section 1478 of Title 10] may be cited as
the 'Military Family Tax Relief Act of 2003'."
Pub. L. 108-27, Sec. 1(a), May 28, 2003, 117 Stat. 752, provided
that: "This Act [enacting section 6429 of this title and section
801 of Title 42, The Public Health and Welfare, amending this
section, sections 24, 55, 57, 63, 163, 168, 179, 301, 306, 338,
467, 531, 541, 584, 702, 854, 857, 1255, 1257, 1400L, 1445, and
7518 of this title, and section 1177 of Title 46, Appendix,
Shipping, repealing section 341 of this title, enacting provisions
set out as notes under this section, sections 24, 55, 63, 168, and
179 of this title, and section 1396d of Title 42, and amending
provisions set out as notes under this section] may be cited as the
'Jobs and Growth Tax Relief Reconciliation Act of 2003'."
Pub. L. 108-26, Sec. 1, May 28, 2003, 117 Stat. 751, provided
that: "This Act [enacting and amending provisions set out as notes
under section 3304 of this title] may be cited as the 'Unemployment
Compensation Amendments of 2003'."
SHORT TITLE OF 2002 AMENDMENTS
Pub. L. 107-358, Sec. 1, Dec. 17, 2002, 116 Stat. 3015, provided
that: "This Act [amending provisions set out as a note under this
section] may be cited as the 'Holocaust Restitution Tax Fairness
Act of 2002'."
Pub. L. 107-181, Sec. 1, May 20, 2002, 116 Stat. 583, provided
that: "This Act [amending section 107 of this title and enacting
provisions set out as a note under section 107 of this title] may
be cited as the 'Clergy Housing Allowance Clarification Act of
2002'."
Pub. L. 107-147, Sec. 1(a), Mar. 9, 2002, 116 Stat. 21, provided
that: "This Act [see Tables for classification] may be cited as the
'Job Creation and Worker Assistance Act of 2002'."
Pub. L. 107-134, Sec. 1(a), Jan. 23, 2002, 115 Stat. 2427,
provided that: This Act [enacting sections 139 and 5891 of this
title and section 1148 of Title 29, Labor, amending sections 5,
101, 104, 140, 642, 692, 2011, 2053, 2201, 6013, 6081, 6103, 6105,
6161, 6404, 7213, 7508, and 7508A of this title and section 1302 of
Title 29, enacting provisions set out as notes under sections 101,
108, 139, 501, 642, 692, 2011, 5891, 6081, and 6103 of this title,
section 401 of Title 42, The Public Health and Welfare, and section
40101 of Title 49, Transportation, and amending provisions set out
as a note under section 40101 of Title 49] may be cited as the
'Victims of Terrorism Tax Relief Act of 2001'."
SHORT TITLE OF 2001 AMENDMENTS
Pub. L. 107-16, Sec. 1(a), June 7, 2001, 115 Stat. 38, provided
that: "This Act [see Tables for classification] may be cited as the
'Economic Growth and Tax Relief Reconciliation Act of 2001'."
Pub. L. 107-15, Sec. 1, June 5, 2001, 115 Stat. 37, provided
that: "This Act [amending provisions set out as a note under
section 101 of this title] may be cited as the 'Fallen Hero
Survivor Benefit Fairness Act of 2001'."
SHORT TITLE OF 2000 AMENDMENTS
Pub. L. 106-573, Sec. 1, Dec. 28, 2000, 114 Stat. 3061, provided
that: "This Act [amending section 453 of this title and enacting
provisions set out as a note under section 453 of this title] may
be cited as the 'Installment Tax Correction Act of 2000'."
Pub. L. 106-554, Sec. 1(a)(7) [Sec. 1(a)], Dec. 21, 2000, 114
Stat. 2763, 2763A-587, provided that: "This Act [H.R. 5662, as
enacted by section 1(a)(7) of Pub. L. 106-554, see Tables for
classification] may be cited as the 'Community Renewal Tax Relief
Act of 2000'."
Pub. L. 106-519, Sec. 1(a), Nov. 15, 2000, 114 Stat. 2423,
provided that: "This Act [enacting sections 114 and 941 to 943 of
this title, amending sections 56, 275, 864, 903 and 999 of this
title, and repealing sections 921 to 927 of this title] may be
cited as the 'FSC Repeal and Extraterritorial Income Exclusion Act
of 2000'."
Pub. L. 106-476, title IV, Sec. 4001, Nov. 9, 2000, 114 Stat.
2176, provided that: "This title [enacting sections 1681 to 1681b
of Title 19, Customs Duties, amending sections 5704, 5754, and 5761
of this title, and enacting provisions set out as notes under
sections 5704 and 5761 of this title and section 1681 of Title 19]
may be cited as the 'Imported Cigarette Compliance Act of 2000'."
SHORT TITLE OF 1999 AMENDMENT
Pub. L. 106-170, title V, Sec. 500, Dec. 17, 1999, 113 Stat.
1918, provided that: "This title [see Tables for classification]
may be cited as the 'Tax Relief Extension Act of 1999'."
SHORT TITLE OF 1998 AMENDMENTS
Pub. L. 105-277, div. J, Sec. 1000(a), Oct. 21, 1998, 112 Stat.
2681-886, provided that: "This division [Secs. 1000-5301, see
Tables for classification] may be cited as the 'Tax and Trade
Relief Extension Act of 1998'."
Pub. L. 105-277, div. C, title XV, Sec. 1501, Oct. 21, 1998, 112
Stat. 2681-741, provided that: "This title [amending sections 4132
and 9510 of this title and section 300aa-11 of Title 42, The Public
Health and Welfare, and enacting provisions set out as notes under
sections 4132 and 9510 of this title] may be cited as the 'Vaccine
Injury Compensation Program Modification Act'."
Pub. L. 105-206, Sec. 1(a), July 22, 1998, 112 Stat. 685,
provided that: "This Act [see Tables for classification] may be
cited as the 'Internal Revenue Service Restructuring and Reform Act
of 1998'."
Pub. L. 105-206, title III, Sec. 3000, July 22, 1998, 112 Stat.
726, provided that: "This title [see Tables for classification] may
be cited as the 'Taxpayer Bill of Rights 3'."
Pub. L. 105-206, title VI, Sec. 6001(a), July 22, 1998, 112 Stat.
790, provided that: "This title [see Tables for classification] may
be cited as the 'Tax Technical Corrections Act of 1998'."
Pub. L. 105-178, title IX, Sec. 9001(a), June 9, 1998, 112 Stat.
499, provided that: "This title [amending sections 40, 132, 4041,
4051, 4071, 4081, 4091, 4221, 4481 to 4483, 6156, 6412, 6421, 6427,
9503, and 9504 of this title and section 460l-11 of Title 16,
Conservation, repealing section 9511 of this title, enacting
provisions set out as notes under sections 40, 132, 172, 4041,
6421, and 9503 of this title, and amending provisions set out as a
note under section 172 of this title] may be cited as the 'Surface
Transportation Revenue Act of 1998'."
SHORT TITLE OF 1997 AMENDMENTS
Pub. L. 105-35, Sec. 1, Aug. 5, 1997, 111 Stat. 1104, provided
that: "This Act [enacting section 7213A of this title, amending
sections 7213 and 7431 of this title, and enacting provisions set
out as notes under sections 7213 and 7431 of this title] may be
cited as the 'Taxpayer Browsing Protection Act'."
Section 1(a) of Pub. L. 105-34 provided that: "This Act [see
Tables for classification] may be cited as the 'Taxpayer Relief Act
of 1997'."
Pub. L. 105-2, Sec. 1(a), Feb. 28, 1997, 111 Stat. 4, provided
that: "This Act [amending sections 4041, 4081, 4091, 4261, 4271,
and 9502 of this title and enacting provisions set out as notes
under sections 4041, 4081, and 4261 of this title] may be cited as
the 'Airport and Airway Trust Fund Tax Reinstatement Act of 1997'."
SHORT TITLE OF 1996 AMENDMENTS
Section 1(a) of Pub. L. 104-188 provided that: "This Act [see
Tables for classification] may be cited as the 'Small Business Job
Protection Act of 1996'."
Pub. L. 104-168, Sec. 1(a), July 30, 1996, 110 Stat. 1452,
provided that: "This Act [enacting sections 4958, 7434, 7435, and
7524 of this title, amending sections 501, 4955, 4963, 6013, 6033,
6041 to 6042, 6044, 6045, 6049, 6050B, 6050H to 6050K, 6050N, 6103,
6104, 6159, 6201, 6213, 6323, 6334, 6343, 6404, 6503, 6601, 6651,
6652, 6656, 6672, 6685, 7122, 7213, 7422, 7430, 7433, 7454, 7502,
7608, 7609, 7623, 7802, 7805, and 7811 of this title, renumbering
sections 7434 and 7435 as sections 7435 and 7436 of this title,
enacting provisions set out as notes under sections 501, 4955,
6013, 6033, 6041, 6103, 6104, 6159, 6201, 6311, 6323, 6334, 6404,
6503, 6601, 6651, 6652, 6656, 6672, 7122, 7430, 7433 to 7435, 7524,
7608, 7609, 7623, 7802, 7803, 7805, and 7811 of this title, and
amending provisions set out as a note under section 7608 of this
title] may be cited as the 'Taxpayer Bill of Rights 2'."
SHORT TITLE OF 1994 AMENDMENTS
Pub. L. 103-465, title VII, Sec. 750, Dec. 8, 1994, 108 Stat.
5012, provided that: "This subtitle [subtitle F (Secs. 750-781) of
title VII of Pub. L. 103-465, enacting sections 1310, 1311, and
1350 of Title 29, Labor, amending sections 401, 404, 411, 412, 415,
417, 4971, and 4972 of this title and sections 1053 to 1056, 1082,
1132, 1301, 1303, 1305, 1306, 1322, 1341, 1342, and 1343 of Title
29, and enacting provisions set out as notes under sections 401,
411, 412, and 4972 of this title and sections 1056, 1082, 1303,
1306, 1310, 1311, 1322, 1341, and 1342 of Title 29] may be cited as
the 'Retirement Protection Act of 1994'."
Pub. L. 103-387, Sec. 1, Oct. 22, 1994, 108 Stat. 4071, provided
that: "This Act [enacting section 3510 of this title, amending
sections 3102 and 3121 of this title, section 3701 of Title 31,
Money and Finance, and sections 401, 402, 404, 409, 410, and 1383
of Title 42, The Public Health and Welfare, and enacting provisions
set out as notes under sections 3102 and 3510 of this title,
section 3701 of Title 31, and sections 401, 402, and 1383 of Title
42] may be cited as the 'Social Security Domestic Employment Reform
Act of 1994'."
SHORT TITLE OF 1993 AMENDMENTS
Pub. L. 103-152, Sec. 1, Nov. 24, 1993, 107 Stat. 1516, provided
that: "This Act [amending sections 503, 504, 1105, 1108, and 1382j
of Title 42, The Public Health and Welfare, enacting provisions set
out as notes under section 3304 of this title and sections 503 and
1382j of Title 42, amending provisions set out as notes under
section 3304 of this title and section 352 of Title 45, Railroads,
and repealing provisions set out as a note under section 3304 of
this title] may be cited as the 'Unemployment Compensation
Amendments of 1993'."
Section 13001(a) of title XIII of Pub. L. 103-66 provided that:
"This chapter [chapter 1 (Secs. 13001-13444) of title XIII of Pub.
L. 103-66, see Tables for classification] may be cited as the
'Revenue Reconciliation Act of 1993'."
Pub. L. 103-6, Sec. 1, Mar. 4, 1993, 107 Stat. 33, provided that:
"This Act [enacting provisions set out as notes under section 3304
of this title, section 31 of Title 2, The Congress, and section 352
of Title 45, Railroads, and amending provisions set out as notes
under section 3304 of this title and section 352 of Title 45] may
be cited as the 'Emergency Unemployment Compensation Amendments of
1993'."
SHORT TITLE OF 1992 AMENDMENTS
Pub. L. 102-486, title XIX, Sec. 19141, Oct. 24, 1992, 106 Stat.
3036, provided that: "This subtitle [subtitle C (Secs. 19141-19143)
of title XIX of Pub. L. 102-486, enacting sections 9701 to 9722 of
this title, amending sections 1231 and 1232 of Title 30, Mineral
Lands and Mining, and enacting provisions set out as a note under
section 9701 of this title] may be cited as the 'Coal Industry
Retiree Health Benefit Act of 1992'."
Pub. L. 102-318, Sec. 1, July 3, 1992, 106 Stat. 290, provided
that: "This Act [enacting section 1110 of Title 42, The Public
Health and Welfare, amending sections 55, 62, 72, 151, 219, 401 to
404, 406 to 408, 411, 414, 415, 457, 691, 871, 877, 1441, 3121,
3304, 3306, 3402, 3405, 4973, 4980A, 6047, 6652, 6655, and 7701 of
this title, section 8509 of Title 5, Government Organization and
Employees, section 2291 of Title 19, Customs Duties, and sections
502, 503, 1101, 1102, 1104, and 1105 of Title 42, enacting
provisions set out as notes under sections 401, 402, 3302, 3304,
and 6655 of this title, section 8509 of Title 5, section 2291 of
Title 19, and sections 502, 666, 1102, and 1108 of Title 42, and
amending provisions set out as notes under section 3304 of this
title, sections 502 and 666 of Title 42, and section 352 of Title
45, Railroads] may be cited as the 'Unemployment Compensation
Amendments of 1992'."
SHORT TITLE OF 1991 AMENDMENTS
Pub. L. 102-240, title VIII, Sec. 8001(a), Dec. 18, 1991, 105
Stat. 2203, provided that: "This title [enacting section 9511 of
this title, amending sections 4041, 4051, 4071, 4081, 4091, 4221,
4481, 4482, 4483, 6156, 6412, 6420, 6421, 6427, 9503, and 9504 of
this title and section 460l-11 of Title 16, Conservation, and
enacting provisions set out as notes under section 9503 of this
title, section 101 of Title 23, Highways, and section 1601 of
former Title 49, Transportation] may be cited as the 'Surface
Transportation Revenue Act of 1991'."
Pub. L. 102-227, Sec. 1(a), Dec. 11, 1991, 105 Stat. 1686,
provided that: "This Act [amending sections 25, 28, 41, 42, 48, 51,
57, 120, 127, 143, 144, 162, 864, and 6655 of this title and
enacting provisions set out as notes under sections 25, 28, 42, 51,
120, 127, 143, 144, 162, 864, and 6655 of this title] may be cited
as the 'Tax Extension Act of 1991'."
SHORT TITLE OF 1990 AMENDMENT
Section 11001(a) of title XI of Pub. L. 101-508 provided that:
"This title [see Tables for classification] may be cited as the
'Revenue Reconciliation Act of 1990'."
SHORT TITLE OF 1989 AMENDMENT
Section 7001(a) of title VII of Pub. L. 101-239 provided that:
"This title [see Tables for classification] may be cited as the
'Revenue Reconciliation Act of 1989'."
Section 7701 of title VII of Pub. L. 101-239 provided that: "This
subtitle [subtitle G (Secs. 7701-7743) of title VII of Pub. L.
101-239, see Tables for classification] may be cited as the
'Improved Penalty Administration and Compliance Tax Act'."
SHORT TITLE OF 1988 AMENDMENT
Section 1(a) of Pub. L. 100-647 provided that: "This Act [see
Tables for classification] may be cited as the 'Technical and
Miscellaneous Revenue Act of 1988'."
Section 6226 of Pub. L. 100-647 provided that: "This subtitle
[subtitle J (Secs. 6226-6247) of title VI of Pub. L. 100-647,
enacting sections 6159, 6326, 6712, 7430, 7432, 7433, 7520, 7521,
and 7811 of this title, amending sections 6213, 6214, 6331, 6332,
6334, 6335, 6343, 6404, 6512, 6601, 6673, 6863, 7216, 7429, 7481,
7482, 7802, and 7805 of this title and section 504 of Title 5,
Government Organization and Employees, renumbering section 6326 as
6327, 7432 as 7433, and 7433 as 7434 of this title, and enacting
provisions set out as notes under this section and sections 6159,
6213, 6214, 6326, 6331, 6404, 6512, 6673, 6712, 6863, 7429, 7430,
7432, 7520, 7521, 7605, 7801 to 7803, 7805, and 7811 of this title]
may be cited as the 'Omnibus Taxpayer Bill of Rights'."
SHORT TITLE OF 1987 AMENDMENTS
Pub. L. 100-223, title IV, Sec. 401, Dec. 30, 1987, 101 Stat.
1532, provided that: "This title [enacting section 4283 of this
title, amending sections 4041, 4261, 4271, 6427, and 9502 of this
title, and enacting provisions set out as notes under sections 4041
and 4261 of this title] may be cited as the 'Airport and Airway
Revenue Act of 1987'."
Pub. L. 100-203, title IX, Sec. 9302(a), Dec. 22, 1987, 101 Stat.
1330-333, provided that: "This part [part II (Secs. 9302-9346) of
subtitle D of part II of Pub. L. 100-203, enacting sections 1085b
and 1371 of Title 29, Labor, amending sections 401, 404, 411, 412,
414, and 4971 of this title and sections 1021, 1023, 1024, 1054,
1082 to 1084, 1085a, 1086, 1103, 1107, 1113, 1132, 1201, 1301, 1305
to 1307, 1322, 1341, 1342, 1344, 1349, 1362, 1364, 1367, and 1368
of Title 29, repealing section 1349 of Title 29, and enacting
provisions set out as notes under sections 401, 404, 412, and 4971
of this title and sections 1054, 1107, 1132, 1301, 1305, 1322, and
1344 of Title 29] may be cited as the 'Pension Protection Act'."
Pub. L. 100-203, title X, Sec. 10000(a), Dec. 22, 1987, 101 Stat.
1330-382, provided that: "This title [see Tables for
classification] may be cited as the 'Revenue Act of 1987'."
Pub. L. 100-17, title V, Sec. 501, Apr. 2, 1987, 101 Stat. 256,
provided that: "This title [amending sections 4041, 4051, 4052,
4071, 4081, 4221, 4481, 4482, 4483, 6156, 6412, 6420, 6421, 6427,
and 9503 of this title and section 460l-11 of Title 16,
Conservation, and enacting provisions set out as notes under
sections 4052 and 4481 of this title] may be cited as the 'Highway
Revenue Act of 1987'."
SHORT TITLE OF 1986 AMENDMENTS
Pub. L. 99-662, title XIV, Sec. 1401, Nov. 17, 1986, 100 Stat.
4266, provided that: "This title [enacting sections 4461, 4462,
9505, and 9506 of this title and section 988a of Title 33,
Navigation and Navigable Waters, amending section 4042 of this
title and sections 984 and 1804 of Title 33, repealing sections
1801 and 1802 of Title 33, and enacting provisions set out as notes
under sections 4042, 4461, 9505, and 9506 of this title and
sections 984 and 988 of Title 33] may be cited as the 'Harbor
Maintenance Revenue Act of 1986'."
Section 1(a) of Pub. L. 99-514 provided that: "This Act [see
Tables for classification] may be cited as the 'Tax Reform Act of
1986'."
Pub. L. 99-499, title V, Sec. 501, Oct. 17, 1986, 100 Stat. 1760,
provided that: "This title [enacting sections 59A, 4671, 4672,
9507, and 9508 of this title, amending sections 26, 164, 275, 936,
1561, 4041, 4042, 4081, 4221, 4611, 4612, 4661, 4662, 6154, 6416,
6420, 6421, 6425, 6427, 6655, 9502, 9503, and 9506 of this title
and section 9601 of Title 42, The Public Health and Welfare,
repealing sections 4681 and 4682 of this title and sections 9631 to
9633, 9641, and 9653 of Title 42, and enacting provisions set out
as notes under this section and sections 26, 4041, 4611, 4661,
4671, 4681, 9507, and 9508 of this title] may be cited as the
'Superfund Revenue Act of 1986'."
SHORT TITLE OF 1984 AMENDMENT
Pub. L. 98-369, Sec. 1(a), July 18, 1984, 98 Stat. 494, provided
that: "This Act [see Tables for classification] may be cited as the
'Deficit Reduction Act of 1984'."
Pub. L. 98-369, div. A (Secs. 5-1082), Sec. 5(a), July 18, 1984,
98 Stat. 494, provided that: "This division [see Tables for
classification] may be cited as the 'Tax Reform Act of 1984'."
SHORT TITLE OF 1983 AMENDMENTS
Pub. L. 98-76, title II, Sec. 201, Aug. 12, 1983, 97 Stat. 419,
provided that: "This title [enacting sections 3321 to 3323 and
6050G of this title, amending sections 72, 86, 105, 3201, 3202,
3211, 3221, 3231, 6157, 6201, 6317, 6513, and 6601 of this title
and section 430 of Title 42, The Public Health and Welfare, and
enacting provisions set out as notes under sections 72, 105, 3201,
3321, and 6302 of this title and section 231n of Title 45,
Railroads] may be cited as the 'Railroad Retirement Revenue Act of
1983'."
Pub. L. 98-67, title I, Sec. 101(a), Aug. 5, 1983, 97 Stat. 369,
provided that: "This title [enacting sections 3406 and 6705 of this
title, amending sections 31, 274, 275, 643, 661, 3402, 3403, 3502,
3507, 6011, 6013, 6015, 6042, 6044, 6049, 6051, 6365, 6401, 6413,
6652, 6653, 6654, 6676, 6678, 6682, 7205, 7215, 7431, 7654, and
7701 of this title, repealing sections 3451 to 3456 of this title,
enacting provisions set out as notes under sections 31, 3451, and
6011 of this title, and repealing provisions set out as a note
under section 3451 of this title] may be cited as the 'Interest and
Dividend Tax Compliance Act of 1983'."
Pub. L. 97-473, title II, Sec. 201, Jan. 14, 1983, 96 Stat. 2607,
provided that: "This title [enacting section 7871 of this title,
amending sections 41, 103, 164, 170, 2055, 2106, 2522, 4227, 4484,
6420, 6421, 6424, 6427, and 7701 of this title, and enacting
provisions set out as a note under section 7871 of this title] may
be cited as the 'Indian Tribal Governmental Tax Status Act of
1982'."
Section 1(a) of Pub. L. 97-448 provided that: "This Act [see
Tables for classification] may be cited as the 'Technical
Corrections Act of 1982'."
Pub. L. 97-424, title V, Sec. 501(a), Jan. 6, 1983, 96 Stat.
2168, provided that: "This title [see Tables for classification]
may be cited as the 'Highway Revenue Act of 1982'."
SHORT TITLE OF 1982 AMENDMENTS
Pub. L. 97-362, Sec. 1(a), Oct. 25, 1982, 96 Stat. 1726, provided
that: "This Act [amending sections 8509 and 8521 of Title 5,
Government Organization and Employees, sections 48, 172, 4401,
4411, 6051, 7447, 7448, 7456, 7459, and 7463 of this title, and
section 601 of former Title 46, Shipping, enacting provisions set
out as notes under sections 8509 and 8521 of Title 5 and sections
48, 172, 336, 4401, 4411, 6051, 7448, and 7463 of this title, and
amending provisions set out as notes under section 2291 of Title
19, Customs Duties, and section 3306 of this title] may be cited as
the 'Miscellaneous Revenue Act of 1982'."
Pub. L. 97-354, Sec. 1(a), Oct. 19, 1982, 96 Stat. 1669, provided
that: "This Act [enacting sections 1361 to 1363, 1366 to 1368, 1371
to 1375, 1377 to 1379, and 6241 to 6245 of this title, amending
sections 29, 31, 40, 41, 46, 48, 50A, 50B, 52, 53, 55, 57, 58, 62,
108, 163, 168, 170, 172, 179, 183, 189, 194, 267, 280, 280A, 291,
447, 464, 465, 613A, 992, 1016, 1101, 1212, 1251, 1254, 1256, 3453,
3454, 4992, 4996, 6037, 6042, 6362, and 6661 of this title and
section 1108 of Title 29, Labor, omitting section 1376 of this
title, and enacting provisions set out as a note under section 1361
of this title] may be cited as the 'Subchapter S Revision Act of
1982'."
Pub. L. 97-248, Sec. 1(a), Sept. 3, 1982, 96 Stat. 324, provided
that: "This Act [see Tables for classification] may be cited as the
'Tax Equity and Fiscal Responsibility Act of 1982'."
Section 401 of title IV of Pub. L. 97-248 provided that: "This
title [enacting sections 6046A and 6221 to 6232 of this title and
section 1508 of Title 28, Judiciary and Judicial Procedure,
amending sections 702, 6031, 6213, 6216, 6422, 6501, 6504, 6511,
6512, 6515, 6679, 7422, 7451, 7456, 7459, 7482, and 7485 of this
title and section 1346 of Title 28, and enacting provisions set out
as notes under sections 6031, 6046A, 6221, and 6231 of this title]
may be cited as the 'Tax Treatment of Partnership Items Act of
1982'."
SHORT TITLE OF 1981 AMENDMENTS
Pub. L. 97-119, title I, Sec. 101(a), Dec. 29, 1981, 95 Stat.
1635, provided that: "This subtitle [subtitle A (Secs. 101-104) of
title I of Pub. L. 97-119, enacting sections 9500, 9501, 9601, and
9602 of this title, amending sections 501 and 4121 of this title
and sections 902, 925, 932, and 934 of Title 30, Mineral Lands and
Mining, repealing section 934a of Title 30, and enacting provisions
set out as notes under sections 4121 and 9501 of this title and
section 934 of Title 30] may be cited as the 'Black Lung Benefits
Revenue Act of 1981'."
Section 1(a) of Pub. L. 97-34 provided that: "This Act [see
Tables for classification] may be cited as the 'Economic Recovery
Tax Act of 1981'."
SHORT TITLE OF 1980 AMENDMENTS
Pub. L. 96-605, Sec. 1(a), Dec. 28, 1980, 94 Stat. 3521, provided
that: "This Act [enacting sections 66 and 195 of this title,
amending sections 48, 105, 125, 274, 401, 408, 409A, 410, 414, 415,
501, 513, 514, 528, 861, 871, and 2055 of this title, and enacting
provisions set out as notes under sections 48, 66, 119, 125, 195,
274, 401, 409A, 414, 415, 501, 513, 514, 528, 861, 871, 2055, 3121,
and 7701 of this title] may be cited as the 'Miscellaneous Revenue
Act of 1980'."
Pub. L. 96-589, Sec. 1(a), Dec. 24, 1980, 94 Stat. 3389, provided
that: "This Act [enacting sections 370, 1398, 1399, 6658, and 7464
of this title, redesignating former section 7464 of this title as
7465, amending sections 108, 111, 118, 128, 302, 312, 337, 351,
354, 355, 357, 368, 381, 382, 422, 443, 542, 703, 1017, 1023, 1371,
3302, 6012, 6036, 6103, 6155, 6161, 6212, 6213, 6216, 6326, 6404,
6503, 6512, 6532, 6871, 6872, 6873, 7430, and 7508 of this title,
repealing section 1018 of this title, and enacting provisions set
out as a note under section 108 of this title] may be cited as the
'Bankruptcy Tax Act of 1980'."
Pub. L. 96-510, title II, Sec. 201(a), Dec. 11, 1980, 94 Stat.
2796, provided that: "This title [enacting chapter 38 of this
title, sections 9631 to 9641 of Title 42, The Public Health and
Welfare, and provisions set out as a note under section 4611 of
this title] may be cited as the 'Hazardous Substance Response
Revenue Act of 1980'."
Pub. L. 96-499, title XI, Sec. 1100, Dec. 5, 1980, 94 Stat. 2660,
provided: "This title [enacting sections 103A, 280D, 897, 6039C,
and 6429 of this title, amending sections 103, 861, 871, 882, 3121,
3306, 4251, 6652, and 6655 of this title and section 409 of Title
42, The Public Health and Welfare, and enacting provisions set out
as notes under sections 1, 103A, 280D, 897, 3121, and 6655 of this
title] may be cited as the 'Revenue Adjustments Act of 1980'."
Pub. L. 96-499, title XI, subtitle A (Secs. 1101-1104), Sec.
1101, Dec. 5, 1980, 94 Stat. 2660, provided: "This subtitle
[enacting section 103A of this title, amending section 103 of this
title, and enacting provisions set out as a note under section 103A
of this title] may be cited as the 'Mortgage Subsidy Bond Tax Act
of 1980'."
Pub. L. 96-499, title XI, Sec. 1121, Dec. 5, 1980, 94 Stat. 2682,
provided: "This subtitle [subtitle C (Secs. 1121-1125) of title XI
of Pub. L. 96-499, enacting sections 897 and 6039C of this title,
amending sections 861, 871, 882, and 6652 of this title, and
enacting provisions set out as notes under section 897 of this
title] may be cited as the 'Foreign Investment in Real Property Tax
Act of 1980'."
Pub. L. 96-471, Sec. 1(a), Oct. 19, 1980, 94 Stat. 2247,
provided: "This Act [enacting sections 453 to 453B of this title,
amending sections 311, 336, 337, 381, former section 453, sections
453B, 481, 644, 691, 1038, 1239, and 1255 of this title, and
enacting provisions set out as notes under sections 453, 691, and
1038 of this title] may be cited as the 'Installment Sales Revision
Act of 1980'."
Pub. L. 96-283, title IV, Sec. 401, June 28, 1980, 94 Stat. 582,
provided that: "This title [enacting sections 4495 to 4498 of this
title and sections 1472, 1473 of Title 30, Mineral Lands and
Mining, and enacting provision set out as a note under section 4495
of this title] may be cited as the 'Deep Seabed Hard Mineral
Removal Tax Act of 1979'."
Pub. L. 96-223, Sec. 1(a) Apr. 2, 1980, 94 Stat. 229, provided
that: "This Act [see Tables for classification] may be cited as the
'Crude Oil Windfall Profit Tax Act of 1980'."
Pub. L. 96-222, Sec. 1(a), Apr. 1, 1980, 94 Stat. 194, provided
that: "This Act [see Tables for classification] may be cited as the
'Technical Corrections Act of 1979'."
SHORT TITLE OF 1979 AMENDMENT
Pub. L. 96-39, title VIII, Sec. 801(a), July 26, 1979, 93 Stat.
273, provided that: "This subtitle [subtitle A (Secs. 801-810) of
title VIII of Pub. L. 96-39, amending sections 5001, 5002 to 5008,
5043, 5061, 5064, 5066, 5116, 5171 to 5173, 5175 to 5178, 5180,
5181, 5201 to 5205, 5207, 5211 to 5215, 5221 to 5223, 5231, 5232,
5235, 5241, 5273, 5291, 5301, 5352, 5361 to 5363, 5365, 5381, 5391,
5551, 5601, 5604, 5610, 5612, 5615, 5663, 5681, 5682, and 5691 of
this title, repealing sections 5009, 5021 to 5026, 5081 to 5084,
5174, 5233, 5234, 5251, 5252, 5364, and 5521 to 5523 of this title,
and enacting provisions set out as notes under sections 5001, 5061,
5171, and 5173 of this title] may be cited as the 'Distilled
Spirits Tax Revision Act of 1979'."
SHORT TITLE OF 1978 AMENDMENTS
Section 1(a) of Pub. L. 95-618, Nov. 9, 1978, 92 Stat. 3174,
provided that: "This Act [enacting sections 44C, 124, and 4064 of
this title, amending sections 39, 46 to 48, 56, 57, 167, 263, 465,
613, 613A, 614, 751, 1016, 1254, 4041, 4063, 4081, 4092, 4093,
4217, 4221, 4222, 4293, 4483, 6096, 6401, 6412, 6416, 6421, 6424,
6427, 6504, and 6675 of this title, redesignating section 124 of
this title as section 125, enacting provisions set out as notes
under sections 39, 44C, 48, 124, 167, 263, 613, 613A, 4041, 4063,
4064, 4081, 4093, and 4221 of this title, and amending provisions
set out as notes under section 57 of this title and section 120 of
Title 23, Highways] may be cited as the 'Energy Tax Act of 1978'."
Pub. L. 95-615, Sec. 1, Nov. 8, 1978, 92 Stat. 3097, provided
that: "This Act [probably meaning sections 1 to 8 of Pub. L.
95-615, amending section 167 of this title, enacting provisions set
out as notes under sections 61, 62, and 911 of this title, and
amending provisions set out as notes under sections 117, 167, 382,
401, and 911 of this title] may be cited as the 'Tax Treatment
Extension Act of 1977'."
Pub. L. 95-615, Sec. 201(a), Nov. 8, 1978, 92 Stat. 3098,
provided that: "This Act [probably meaning sections 201 to 210 of
Pub. L. 95-615, enacting section 913 of this title, amending
sections 43, 62, 119, 217, 911, 1034, 1302, 1304, 1402, 3401, 6011,
6012, and 6091 of this title, and enacting provisions set out as
notes under sections 61, 401, and 911 of this title] may be cited
as the 'Foreign Earned Income Act of 1978'."
Section 1(a) of Pub. L. 95-600 provided that: "This Act [see
Tables for classification] may be cited as the 'Revenue Act of
1978'."
Pub. L. 95-502, title II, Sec. 201, Oct. 21, 1978, 92 Stat. 1696,
provided that: "This title [enacting section 4042 of this title and
sections 1801 to 1804 of Title 33, Navigation and Navigable Waters,
amending section 4293 of this title, and enacting provisions set
out as notes under section 4042 of this title] may be cited as the
'Inland Waterways Revenue Act of 1978'."
Pub. L. 95-227, Sec. 1, Feb. 10, 1978, 92 Stat. 11, provided
that: "This Act [enacting sections 192, 4121, and 4951 to 4953 of
this title and section 934a of Title 30, Mineral Lands and Mining,
amended sections 501, 4218, 4221, 4293, 4946, 6104, 6213, 6405,
6416, 6501, 6503, and 7454 of this title and section 934 of Title
30 and enacted provisions set out as notes under sections 192 and
4121 of this title and section 934 of Title 30] may be cited as the
'Black Lung Benefits Revenue Act of 1977'."
SHORT TITLE OF 1977 AMENDMENTS
Section 1(a) of Pub. L. 95-30 provided that: "This Act [see
Tables for classification] may be cited as the 'Tax Reduction and
Simplification Act of 1977'."
Pub. L. 95-19, Sec. 1, Apr. 12, 1977, 91 Stat. 39, provided that:
"This Act [amending section 3304 of this title, enacting provisions
set out as notes under sections 3302, 3304, and 3309 of this title,
and amending provisions set out as notes under sections 3302, 3304,
and 3309 of this title and sections 359 and 360 of Title 2, The
Congress] may be cited as the 'Emergency Unemployment Compensation
Extension Act of 1977'."
SHORT TITLE OF 1976 AMENDMENTS
Pub. L. 94-455, title I, Sec. 101, Oct. 4, 1976, 90 Stat. 1525,
provided that: "This Act [see Tables for classification] may be
cited as the 'Tax Reform Act of 1976'."
Section 1 of Pub. L. 94-452 provided that: "This Act [enacting
section 6158 of this title, amending sections 311, 1101, 1102,
1103, 6151, 6503, and 6601 of this title, and enacting provisions
set out as notes under sections 311, 1101, and 6158 of this title]
may be cited as the 'Bank Holding Company Tax Act of 1976'."
SHORT TITLE OF 1975 AMENDMENTS
Pub. L. 94-164, Sec. 1, Dec. 23, 1975, 89 Stat. 970, provided
that: "This Act [amending sections 11, 21, 42, 43, 103, 141, 883,
962, 1561, 3402, 6012, 6153, and 6154 of this title and provisions
set out as notes under sections 42, 43, and 3402 of this title, and
enacting provisions set out as notes under this section and
sections 3, 11, 43, 103, and 883 of this title] may be cited as the
'Revenue Adjustment Act of 1975'."
Pub. L. 94-12, Sec. 1(a), Mar. 29, 1975, 89 Stat. 26, provided
that: "This Act [enacting sections, 42, 43, 44, 613A, 907, 955, and
6428 of this title, amending sections 3, 11, 12, 21, 46, 47, 48,
50A, 50B, 56, 141, 214, 535, 613, 703, 851, 901, 902, 951, 954,
962, 993, 1034, 1561, 3304 note, 3402, 6012, 6096, 6201, and 6401
of this title, repealing sections 955 and 963 of this title, and
enacting provisions set out as notes under sections 3, 11, 43, 44,
46, 48, 50A, 214, 410, 535, 613A, 907, 955, 993, 3304, 3402, 6428,
and 6611 of this title and section 402 of Title 42, The Public
Health and Welfare] may be cited as the 'Tax Reduction Act of
1975'."
SHORT TITLE OF 1973 AMENDMENTS
Pub. L. 93-69, title I, Sec. 110, July 10, 1973, 87 Stat. 166,
provided that: "This title [amending sections 3201, 3202, 3211, and
3221 of this title and sections 228b, 228c, and 228e of Title 45,
Railroads, enacting provisions set out as notes under section 3201
of this title and sections 228b, 228c, 228f, and 228o of Title 45,
and amending provisions set out as notes under section 228c of
Title 45] may be cited as the 'Railroad Retirement Amendments of
1973'."
For short title of Pub. L. 93-17 as the "Interest Equalization
Tax Extension Act of 1973", see section 1(a) of Pub. L. 93-17, set
out as a note under section 2104 of this title.
SHORT TITLE OF 1972 AMENDMENT
Pub. L. 92-512, title II, Sec. 201, Oct. 20, 1972, 86 Stat. 936,
provided that: "This title [enacting sections 6361 to 6363 of this
title, amending sections 6405 and 7463 of this title, and enacting
provisions set out as a note under section 7463 of this title] may
be cited as the 'Federal-State Tax Collection Act of 1972'."
SHORT TITLE OF 1971 AMENDMENTS
Pub. L. 92-178, Sec. 1(a), Dec. 10, 1971, 85 Stat. 497, provided
that: "This Act [see Tables for classification] may be cited as the
'Revenue Act of 1971'."
For short title of Pub. L. 92-9 as the "Interest Equalization Tax
Extension Act of 1971", see section 1(a) of Pub. L. 92-9, set out
as a note under section 861 of this title.
SHORT TITLE OF 1970 AMENDMENT
For short title of Pub. L. 91-614 as the "Excise, Estate, and
Gift Tax Adjustment Act of 1970", see section 1 of Pub. L. 91-614,
set out as a Short Title note under section 2001 of this title.
SHORT TITLE OF 1969 AMENDMENTS
Pub. L. 91-172, Sec. 1(a), Dec. 30, 1969, 83 Stat. 487, provided
that: "This Act [see Tables for classification] may be cited as the
'Tax Reform Act of 1969'."
For short title of Pub. L. 91-128 as the "Interest Equalization
Tax Extension Act of 1969", see section 1(a) of Pub. L. 91-128, set
out as a note under section 4182 of this title.
SHORT TITLE OF 1968 AMENDMENT
Pub. L. 90-364, Sec. 1(a), June 28, 1968, 82 Stat. 251, provided
that: "This Act [enacting sections 51 and 6425 of this title,
amending sections 103, 243, 276, 501, 963, 3402, 4061, 4251, 6020,
6154, 6412, 6651, 6655, 7203, 7502, and 7701 of this title and
sections 603, 607, and 1396b of Title 42, The Public Health and
Welfare, repealing sections 6016, 6074, and 4251 to 4254 of this
title, enacting provisions set out as notes under sections 51, 103,
276, 501, 4061, 6154, and 7502 of this title, section 3101 of Title
5, Government Organization and Employees, sections 11 and 757b of
former Title 31, Money and Finance, and section 1396b of Title 42,
and amending notes under section 1396b of Title 42,] may be cited
as the 'Revenue and Expenditure Control Act of 1968'."
SHORT TITLE OF 1967 AMENDMENT
For short title of Pub. L. 90-59 as the "Interest Equalization
Tax Extension Act of 1967", see section 1(a) of Pub. L. 90-59, set
out as a note under section 6011 of this title.
SHORT TITLE OF 1966 AMENDMENTS
For short title of title I of Pub. L. 89-809 as the "Foreign
Investors Tax Act of 1966", see section 101 of Pub. L. 89-809, set
out as a note under section 861 of this title.
For short title of title III of Pub. L. 89-809 as the
"Presidential Election Campaign Fund Act of 1966", see section 301
of Pub. L. 89-809, set out as a Short Title note under section 6096
of this title.
For short title of Pub. L. 89-719 as the "Federal Tax Lien Act of
1966", see section 1(a) of Pub. L. 89-719, set out as a Short Title
note under section 6321 of this title.
SHORT TITLE OF 1965 AMENDMENT
Pub. L. 89-44, Sec. 1(a), June 21, 1965, 79 Stat. 136, provided
that: "This Act [see Tables for classification] may be cited as the
'Excise Tax Reduction Act of 1965'."
SHORT TITLE OF 1964 AMENDMENTS
Section 1 of Pub. L. 88-348 provided: "That this Act [amending
sections 165, 4061, 4251, 4261, 5001, 5022, 5041, 5051, 5063, 5701,
5707, and 6412 of this title, and provisions set out as notes under
sections 165, 4261, and 5701 of this title] may be cited as the
'Excise-Tax Rate Extension Act of 1964'."
Pub. L. 88-272, Sec. 2(a), Feb. 26, 1964, 78 Stat 19, provided
that: "This Act [see Tables for classification] may be cited as the
'Revenue Act of 1964'."
SHORT TITLE OF 1963 AMENDMENT
Pub. L. 88-52, Sec. 1, June 29, 1963, 77 Stat. 72, provided:
"That this Act [amending sections 11, 821, 4061, 4251, 4261, 5001,
5022, 5041, 5051, 5063, 5701, 5707, 6412 of this title and
provisions set out as notes under sections 4261 and 5701 of this
title] may be cited as the 'Tax Rate Extension Act of 1963'."
SHORT TITLE OF 1962 AMENDMENTS
Pub. L. 87-834, Sec. 1(a), Oct. 16, 1962, 76 Stat. 960, provided
that: "This Act [see Tables for classification] may be cited as the
'Revenue Act of 1962'."
For short title of Pub. L. 87-792 as the "Self-Employed
Individuals Tax Retirement Act of 1962", see section 1 of Pub. L.
87-792, set out as a note under section 401 of this title.
Pub. L. 87-508, Sec. 1, June 28, 1962, 76 Stat. 114, provided:
"That this Act [amending sections 11, 821, 4061, 4251 to 4253, 4261
to 4264, 5001, 5002, 5041, 5051, 5063, 5701, 6707, 6412, 6416, and
6421 of this title, enacting provisions set out as notes under
section 4261, 6416, and 6421 of this title, and amending provisions
set out as a note under section 5701 of this title] may be cited as
the 'Tax Rate Extension Act of 1962'."
SHORT TITLE OF 1961 AMENDMENT
Pub. L. 87-72, Sec. 1, June 30, 1961, 75 Stat. 193, provided:
"That this Act [amending sections 11, 821, 4061, 4251, 4261, 5001,
5022, 5041, 5051, 5063, 5701, 5707, and 6412 of this title and
provisions set out as a note under section 5701 of this title] may
be cited as the 'Tax Rate Extension Act of 1961'."
SHORT TITLE OF 1959 AMENDMENTS
Pub. L. 86-75, Sec. 1, June 30, 1959, 73 Stat. 157, provided:
"That this Act [amending sections 11, 821, 4061, 4251, 4261, 5001,
5022, 5041, 5051, 5063, 5701, 5707 and 6412 of this title and
provisions set out as a note under section 5701 of this title] may
be cited as the 'Tax Rate Extension Act of 1959'."
Section 1 of Pub. L. 86-69 provided that: "This Act [amending
former part I of subchapter L of this chapter and sections 116,
381, 841, 842, 891, 1016, 1201, 1232, 1504, 4371, and 6501 of this
title and enacting provisions set out as notes under sections 801,
6072, and 6655 of this title] may be cited as the 'Life Insurance
Company Income Tax Act of 1959'."
SHORT TITLE OF 1958 AMENDMENTS
Pub. L. 85-866, title I, Sec. 1(a), Sept. 2, 1958, 72 Stat. 1606,
provided that: "This title [see Tables for classification] may be
cited as the 'Technical Amendments Act of 1958'."
Pub. L. 85-866, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1676,
provided that: "This title [amending sections 165, 172, 179, 535,
1244, 1551, 6161, 6166, 6503, and 6601 of this title and enacting
provisions set out as notes under sections 172, 179, 535, 6161 of
this title] may be cited as the 'Small Business Tax Revision Act of
1958'."
For short title of Pub. L. 85-859 as the "Excise Tax Technical
Changes Act of 1958", see section 1(a) of Pub. L. 85-859, set out
as a Short Title note under section 5001 of this title.
Pub. L. 85-475, Sec. 1, June 30, 1958, 72 Stat. 259, provided:
"That this Act [amending sections 11, 821, 4061, 4292, 5001, 5022,
5041, 5051, 5063, 5134, 5701, 5707, 6412, 6415, 6416, 7012, and
7272 of this title and repealing sections 4271 to 4273 and 4281 to
4283 of this title] may be cited as the 'Tax Rate Extension Act of
1958'."
SHORT TITLE OF 1957 AMENDMENT
Section 1 of Pub. L. 85-12 provided: "That this Act [amending
sections 11, 821, 4061, 5001, 5022, 5041, 5051, 5063, 5134, 5701,
5707, and 6412 of this title] may be cited as the 'Tax Rate
Extension Act of 1957'."
SHORT TITLE OF 1956 AMENDMENTS
For short title of title II of act June 29, 1956 as the "Highway
Revenue Act of 1956", see section 201(a) of act June 29, 1956, set
out as a note under section 4041 of this title.
For short title of act Mar. 29, 1956 as the "Tax Rate Extension
Act of 1956", see section 1 of act Mar. 29, 1956, set out as a note
under section 4041 of this title.
Section 1 of act Mar. 13, 1956, provided: "That this Act
[enacting section 843 of this title and amending sections 316, 501,
594, 801 to 805, 811 to 813, 816 to 818, 821, 822, 832, 841, 842,
891, 1201, 1504, and 4371 of this title] be cited as the 'Life
Insurance Company Tax Act for 1955'."
SHORT TITLE OF 1955 AMENDMENT
For short title of act Mar. 30, 1955 as the "Tax Rate Extension
Act of 1955", see section 1 of act Mar. 30, 1955, set out as a note
under section 4041 of this title.
TRANSITIONAL RULES FOR TAXABLE YEARS WHICH INCLUDE MAY 6, 2003
Pub. L. 108-27, title III, Sec. 301(c), May 28, 2003, 117 Stat.
759, provided that: "For purposes of applying section 1(h) of the
Internal Revenue Code of 1986 in the case of a taxable year which
includes May 6, 2003 -
"(1) The amount of tax determined under subparagraph (B) of
section 1(h)(1) of such Code shall be the sum of -
"(A) 5 percent of the lesser of -
"(i) the net capital gain determined by taking into account
only gain or loss properly taken into account for the portion
of the taxable year on or after May 6, 2003 (determined
without regard to collectibles gain or loss, gain described
in section 1(h)(6)(A)(i) of such Code, and section 1202
gain), or
"(ii) the amount on which a tax is determined under such
subparagraph (without regard to this subsection),
"(B) 8 percent of the lesser of -
"(i) the qualified 5-year gain (as defined in section
1(h)(9) of the Internal Revenue Code of 1986, as in effect on
the day before the date of the enactment of this Act [May 28,
2003]) properly taken into account for the portion of the
taxable year before May 6, 2003, or
"(ii) the excess (if any) of -
"(I) the amount on which a tax is determined under such
subparagraph (without regard to this subsection), over
"(II) the amount on which a tax is determined under
subparagraph (A), plus
"(C) 10 percent of the excess (if any) of -
"(i) the amount on which a tax is determined under such
subparagraph (without regard to this subsection), over
"(ii) the sum of the amounts on which a tax is determined
under subparagraphs (A) and (B).
"(2) The amount of tax determined under subparagraph (C) of
section (1)(h)(1) of such Code shall be the sum of -
"(A) 15 percent of the lesser of -
"(i) the excess (if any) of the amount of net capital gain
determined under subparagraph (A)(i) of paragraph (1) of this
subsection over the amount on which a tax is determined under
subparagraph (A) of paragraph (1) of this subsection, or
"(ii) the amount on which a tax is determined under such
subparagraph (C) (without regard to this subsection), plus
"(B) 20 percent of the excess (if any) of -
"(i) the amount on which a tax is determined under such
subparagraph (C) (without regard to this subsection), over
"(ii) the amount on which a tax is determined under
subparagraph (A) of this paragraph.
"(3) For purposes of applying section 55(b)(3) of such Code,
rules similar to the rules of paragraphs (1) and (2) of this
subsection shall apply.
"(4) In applying this subsection with respect to any pass-thru
entity, the determination of when gains and losses are properly
taken into account shall be made at the entity level.
"(5) For purposes of applying section 1(h)(11) of such Code, as
added by section 302 of this Act, to this subsection, dividends
which are qualified dividend income shall be treated as gain
properly taken into account for the portion of the taxable year
on or after May 6, 2003.
"(6) Terms used in this subsection which are also used in
section 1(h) of such Code shall have the respective meanings that
such terms have in such section."
COORDINATION OF PROVISIONS IN AMENDATORY ACTS
Pub. L. 105-277, div. J, title IV, Sec. 4001(b), Oct. 21, 1998,
112 Stat. 2681-906, provided that: "For purposes of applying the
amendments made by any title of this division [Secs. 1000-5301, see
Tables for classification] other than this title [see Definitions
note set out below for classification], the provisions of this
title shall be treated as having been enacted immediately before
the provisions of such other titles."
Pub. L. 105-206, title VI, Sec. 6001(b), July 22, 1998, 112 Stat.
790, provided that: "For purposes of applying the amendments made
by any title of this Act other than this title, the provisions of
this title [see Tables for classification] shall be treated as
having been enacted immediately before the provisions of such other
titles."
Section 1600 of title XVI of Pub. L. 105-34 provided that: "For
purposes of applying the amendments made by any title of this Act
other than this title, the provisions of this title [see Tables for
classification] shall be treated as having been enacted immediately
before the provisions of such other titles."
Section 1701 of Pub. L. 104-188 provided that: "For purposes of
applying the amendments made by any subtitle [subtitle A to F
(Secs. 1111-1621) and H to J (Secs. 1801-1954) of title I of Pub.
L. 104-188, see Tables for classification] of this title other than
this subtitle [subtitle G (Secs. 1701-1704) of title I of Pub. L.
104-188, see Tables for classification], the provisions of this
subtitle shall be treated as having been enacted immediately before
the provisions of such other subtitles."
Section 11700 of Pub. L. 101-508 provided that: "For purposes of
applying the amendments made by any subtitle [subtitles A to F
(Secs. 11101-11622) and H and I (Secs. 11801-11901) of title XI of
Pub. L. 101-508, see Tables for classification] of this title other
than this subtitle [subtitle G (Secs. 11700-11704) of title XI of
Pub. L. 101-508, see Tables for classification], the provisions of
this subtitle shall be treated as having been enacted immediately
before the provisions of such other subtitles."
Section 7801(b) of Pub. L. 101-239 provided that: "For purposes
of applying the amendments made by any subtitle [subtitles A to G
(Secs. 7101-7743) of title VII of Pub. L. 101-239, see Tables for
classification] of this title other than this subtitle [subtitle H
(Secs. 7801-7894) of title VII of Pub. L. 101-239, see Tables for
classification], the provisions of this subtitle shall be treated
as having been enacted immediately before the provisions of such
other subtitles."
Section 1800 of title XVIII of Pub. L. 99-514 provided that: "For
purposes of applying the amendments made by any title of this Act
other than this title, the provisions of this title [see Tables for
classification] shall be treated as having been enacted immediately
before the provisions of such other titles."
ADJUSTMENTS FOR CONSUMER PRICE INDEX ERROR
Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 308], Dec. 21,
2000, 114 Stat. 2763, 2763A-636, provided that:
"(a) Determinations by OMB. - As soon as practicable after the
date of the enactment of this Act [Dec. 21, 2000], the Director of
the Office of Management and Budget shall determine with respect to
each applicable Federal benefit program whether the CPI computation
error for 1999 has or will result in a shortfall in payments to
beneficiaries under such program (as compared to payments that
would have been made if the error had not occurred). As soon as
practicable after the date of the enactment of this Act, but not
later than 60 days after such date, the Director shall direct the
head of the Federal agency which administers such program to make a
payment or payments that, insofar as the Director finds practicable
and feasible -
"(1) are targeted to the amount of the shortfall experienced by
individual beneficiaries, and
"(2) compensate for the shortfall.
"(b) Coordination with Federal Agencies. - As soon as practicable
after the date of the enactment of this Act [Dec. 21, 2000], each
Federal agency that administers an applicable Federal benefit
program shall, in accordance with such guidelines as are issued by
the Director pursuant to this section, make an initial
determination of whether, and the extent to which, the CPI
computation error for 1999 has or will result in a shortfall in
payments to beneficiaries of an applicable Federal benefit program
administered by such agency. Not later than 30 days after such
date, the head of such agency shall submit a report to the Director
and to each House of the Congress of such determination, together
with a complete description of the nature of the shortfall.
"(c) Implementation Pursuant to Agency Reports. - Upon receipt of
the report submitted by a Federal agency pursuant to subsection
(b), the Director shall review the initial determination of the
agency, the agency's description of the nature of the shortfall,
and the compensation payments proposed by the agency. Prior to
directing payment of such payments pursuant to subsection (a), the
Director shall make appropriate adjustments (if any) in the
compensation payments proposed by the agency that the Director
determines are necessary to comply with the requirements of
subsection (a) and transmit to the agency a summary report of the
review, indicating any adjustments made by the Director. The agency
shall make the compensation payments as directed by the Director
pursuant to subsection (a) in accordance with the Director's
summary report.
"(d) Income Disregard Under Federal Means-Tested Benefit
Programs. - A payment made under this section to compensate for a
shortfall in benefits shall, in accordance with guidelines issued
by the Director pursuant to this section, be disregarded in
determining income under title VIII of the Social Security Act [42
U.S.C. 1001 et seq.] or any applicable Federal benefit program that
is means-tested.
"(e) Funding. - Funds otherwise available under each applicable
Federal benefit program for making benefit payments under such
program are hereby made available for making compensation payments
under this section in connection with such program.
"(f) No Judicial Review. - No action taken pursuant to this
section shall be subject to judicial review.
"(g) Director's Report. - Not later than April 1, 2001, the
Director shall submit to each House of the Congress a report on the
activities performed by the Director pursuant to this section.
"(h) Definitions. - For purposes of this section:
"(1) Applicable federal benefit program. - The term 'applicable
Federal benefit program' means any program of the Government of
the United States providing for regular or periodic payments or
cash assistance paid directly to individual beneficiaries, as
determined by the Director of the Office of Management and
Budget.
"(2) Federal agency. - The term 'Federal agency' means a
department, agency, or instrumentality of the Government of the
United States.
"(3) CPI computation error for 1999. - The term 'CPI
computation error for 1999' means the error in the computation of
the Consumer Price Index announced by the Bureau of Labor
Statistics on September 28, 2000.
"(i) Tax Provisions. - In the case of taxable years (and other
periods) beginning after December 31, 2000, if any Consumer Price
Index (as defined in section 1(f)(5) of the Internal Revenue Code
of 1986) reflects the CPI computation error for 1999 -
"(1) the correct amount of such Index shall (in such manner and
to such extent as the Secretary of the Treasury determines to be
appropriate) be taken into account for purposes of such Code, and
"(2) tables prescribed under section 1(f) of such Code to
reflect such correct amount shall apply in lieu of any tables
that were prescribed based on the erroneous amount."
APPLICATION OF SPECIAL RULES FOR MAXIMUM CAPITAL GAINS RATE
Pub. L. 105-277, div. J, title IV, Sec. 4002(i)(2), Oct. 21,
1998, 112 Stat. 2681-907, provided that:
"(2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and (B)(ii) of
section 1(h)(13) of the 1986 Code shall not apply to any
distribution after December 31, 1997, by a regulated investment
company or a real estate investment trust with respect to -
"(i) gains and losses recognized directly by such company or
trust, and
"(ii) amounts properly taken into account by such company or
trust by reason of holding (directly or indirectly) an interest
in another such company or trust to the extent that such
subparagraphs did not apply to such other company or trust with
respect to such amounts.
"(B) Subparagraph (A) shall not apply to any distribution which
is treated under section 852(b)(7) or 857(b)(8) of the 1986 Code as
received on December 31, 1997.
"(C) For purposes of subparagraph (A), any amount which is
includible in gross income of its shareholders under section
852(b)(3)(D) or 857(b)(3)(D) of the 1986 Code after December 31,
1997, shall be treated as distributed after such date.
"(D)(i) For purposes of subparagraph (A), in the case of a
qualified partnership with respect to which a regulated investment
company meets the holding requirement of clause (iii) -
"(I) the subparagraphs referred to in subparagraph (A) shall
not apply to gains and losses recognized directly by such
partnership for purposes of determining such company's
distributive share of such gains and losses, and
"(II) such company's distributive share of such gains and
losses (as so determined) shall be treated as recognized directly
by such company.
The preceding sentence shall apply only if the qualified
partnership provides the company with written documentation of such
distributive share as so determined.
"(ii) For purposes of clause (i), the term 'qualified
partnership' means, with respect to a regulated investment company,
any partnership if -
"(I) the partnership is an investment company registered under
the Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.],
"(II) the regulated investment company is permitted to invest
in such partnership by reason of section 12(d)(1)(E) of such Act
[15 U.S.C. 80a-12(d)(1)(E)] or an exemptive order of the
Securities and Exchange Commission under such section, and
"(III) the regulated investment company and the partnership
have the same taxable year.
"(iii) A regulated investment company meets the holding
requirement of this clause with respect to a qualified partnership
if (as of January 1, 1998) -
"(I) the value of the interests of the regulated investment
company in such partnership is 35 percent or more of the value of
such company's total assets, or
"(II) the value of the interests of the regulated investment
company in such partnership and all other qualified partnerships
is 90 percent or more of the value of such company's total
assets."
CAPITAL GAIN DISTRIBUTION BY TRUST
Pub. L. 105-277, div. J, title IV, Sec. 4003(b), Oct. 21, 1998,
112 Stat. 2681-909, as amended by Pub. L. 106-554, Sec. 1(a)(7)
[title III, Sec. 312(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A-640,
provided that: "In the case of any capital gain distribution made
after 1997 by a trust to which section 664 of the 1986 Code applies
with respect to amounts properly taken into account by such trust
during 1997, paragraphs (5)(A)(i)(I), (5)(A)(ii)(I), (7)(A)(i)(II),
and (13)(A) of section 1(h) of the 1986 Code (as in effect for
taxable years ending on December 31, 1997) shall not apply."
ELECTION TO RECOGNIZE GAIN ON ASSETS HELD ON JANUARY 1, 2001
Pub. L. 105-34, title III, Sec. 311(e), Aug. 5, 1997, 111 Stat.
835, as amended by Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec.
314(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-643; Pub. L. 107-147,
title IV, Sec. 414(a), Mar. 9, 2002, 116 Stat. 54, provided that:
"For purposes of the Internal Revenue Code of 1986 -
"(1) In general. - A taxpayer other than a corporation may
elect to treat -
"(A) any readily tradable stock (which is a capital asset)
held by such taxpayer on January 1, 2001, and not sold before
the next business day after such date, as having been sold on
such next business day for an amount equal to its closing
market price on such next business day (and as having been
reacquired on such next business day for an amount equal to
such closing market price), and
"(B) any other capital asset or property used in the trade or
business (as defined in section 1231(b) of the Internal Revenue
Code of 1986) held by the taxpayer on January 1, 2001, as
having been sold on such date for an amount equal to its fair
market value on such date (and as having been reacquired on
such date for an amount equal to such fair market value).
"(2) Treatment of gain or loss. -
"(A) Any gain resulting from an election under paragraph (1)
shall be treated as received or accrued on the date the asset
is treated as sold under paragraph (1) and shall be included in
gross income notwithstanding any provision of the Internal
Revenue Code of 1986.
"(B) Any loss resulting from an election under paragraph (1)
shall not be allowed for any taxable year.
"(3) Election. - An election under paragraph (1) shall be made
in such manner as the Secretary of the Treasury or his delegate
may prescribe and shall specify the assets for which such
election is made. Such an election, once made with respect to any
asset, shall be irrevocable. Such an election shall not apply to
any asset which is disposed of (in a transaction in which gain or
loss is recognized in whole or in part) before the close of the
1-year period beginning on the date that the asset would have
been treated as sold under such election.
"(4) Readily tradable stock. - For purposes of this subsection,
the term 'readily tradable stock' means any stock which, as of
January 1, 2001, is readily tradable on an established securities
market or otherwise.
"(5) Disposition of interest in passive activity. - Section
469(g)(1)(A) of the Internal Revenue Code of 1986 shall not apply
by reason of an election made under paragraph (1)."
[Pub. L. 107-147, title IV, Sec. 414(b), Mar. 9, 2002, 116 Stat.
54, provided that: "The amendments made by this section [amending
section 311(e) of Pub. L. 105-34, set out above] shall take effect
as if included in section 311 of the Taxpayer Relief Act of 1997
[Pub. L. 105-34]."]
ELECTION TO PAY ADDITIONAL 1993 TAXES IN INSTALLMENTS
Section 13201(d) of Pub. L. 103-66 provided that:
"(1) In general. - At the election of the taxpayer, the
additional 1993 taxes may be paid in 3 equal installments.
"(2) Dates for paying installments. - In the case of any tax
payable in installments by reason of paragraph (1) -
"(A) the first installment shall be paid on or before the due
date for the taxpayer's taxable year beginning in calendar year
1993,
"(B) the second installment shall be paid on or before the date
1 year after the date determined under subparagraph (A), and
"(C) the third installment shall be paid on or before the date
2 years after the date determined under subparagraph (A).
For purposes of the preceding sentence, the term 'due date' means
the date prescribed for filing the taxpayer's return determined
without regard to extensions.
"(3) Extension without interest. - For purposes of section 6601
of the Internal Revenue Code of 1986, the date prescribed for the
payment of any tax payable in installments under paragraph (1)
shall be determined with regard to the extension under paragraph
(1).
"(4) Additional 1993 taxes. -
"(A) In general. - For purposes of this subsection, the term
'additional 1993 taxes' means the excess of -
"(i) the taxpayer's net chapter 1 liability as shown on the
taxpayer's return for the taxpayer's taxable year beginning in
calendar year 1993, over
"(ii) the amount which would have been the taxpayer's net
chapter 1 liability for such taxable year if such liability had
been determined using the rates which would have been in effect
under section 1 of the Internal Revenue Code of 1986 for
taxable years beginning in calendar year 1993 but for the
amendments made by this section [amending this section and
sections 41, 63, 68, 132, 151, 453A, 513, 531, and 541 of this
title] and section 13202 [amending this section and sections
531 and 541 of this title] and such liability had otherwise
been determined on the basis of the amounts shown on the
taxpayer's return.
"(B) Net chapter 1 liability. - For purposes of subparagraph
(A), the term 'net chapter 1 liability' means the liability for
tax under chapter 1 of the Internal Revenue Code of 1986
determined -
"(i) after the application of any credit against such tax
other than the credits under sections 31 and 34, and
"(ii) before crediting any payment of estimated tax for the
taxable year.
"(5) Acceleration of payments. - If the taxpayer does not pay any
installment under this section on or before the date prescribed for
its payment or if the Secretary of the Treasury or his delegate
believes that the collection of any amount payable in installments
under this section is in jeopardy, the Secretary shall immediately
terminate the extension under paragraph (1) and the whole of the
unpaid tax shall be paid on notice and demand from the Secretary.
"(6) Election on return. - An election under paragraph (1) shall
be made on the taxpayer's return for the taxpayer's taxable year
beginning in calendar year 1993.
"(7) Exception for estates and trusts. - This subsection shall
not apply in the case of an estate or trust."
TRANSITIONAL RULE FOR MAXIMUM CAPITAL GAINS RATE
Section 302(c) of Pub. L. 99-514, which related to long-term
capital gain on rights to royalties paid under particular leases
and assignments, was repealed by Pub. L. 100-647, title I, Sec.
1003(b)(1), Nov. 10, 1988, 102 Stat. 3382.
COORDINATION WITH OTHER PROVISIONS
Pub. L. 99-509, title VIII, Sec. 8081, Oct. 21, 1986, 100 Stat.
1965, provided that: "Nothing in any provision of this Act [see
Tables for classifications] (other than this title) shall be
construed as -
"(1) imposing any tax (or exempting any person or property from
any tax),
"(2) establishing any trust fund, or
"(3) authorizing amounts to be expended from any trust fund."
[S.Con.Res. 174, agreed to Oct. 18, 1986, provided: "That, in the
enrollment of the bill (H.R. 5300) to provide for reconciliation
pursuant to section 2 of the concurrent resolution on the budget
for fiscal year 1987, the Clerk of the House of Representatives
shall insert at the end of section 8081 of the bill the following:
Paragraph (3) shall not apply to any authorization made by title IX
of this Act." As a result of clerical error, the sentence was
inserted at the end of section 8101 of the bill, and appears at the
end of section 8101 of Pub. L. 99-509, 100 Stat. 1967.]
Pub. L. 99-499, title V, Sec. 531, Oct. 17, 1986, 100 Stat. 1782,
provided that: "Notwithstanding any provision of this Act [see
Tables for classifications] not contained in this title [see Short
Title of 1986 Amendment note above], any provision of this Act (not
contained in this title) which -
"(1) imposes any tax, premium, or fee,
"(2) establishes any trust fund, or
"(3) authorizes amounts to be expended from any trust fund,
shall have no force or effect."
ELIMINATION OF 50-CENT ROUNDING ERRORS
Section 101(a)(3) of Pub. L. 97-448, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "If
any figure in any table -
"(A) which is set forth in section 1 of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] (as amended by section 101 of
the Economic Recovery Tax Act of 1981 [Pub. L. 97-34, title I,
Sec. 101, Aug. 13, 1981, 95 Stat. 176], and
"(B) which applies to married individuals filing separately or
to estates and trusts,
differs by not more than 50 cents from the correct amount under the
formula used in constructing such table, such figure is hereby
corrected to the correct amount." [See 1982 Amendment note above.]
POLICY WITH RESPECT TO ADDITIONAL TAX REDUCTIONS
Section 3 of Pub. L. 95-600 provided that: "As a matter of
national policy the rate of growth in Federal outlays, adjusted for
inflation, should not exceed 1 percent per year between fiscal year
1979 and fiscal year 1983; Federal outlays as a percentage of gross
national product should decline to below 21 percent in fiscal year
1980, 20.5 percent in fiscal year 1981, 20 percent in fiscal year
1982 and 19.5 percent in fiscal year 1983; and the Federal budget
should be balanced in fiscal years 1982 and 1983. If these
conditions are met, it is the intention that the tax-writing
committees of Congress will report legislation providing
significant tax reductions for individuals to the extent that these
tax reductions are justified in the light of prevailing and
expected economic conditions."
EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS
Pub. L. 94-455, title XIX, Sec. 1908, Oct. 4, 1976, 90 Stat.
1836, provided that: "For purposes of any amendment made by any
provision of this Act [see Tables for classification] (other than
this title) -
"(1) which contains a term the meaning of which is defined in
or modified by any provision of this title, and
"(2) which has an effective date earlier than the effective
date of the provision of this title defining or modifying such
term,
that definition or modification shall be considered to take effect
as of such earlier effective date."
CONGRESSIONAL DECLARATION RELATING TO 1975 AMENDMENT
Pub. L. 94-164, Sec. 1A, Dec. 23, 1975, 89 Stat. 970, provided
that:
"(a) Congress is determined to continue the tax reduction for the
first 6 months of 1976 in order to assure continued economic
recovery.
"(b) Congress is also determined to continue to control spending
levels in order to reduce the national deficit.
"(c) Congress reaffirms its commitments to the procedures
established by the Congressional Budget and Impoundment Control Act
of 1974 [see Tables for classification of Pub. L. 93-344, July 12,
1974, 88 Stat. 297] under which it has already established a
binding spending ceiling for the fiscal year 1976.
"(d) If the Congress adopts a continuation of the tax reduction
provided by this Act [see Short Title of 1975 Amendment note above]
beyond June 30, 1976, and if economic conditions warrant doing so,
Congress shall provide, through the procedures in the Budget Act
[Pub. L. 93-344], for reductions in the level of spending in the
fiscal year 1977 below what would otherwise occur, equal to any
additional reduction in taxes (from the 1974 tax rate levels)
provided for the fiscal year 1977: Provided, however, That nothing
shall preclude the right of the Congress to pass a budget
resolution containing a higher or lower expenditure figure if the
Congress concludes that this is warranted by economic conditions or
unforeseen circumstances."
CONGRESSIONAL DECLARATION RELATING TO 1964 AMENDMENT
Pub. L. 88-272, Sec. 1, Feb. 26, 1964, 78 Stat. 19, provided
that: "It is the sense of Congress that the tax reduction provided
by this Act [see Short Title of 1964 Amendment note above] through
stimulation of the economy, will, after a brief transitional
period, raise (rather than lower) revenues and that such revenue
increases should first be used to eliminate the deficits in the
administrative budgets and then to reduce the public debt. To
further the objective of obtaining balanced budgets in the near
future, Congress by this action, recognizes the importance of
taking all reasonable means to restrain Government spending and
urges the President to declare his accord with this objective."
-CROSS-
DEFINITIONS
Pub. L. 105-277, div. J, title IV, Sec. 4001(a), Oct. 21, 1998,
112 Stat. 2681-906, provided that: "For purposes of this title
[amending this section, sections 51, 56, 67, 68, 86, 135, 137, 163,
172, 219, 221, 264, 351, 368, 408A, 469, 873, 954, 2001, 2031,
6015, 6103, 6159, 6311, 6404, 6693, 7421, 7443A, 7491, 9503, and
9510 of this title, and sections 401 and 407 of Title 42, The
Public Health and Welfare, enacting provisions set out as notes
under this section, sections 51, 67, 68, 86, 172, 833, 6103, and
9503 of this title, and section 401 of Title 42, and amending
provisions set out as notes under sections 6601 and 7508A of this
title] -
"(1) 1986 code. - The term '1986 Code' means the Internal
Revenue Code of 1986.
"(2) 1998 act. - The term '1998 Act' means the Internal Revenue
Service Restructuring and Reform Act of 1998 (Public Law 105-206)
[see Tables for classification].
"(3) 1997 act. - The term '1997 Act' means the Taxpayer Relief
Act of 1997 (Public Law 105-34) [see Tables for classification]."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 2, 3, 15, 23, 24, 25A,
32, 41, 42, 55, 59, 63, 68, 132, 135, 137, 146, 162, 163, 179, 213,
219, 220, 221, 223, 301, 306, 453A, 460, 468B, 511, 512, 513, 584,
641, 646, 685, 691, 702, 774, 854, 857, 871, 876, 877, 891, 904,
911, 936, 962, 1022, 1260, 1291, 1301, 1398, 1446, 2032A, 2503,
2631, 3402, 3406, 4001, 4261, 6014, 6015, 6039F, 6103, 6242, 6323,
6334, 6428, 6601, 6652, 6655, 6867, 7430, 7518, 7519 of this title;
title 7 section 940d; title 46 App. section 1177.
-End-
-CITE-
26 USC Sec. 2 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
Sec. 2. Definitions and special rules
-STATUTE-
(a) Definition of surviving spouse
(1) In general
For purposes of section 1, the term "surviving spouse" means a
taxpayer -
(A) whose spouse died during either of his two taxable years
immediately preceding the taxable year, and
(B) who maintains as his home a household which constitutes
for the taxable year the principal place of abode (as a member
of such household) of a dependent (i) who (within the meaning
of section 152) is a son, stepson, daughter, or stepdaughter of
the taxpayer, and (ii) with respect to whom the taxpayer is
entitled to a deduction for the taxable year under section 151.
For purposes of this paragraph, an individual shall be considered
as maintaining a household only if over half of the cost of
maintaining the household during the taxable year is furnished by
such individual.
(2) Limitations
Notwithstanding paragraph (1), for purposes of section 1 a
taxpayer shall not be considered to be a surviving spouse -
(A) if the taxpayer has remarried at any time before the
close of the taxable year, or
(B) unless, for the taxpayer's taxable year during which his
spouse died, a joint return could have been made under the
provisions of section 6013 (without regard to subsection (a)(3)
thereof).
(3) Special rule where deceased spouse was in missing status
If an individual was in a missing status (within the meaning of
section 6013(f)(3)) as a result of service in a combat zone (as
determined for purposes of section 112) and if such individual
remains in such status until the date referred to in subparagraph
(A) or (B), then, for purposes of paragraph (1)(A), the date on
which such individual died shall be treated as the earlier of the
date determined under subparagraph (A) or the date determined
under subparagraph (B):
(A) the date on which the determination is made under section
556 of title 37 of the United States Code or under section 5566
of title 5 of such Code (whichever is applicable) that such
individual died while in such missing status, or
(B) except in the case of the combat zone designated for
purposes of the Vietnam conflict, the date which is 2 years
after the date designated under section 112 as the date of
termination of combatant activities in that zone.
(b) Definition of head of household
(1) In general
For purposes of this subtitle, an individual shall be
considered a head of a household if, and only if, such individual
is not married at the close of his taxable year, is not a
surviving spouse (as defined in subsection (a)), and either -
(A) maintains as his home a household which constitutes for
more than one-half of such taxable year the principal place of
abode, as a member of such household, of -
(i) a son, stepson, daughter, or stepdaughter of the
taxpayer, or a descendant of a son or daughter of the
taxpayer, but if such son, stepson, daughter, stepdaughter,
or descendant is married at the close of the taxpayer's
taxable year, only if the taxpayer is entitled to a deduction
for the taxable year for such person under section 151 (or
would be so entitled but for paragraph (2) or (4) of section
152(e)), or
(ii) any other person who is a dependent of the taxpayer,
if the taxpayer is entitled to a deduction for the taxable
year for such person under section 151, or
(B) maintains a household which constitutes for such taxable
year the principal place of abode of the father or mother of
the taxpayer, if the taxpayer is entitled to a deduction for
the taxable year for such father or mother under section 151.
For purposes of this paragraph, an individual shall be considered
as maintaining a household only if over half of the cost of
maintaining the household during the taxable year is furnished by
such individual.
(2) Determination of status
For purposes of this subsection -
(A) a legally adopted child of a person shall be considered a
child of such person by blood;
(B) an individual who is legally separated from his spouse
under a decree of divorce or of separate maintenance shall not
be considered as married;
(C) a taxpayer shall be considered as not married at the
close of his taxable year if at any time during the taxable
year his spouse is a nonresident alien; and
(D) a taxpayer shall be considered as married at the close of
his taxable year if his spouse (other than a spouse described
in subparagraph (C)) died during the taxable year.
(3) Limitations
Notwithstanding paragraph (1), for purposes of this subtitle a
taxpayer shall not be considered to be a head of a household -
(A) if at any time during the taxable year he is a
nonresident alien; or
(B) by reason of an individual who would not be a dependent
for the taxable year but for -
(i) paragraph (9) of section 152(a), or
(ii) subsection (c) of section 152.
(c) Certain married individuals living apart
For purposes of this part, an individual shall be treated as not
married at the close of the taxable year if such individual is so
treated under the provisions of section 7703(b).
(d) Nonresident aliens
In the case of a nonresident alien individual, the taxes imposed
by sections 1 and 55 shall apply only as provided by section 871 or
877.
(e) Cross reference
For definition of taxable income, see section 63.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 8; Pub. L. 88-272, title I, Sec.
112(b), Feb. 26, 1964, 78 Stat. 24; Pub. L. 91-172, title VIII,
Sec. 803(b), Dec. 30, 1969, 83 Stat. 682; Pub. L. 93-597, Sec.
3(b), Jan. 2, 1975, 88 Stat. 1951; Pub. L. 94-455, title XIX, Sec.
1901(a)(1), (b)(9), Oct. 4, 1976, 90 Stat. 1764, 1795; Pub. L.
94-569, Sec. 3(a), Oct. 20, 1976, 90 Stat. 2699; Pub. L. 97-448,
title III, Sec. 307(a), Jan. 12, 1983, 96 Stat. 2407; Pub. L.
98-369, div. A, title IV, Sec. 423(c)(2), July 18, 1984, 98 Stat.
801; Pub. L. 99-514, title XIII, Sec. 1301(j)(10), title XVII, Sec.
1708(a)(1), Oct. 22, 1986, 100 Stat. 2658, 2782; Pub. L. 100-647,
title I, Sec. 1007(g)(13)(A), Nov. 10, 1988, 102 Stat. 3436.)
-MISC1-
AMENDMENTS
1988 - Subsec. (d). Pub. L. 100-647 substituted "the taxes
imposed by sections 1 and 55" for "the tax imposed by section 1".
1986 - Subsec. (a)(3)(B). Pub. L. 99-514, Sec. 1708(a)(1),
amended subpar. (B) generally. Prior to amendment, subpar. (B) read
as follows: "the date which is -
"(i) December 31, 1982, in the case of service in the combat
zone designated for purposes of the Vietnam conflict, or
"(ii) 2 years after the date designated under section 112 as
the date of termination of combatant activities in that zone, in
the case of any combat zone other than that referred to in clause
(i)."
Subsec. (c). Pub. L. 99-514, Sec. 1301(j)(10), substituted
"section 7703(b)" for "section 143(b)".
1984 - Subsec. (b)(1)(A). Pub. L. 98-369, Sec. 423(c)(2)(A),
substituted "which constitutes for more than one-half of such
taxable year" for "which constitutes for such taxable year".
Subsec. (b)(1)(A)(i). Pub. L. 98-369, Sec. 423(c)(2)(B), inserted
"(or would be so entitled but for paragraph (2) or (4) of section
152(e))".
1983 - Subsec. (a)(3)(B)(i). Pub. L. 97-448 substituted "December
31, 1982" for "January 2, 1978".
1976 - Subsec. (a)(3)(B). Pub. L. 94-569 substituted "the date
which is" for "the date which is 2 years after" in provisions
preceding cl. (i), substituted "January 2, 1978" for "the date of
the enactment of this paragraph" in cl. (i), and substituted "2
years after the date" for "the date" in cl. (ii).
Subsec. (b)(3)(B)(ii). Pub. L. 94-455, Sec. 1901(b)(9),
redesignated cl. (iii) as (ii) and struck out former cl. (ii) which
provided that an individual who was a dependent solely by reason of
par. (10) of section 152(a) would not be considered as a head of a
household.
Subsec. (c). Pub. L. 94-455, Sec. 1901(a)(1), substituted "shall
be treated as not married at the close of the taxable year" for
"shall not be considered as married".
1975 - Subsec. (a)(3). Pub. L. 93-597 added par. (3).
1969 - Subsec. (a). Pub. L. 91-172 redesignated subsec. (b) as
(a). See sec. 1(a) of this title.
Subsec. (b). Pub. L. 91-172 redesignated provisions of former
section 1(b)(2) to (4) of this title as subsec. (b). Former subsec.
(b) redesignated (a), with minor changes.
Subsec. (c). Pub. L. 91-172 added subsec. (c).
Subsec. (d). Pub. L. 91-172 redesignated as subsec. (d)
provisions of former section 1(d) with minor changes.
Subsec. (e). Pub. L. 91-172 redesignated as subsec. (e)
provisions of former section 1(e).
1964 - Subsec. (a). Pub. L. 88-272 inserted reference to section
141.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 1301(j)(10) of Pub. L. 99-514 applicable to
bonds issued after Aug. 15, 1986, except as otherwise provided, see
sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective
Date; Transitional Rules note under section 141 of this title.
Section 1708(b) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and sections 692, 6013,
and 7508 of this title] shall apply to taxable years beginning
after December 31, 1982."
EFFECTIVE DATE OF 1984 AMENDMENT
Section 423(d) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending this section and sections 43, 44A,
105, 143, 152, and 213 of this title] shall apply to taxable years
beginning after December 31, 1984."
EFFECTIVE DATE OF 1976 AMENDMENT
Section 1901(d) of Pub. L. 94-455 provided that: "Except as
otherwise expressly provided in this section, the amendments made
by this section [see Tables for classification] shall apply with
respect to taxable years beginning after December 31, 1976. The
amendments made by subsections (a)(29) and (b)(10) shall apply with
respect to taxable years ending after the date of the enactment of
this Act [Oct. 4, 1976]."
EFFECTIVE DATE OF 1975 AMENDMENT
Amendment by Pub. L. 93-597 applicable to taxable years ending on
or after Feb. 28, 1961, see section 3(c) of Pub. L. 93-597, set out
as a note under section 6013 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years beginning
after Dec. 31, 1970, except that subsec. (c) is applicable to
taxable years beginning after Dec. 31, 1969, see section 803(f) of
Pub. L. 91-172, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272, except for purposes of section 21 of
this title, effective with respect to taxable years beginning after
Dec. 31, 1963, see section 131 of Pub. L. 88-272, set out as a note
under section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1, 32, 63, 151, 3402,
6012, 6013 of this title; title 20 sections 1087nn, 1087oo, 1087qq;
title 38 section 1503.
-End-
-CITE-
26 USC Sec. 3 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
Sec. 3. Tax tables for individuals
-STATUTE-
(a) Imposition of tax table tax
(1) In general
In lieu of the tax imposed by section 1, there is hereby
imposed for each taxable year on the taxable income of every
individual -
(A) who does not itemize his deductions for the taxable year,
and
(B) whose taxable income for such taxable year does not
exceed the ceiling amount,
a tax determined under tables, applicable to such taxable year,
which shall be prescribed by the Secretary and which shall be in
such form as he determines appropriate. In the table so
prescribed, the amounts of the tax shall be computed on the basis
of the rates prescribed by section 1.
(2) Ceiling amount defined
For purposes of paragraph (1), the term "ceiling amount" means,
with respect to any taxpayer, the amount (not less than $20,000)
determined by the Secretary for the tax rate category in which
such taxpayer falls.
(3) Authority to prescribe tables for taxpayers who itemize
deductions
The Secretary may provide that this section shall apply also
for any taxable year to individuals who itemize their deductions.
Any tables prescribed under the preceding sentence shall be on
the basis of taxable income.
(b) Section inapplicable to certain individuals
This section shall not apply to -
(1) an individual making a return under section 443(a)(1) for a
period of less than 12 months on account of a change in annual
accounting period, and
(2) an estate or trust.
(c) Tax treated as imposed by section 1
For purposes of this title, the tax imposed by this section shall
be treated as tax imposed by section 1.
(d) Taxable income
Whenever it is necessary to determine the taxable income of an
individual to whom this section applies, the taxable income shall
be determined under section 63.
(e) Cross reference
For computation of tax by Secretary, see section 6014.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 8; Pub. L. 88-272, title III,
Sec. 301(a), Feb. 26, 1964, 78 Stat. 129; Pub. L. 91-172, title
VIII, Sec. 803(c), Dec. 30, 1969, 83 Stat. 684; Pub. L. 94-12,
title II, Sec. 201(c), Mar. 29, 1975, 89 Stat. 29; Pub. L. 94-455,
title V, Sec. 501(a), Oct. 4, 1976, 90 Stat. 1558; Pub. L. 95-30,
title I, Sec. 101(b), May 23, 1977, 91 Stat. 131; Pub. L. 95-600,
title IV, Sec. 401(b)(1), Nov. 6, 1978, 92 Stat. 2867; Pub. L.
95-600, title II, Sec. 202(g), as added Pub. L. 96-222, title I,
Sec. 108(a)(1)(A), Apr. 1, 1980, 94 Stat. 223; Pub. L. 96-222,
title I, Sec. 108(a)(1)(E), Apr. 1, 1980, 94 Stat. 225; Pub. L.
97-34, title I, Secs. 101(b)(2)(B), (C), (c)(2)(A), 121(c)(3), Aug.
13, 1981, 95 Stat. 183, 197; Pub. L. 99-514, title I, Secs. 102(b),
141(b)(1), Oct. 22, 1986, 100 Stat. 2102, 2117.)
-MISC1-
AMENDMENTS
1986 - Subsec. (a). Pub. L. 99-514, Sec. 102(b), substituted
subsec. (a) for former subsec. (a) which read as follows:
"(1) In general. - In lieu of the tax imposed by section 1,
there is hereby imposed for each taxable year on the tax table
income of every individual whose tax table income for such year
does not exceed the ceiling amount, a tax determined under
tables, applicable to such taxable year, which shall be
prescribed by the Secretary and which shall be in such form as he
determines appropriate. In the tables so prescribed, the amounts
of tax shall be computed on the basis of the rates prescribed by
section 1.
"(2) Ceiling amount defined. - For purposes of paragraph (1),
the term "ceiling amount" means, with respect to any taxpayer,
the amount (not less than $20,000) determined by the Secretary
for the tax rate category in which such taxpayer falls.
"(3) Certain taxpayers with large number of exemptions. - The
Secretary may exclude from the application of this section
taxpayers in any tax rate category having more than the number of
exemptions for that category determined by the Secretary.
"(4) Tax table income defined. - For purposes of this section,
the term 'tax table income' means adjusted gross income -
"(A) reduced by the sum of -
"(i) the excess itemized deductions, and
"(ii) the direct charitable deduction, and
"(B) increased (in the case of an individual to whom section
63(e) applies) by the unused zero bracket amount.
"(5) Section may be applied on the basis of taxable income. -
The Secretary may provide that this section shall be applied for
any taxable year on the basis of taxable income in lieu of tax
table income."
Subsec. (b). Pub. L. 99-514, Sec. 141(b)(1), struck out par. (1)
which read: "an individual to whom section 1301 (relating to income
averaging) applies for the taxable year," and redesignated pars.
(2) and (3) as (1) and (2), respectively.
1981 - Subsec. (a)(1). Pub. L. 97-34, Sec. 101(b)(2)(B), inserted
"and which shall be in such form as he determines appropriate"
after "Secretary".
Subsec. (a)(4)(A). Pub. L. 97-34, Sec. 121(c)(3), substituted
"reduced by the sum of (i) the excess itemized deductions, and (ii)
the direct charitable deduction" for "reduced by the excess
itemized deductions".
Subsec. (a)(5). Pub. L. 97-34, Sec. 101(b)(2)(C), added par. (5).
Subsec. (b)(1). Pub. L. 97-34, Sec. 101(c)(2)(A), substituted "an
individual to whom section 1301 (relating to income averaging)
applies for the taxable year" for "an individual to whom (A)
section 1301 (relating to income averaging), or (B) section 1348
(relating to maximum rate on personal service income), applies for
the taxable year".
1980 - Subsec. (b)(1). Pub. L. 96-222 redesignated subpars. (B)
and (C) as (A) and (B), respectively, and struck out former subpar.
(A) which made reference to section 911 (relating to earned income
from sources without the United States).
1978 - Subsec. (b)(1). Pub. L. 95-600 struck out subpar. (B)
which related to the alternative capital gains tax under section
1201 of this title, and redesignated subpars. (C) and (D) as (B)
and (C), respectively.
1977 - Pub. L. 95-30 struck out "having taxable income of less
than $20,000" after "individuals" in section catchline.
Subsec. (a). Pub. L. 95-30 designated existing provisions as par.
(1), substituted "tax table income" for "taxable income" and "does
not exceed the ceiling amount" for "does not exceed $20,000", and
added pars. (2) to (4).
Subsecs. (b) to (e). Pub. L. 95-30 added subsec. (b),
redesignated former subsec. (b) as (c), and added subsecs. (d) and
(e).
1976 - Pub. L. 94-455 designated existing provisions as subsec.
(a), substituted provision relating to taxable income for such year
does not exceed $20,000 for provision relating to adjusted gross
income for such year is less than $15,000 and who has elected for
such year to pay the tax imposed by this section, struck out "or
his delegate" after "Secretary", "beginning after Dec. 31, 1969"
after "each taxable year", struck out provision requiring
computation of taxable income by using standard deduction, and
added subsec. (b).
1975 - Pub. L. 94-12 substituted "$15,000" for "$10,000".
1969 - Pub. L. 91-172 raised the individual gross income limit of
$5,000 to $10,000 for exercising the option and substituted
provision that the tax has to be determined under tables to be
prescribed by the Secretary or his delegate for tables of tax rates
for single persons, heads of household, married persons filing
joint returns, married persons filing separate returns with 10 per
cent standard deduction and married persons filing separate returns
with minimum standard deduction.
1964 - Pub. L. 88-272 substituted optional tax tables covering
five categories for taxable years beginning on or after Jan. 1,
1964, and before Jan. 1, 1965, and for years beginning after Dec.
31, 1964, for a single general table.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 101(c)(2)(A) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1981, see section 101(f)(1)
of Pub. L. 97-34, set out as a note under section 1 of this title.
Amendment by section 121(c)(3) of Pub. L. 97-34 applicable to
contributions made after Dec. 31, 1981, in taxable years beginning
after such date, see section 121(d) of Pub. L. 97-34, set out as a
note under section 170 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Section 108(a)(2) of Pub. L. 96-222 provided that:
"(A) In general. - Except as provided in subparagraph (B), the
amendments made by paragraph (1) [amending this section and
sections 119, 911, and 913 of this title] shall take effect as if
included in the Foreign Earned Income Act of 1978 [Pub. L. 95-615].
"(B) Paragraph (1)(E). - The amendment made by paragraph (1)(E)
[amending this section] shall apply to taxable years beginning
after December 31, 1978."
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 401(b)(1) of Pub. L. 95-600 applicable to
taxable years beginning after Dec. 31, 1978, see section 401(c) of
Pub. L. 95-600, set out as a note under section 1201 of this title.
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 508 of Pub. L. 94-455 provided that: "Except as otherwise
provided, the amendments made by this title [enacting section 44A,
amending this section and sections 36, 37, 41, 42, 46, 50A, 104,
144, 213, 217, 904, 1211, 1304, 3402, 6014, and 6096, enacting
provisions set out as notes under sections 105, 8022, and repealing
sections 4 and 214 of this title] shall apply to taxable years
beginning after December 31, 1975."
EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT
Section 209(a) of Pub. L. 94-12, as amended by Pub. L. 94-164,
Sec. 2(e), Dec. 23, 1975, 89 Stat. 972, provided that: "The
amendments made by sections 201, 202(a), and 203 [enacting section
42 of this title and amending this section and sections 56, 141,
6012, and 6096 of this title] shall apply to taxable years ending
after December 31, 1974. The amendments made by sections 201(a) and
202(a) [amending section 141 of this title] shall cease to apply to
taxable years ending after December 31, 1975; those made by
sections 201(b), 201(c), and 203 [enacting section 42 of this title
and amending this section and sections 56, 6012, and 6096 of this
title] shall cease to apply to taxable years ending after December
31, 1976."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years beginning
after Dec. 31, 1969, see section 803(f) of Pub. L. 91-172, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Section 301(c) of Pub. L. 88-272, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Except for
purposes of section 21 of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] (relating to effect of changes in rates
during a taxable year), the amendments made by this section
[amending this section and sections 4 and 6014 of this title] shall
apply to taxable years beginning after December 31, 1963."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 891 of this title.
-End-
-CITE-
26 USC Sec. 4 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
[Sec. 4. Repealed. Pub. L. 94-455, title V, Sec. 501(b)(1), Oct. 4,
1976, 90 Stat. 1558]
-MISC1-
Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 10; Feb. 26,
1964, Pub. L. 88-272, title II, Sec. 232(f)(1), title III, Sec.
301(b)(1), (3), 78 Stat. 111, 140; Dec. 30, 1969, Pub. L. 91-172,
title VIII, Sec. 802(c)(1)-(3), 83 Stat. 677, 678; Dec. 10, 1971,
Pub. L. 92-178, title III, Sec. 301(b), 85 Stat. 520, related to
rules for optional tax.
EFFECTIVE DATE OF REPEAL
Repeal applicable to taxable years beginning after Dec. 31, 1975,
see section 508 of Pub. L. 94-455, set out as an Effective Date of
1976 Amendment note under section 3 of this title.
-End-
-CITE-
26 USC Sec. 5 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
Sec. 5. Cross references relating to tax on individuals
-STATUTE-
(a) Other rates of tax on individuals, etc.
(1) For rates of tax on nonresident aliens, see section 871.
(2) For doubling of tax on citizens of certain foreign
countries, see section 891.
(3) For rate of withholding in the case of nonresident
aliens, see section 1441.
(4) For alternative minimum tax, see section 55.
(b) Special limitations on tax
(1) For limitation on tax in case of income of members of
Armed Forces, astronauts, and victims of certain terrorist
attacks on death, see section 692.
(2) For computation of tax where taxpayer restores
substantial amount held under claim of right, see section 1341.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 10; Pub. L. 88-272, title II,
Sec. 232(f)(2), Feb. 26, 1964, 78 Stat. 111; Pub. L. 91-172, title
III, Sec. 301(b)(2), title VIII, Sec. 803(d)(6), Dec. 30, 1969, 83
Stat. 585, 684; Pub. L. 94-455, title XIX, Secs. 1901(b)(22)(B),
1951(c)(3)(A), Oct. 4, 1976, 90 Stat. 1798, 1841; Pub. L. 95-600,
title IV, Secs. 401(b)(2), 421(e)(1), Nov. 6, 1978, 92 Stat. 2867,
2875; Pub. L. 96-222, title I, Sec. 104(a)(4)(H)(vii), Apr. 1,
1980, 94 Stat. 218; Pub. L. 97-248, title II, Sec. 201(d)(4),
formerly Sec. 201(c)(4), Sept. 3, 1982, 96 Stat. 419, renumbered
Sec. 201(d)(4), Pub. L. 97-448, title III, Sec. 306(a)(1)(A)(i),
Jan. 12, 1983, 96 Stat. 2400; Pub. L. 99-514, title I, Sec.
141(b)(2), title VII, Sec. 701(e)(4)(A), Oct. 22, 1986, 100 Stat.
2117, 2343; Pub. L. 107-134, title I, Sec. 101(b)(1), Jan. 23,
2002, 115 Stat. 2428; Pub. L. 108-121, title I, Sec. 110(a)(2)(A),
Nov. 11, 2003, 117 Stat. 1342.)
-MISC1-
AMENDMENTS
2003 - Subsec. (b)(1). Pub. L. 108-121 inserted ", astronauts,"
after "Forces".
2002 - Subsec. (b)(1). Pub. L. 107-134 inserted "and victims of
certain terrorist attacks" before "on death".
1986 - Subsec. (a)(4). Pub. L. 99-514, Sec. 701(e)(4)(A), amended
par. (4) generally, substituting "alternative minimum tax" for
"minimum tax for taxpayers other than corporations".
Subsec. (b)(2), (3). Pub. L. 99-514, Sec. 141(b)(2), struck out
par. (2) which read: "For limitation on tax where an individual
chooses the benefits of income averaging, see section 1301." and
redesignated former par. (3) as (2).
1982 - Subsec. (a)(4). Pub. L. 97-248, Sec. 201(d)(4), formerly
Sec. 201(c)(4), substituted "section 55" for "sections 55 and 56".
1980 - Subsec. (a)(4). Pub. L. 96-222 substituted "sections 55
and 56" for "section 55".
1978 - Subsec. (a)(3). Pub. L. 95-600, Sec. 401(b)(2),
redesignated par. (4) as (3). Former par. (3), relating to the
alternative tax in the case of capital gains, was struck out.
Subsec. (a)(4), (5). Pub. L. 95-600, Secs. 401(b)(2), 421(e)(1),
redesignated par. (5) as (4) and substituted "taxpayers other than
corporations, see section 55" for "preferences, see section 56".
Former par. (4) redesignated (3).
1976 - Subsec. (b). Pub. L. 94-455 redesignated pars. (2), (3),
and (4), as (1), (2), (3), respectively, and struck out former par.
(1) which referred to section 632 for limitation on tax
attributable to sales of oil or gas properties and par. (5) which
referred to section 1347 for limitation on tax attributable to
claims against the U.S. involving acquisition of property.
1969 - Subsec. (a)(5). Pub. L. 91-172, Sec. 301(b)(2), added par.
(5).
Subsec. (b). Pub. L. 91-172, Sec. 803(d)(6), substituted "tax"
for "surtax" in pars. (1) and (5).
1964 - Subsec. (b). Pub. L. 88-272 redesignated pars. (2), (3),
(4), (7) and (8) as pars. (1) to (5), respectively, substituted
"where an individual chooses the benefits of income averaging" for
"with respect to compensation for longterm services" in par. (3),
and struck out former pars. (1), (5) and (6) which referred to tax
attributable to receipt of lump sum under annuity, endowment, or
life insurance contract, to income from artistic work or
inventions, and to back pay, respectively.
EFFECTIVE DATE OF 2003 AMENDMENT
Pub. L. 108-121, title I, Sec. 110(a)(4), Nov. 11, 2003, 117
Stat. 1342, provided that: "The amendments made by this subsection
[amending this section and sections 692 and 6013 of this title]
shall apply with respect to any astronaut whose death occurs after
December 31, 2002."
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107-134 applicable to taxable years ending
before, on, or after Sept. 11, 2001, with provisions relating to
waiver of limitations, see section 101(d) of Pub. L. 107-134, set
out as a note under section 692 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 141(b)(2) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 701(e)(4)(A) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
EFFECTIVE DATE OF 1982 AMENDMENT
Section 201(e)(1) of Pub. L. 97-248 provided that: "The
amendments made by this section [amending this section and sections
46, 53, 55, 56, 57, 58, 173, 174, 511, 616, 617, 897, 901, 936,
1016, 6015, 6362, 6654, and 7701 of this title] shall apply to
taxable years beginning after December 31, 1982."
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 401(b)(2) of Pub. L. 95-600 applicable to
taxable years beginning after Dec. 31, 1978, see section 401(c) of
Pub. L. 95-600, set out as a note under section 1201 of this title.
Section 421(g) of Pub. L. 95-600 provided that: "The amendments
made by this section [enacting section 55 of this title and
amending this section and sections 57, 58, 443, 511, 666, 871, 877,
904, 6015, 6362, and 6654 of this title] shall apply to taxable
years beginning after December 31, 1978, except that the amendment
made by paragraph (1) of subsection (b) [amending section 57 of
this title] shall apply to sales and exchanges made after July 26,
1978, in taxable years ending after such date."
EFFECTIVE DATE OF 1969 AMENDMENT
Section 301(c) of Pub. L. 91-172, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by this section [enacting sections 56 to 58 of this
title and amending this section and sections 12, 46, 51, 443, 453,
511, 901, 1373, 1375, 6015, and 6654 of this title] shall apply to
taxable years ending after December 31, 1969. In the case of a
taxable year beginning in 1969 and ending in 1970, the tax imposed
by section 56 of the Internal Revenue Code of 1986 [formerly I.R.C.
1954] (as added by subsection (a)) shall be an amount equal to the
tax imposed by such section (determined without regard to this
sentence) multiplied by a fraction -
"(1) the numerator of which is the number of days in the
taxable year occurring after December 31, 1969, and
"(2) the denominator of which is the number of days in the
entire taxable year."
Amendment by section 803(d)(6) of Pub. L. 91-172 applicable to
taxable years beginning after Dec. 31, 1970, see section 803(f) of
Pub. L. 91-172, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Section 232(g) of Pub. L. 88-272, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) General rule. - Except as provided in paragraph (2), the
amendments made by this section [enacting sections 1301 to 1305,
amending this section and sections 4, 72, 144, 402, 403, 6511, and
omitting former sections 1301 to 1307 of this title] shall apply
with respect to taxable years beginning after December 31, 1963.
"(2) Income from an employment. - If, in a taxable year beginning
after December 31, 1963, an individual or partnership receives or
accrues compensation from an employment (as defined by section
1301(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]
as in effect immediately before the enactment of this Act [Feb. 26,
1964] and the employment began before February 6, 1963, the tax
attributable to such compensation may, at the election of the
taxpayer, be computed under the provisions of sections 1301 and
1307 of such Code as in effect immediately before the enactment of
this Act. If a taxpayer so elects (at such time and in such manner
as the Secretary of the Treasury or his delegate by regulations
prescribes), he may not choose for such taxable year the benefits
provided by part I of subchapter Q of chapter 1 of such Code
(relating to income averaging) as amended by this Act and (if he
elects to have subsection (e) of such section 1307 apply) section
170(b)(5) of such Code as amended by this Act shall not apply to
charitable contributions paid in such taxable year."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(e)(4)(A) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, see section 1012(aa)(2) of Pub. L.
100-647, set out as a note under section 861 of this title.
-End-
-CITE-
26 USC PART II - TAX ON CORPORATIONS 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART II - TAX ON CORPORATIONS
-HEAD-
PART II - TAX ON CORPORATIONS
-MISC1-
Sec.
11. Tax imposed.
12. Cross references relating to tax on corporations.
-End-
-CITE-
26 USC Sec. 11 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART II - TAX ON CORPORATIONS
-HEAD-
Sec. 11. Tax imposed
-STATUTE-
(a) Corporations in general
A tax is hereby imposed for each taxable year on the taxable
income of every corporation.
(b) Amount of tax
(1) In general
The amount of the tax imposed by subsection (a) shall be the
sum of -
(A) 15 percent of so much of the taxable income as does not
exceed $50,000,
(B) 25 percent of so much of the taxable income as exceeds
$50,000 but does not exceed $75,000,
(C) 34 percent of so much of the taxable income as exceeds
$75,000 but does not exceed $10,000,000, and
(D) 35 percent of so much of the taxable income as exceeds
$10,000,000.
In the case of a corporation which has taxable income in excess
of $100,000 for any taxable year, the amount of tax determined
under the preceding sentence for such taxable year shall be
increased by the lesser of (i) 5 percent of such excess, or (ii)
$11,750. In the case of a corporation which has taxable income in
excess of $15,000,000, the amount of the tax determined under the
foregoing provisions of this paragraph shall be increased by an
additional amount equal to the lesser of (i) 3 percent of such
excess, or (ii) $100,000.
(2) Certain personal service corporations not eligible for
graduated rates
Notwithstanding paragraph (1), the amount of the tax imposed by
subsection (a) on the taxable income of a qualified personal
service corporation (as defined in section 448(d)(2)) shall be
equal to 35 percent of the taxable income.
(c) Exceptions
Subsection (a) shall not apply to a corporation subject to a tax
imposed by -
(1) section 594 (relating to mutual savings banks conducting
life insurance business),
(2) subchapter L (sec. 801 and following, relating to insurance
companies), or
(3) subchapter M (sec. 851 and following, relating to regulated
investment companies and real estate investment trusts).
(d) Foreign corporations
In the case of a foreign corporation, the taxes imposed by
subsection (a) and section 55 shall apply only as provided by
section 882.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 11; Mar. 30, 1955, ch. 18, Sec.
2, 69 Stat. 14; Mar. 29, 1956, ch. 115, Sec. 2, 70 Stat. 66; Pub.
L. 85-12, Sec. 2, Mar. 29, 1957, 71 Stat. 9; Pub. L. 85-475, Sec.
2, June 30, 1958, 72 Stat. 259; Pub. L. 86-75, Sec. 2, June 30,
1959, 73 Stat. 157; Pub. L. 86-564, title II, Sec. 201, June 30,
1960, 74 Stat. 290; Pub. L. 86-779, Sec. 10(d), Sept. 14, 1960, 74
Stat. 1009; Pub. L. 87-72, Sec. 2, June 30, 1961, 75 Stat. 193;
Pub. L. 87-508, Sec. 2, June 28, 1962, 76 Stat. 114; Pub. L. 88-52,
Sec. 2, June 29, 1963, 77 Stat. 72; Pub. L. 88-272, title I, Sec.
121, Feb. 26, 1964, 78 Stat. 25; Pub. L. 89-809, title I, Sec.
104(b)(2), Nov. 13, 1966, 80 Stat. 1557; Pub. L. 91-172, title IV,
Sec. 401(b)(2)(B), Dec. 30, 1969, 83 Stat. 602; Pub. L. 94-12,
title III, Sec. 303(a), (b), Mar. 29, 1975, 89 Stat. 44; Pub. L.
94-164, Sec. 4(a)-(c), Dec. 23, 1975, 89 Stat. 973, 974; Pub. L.
94-455, title IX, Sec. 901(a), Oct. 4, 1976, 90 Stat. 1606; Pub. L.
95-30, title II, Sec. 201(1), (2), May 23, 1977, 91 Stat. 141; Pub.
L. 95-600, title III, Sec. 301(a), Nov. 6, 1978, 92 Stat. 2820;
Pub. L. 97-34, title II, Sec. 231(a), Aug. 13, 1981, 95 Stat. 249;
Pub. L. 98-369, div. A, title I, Sec. 66(a), July 18, 1984, 98
Stat. 585; Pub. L. 99-514, title VI, Sec. 601(a), Oct. 22, 1986,
100 Stat. 2249; Pub. L. 100-203, title X, Sec. 10224(a), Dec. 22,
1987, 101 Stat. 1330-412; Pub. L. 100-647, title I, Sec.
1007(g)(13)(B), Nov. 10, 1988, 102 Stat. 3436; Pub. L. 103-66,
title XIII, Sec. 13221(a), (b), Aug. 10, 1993, 107 Stat. 477.)
-MISC1-
AMENDMENTS
1993 - Subsec. (b)(1). Pub. L. 103-66, Sec. 13221(a)(3), inserted
at end of closing provisions "In the case of a corporation which
has taxable income in excess of $15,000,000, the amount of the tax
determined under the foregoing provisions of this paragraph shall
be increased by an additional amount equal to the lesser of (i) 3
percent of such excess, or (ii) $100,000."
Subsec. (b)(1)(C), (D). Pub. L. 103-66, Sec. 13221(a)(1), (2),
added subpars. (C) and (D) and struck out former subpar. (C) which
read as follows: "34 percent of so much of the taxable income as
exceeds $75,000."
Subsec. (b)(2). Pub. L. 103-66, Sec. 13221(b), substituted "35
percent" for "34 percent".
1988 - Subsec. (d). Pub. L. 100-647 substituted "the taxes
imposed by subsection (a) and section 55" for "the tax imposed by
subsection (a)".
1987 - Subsec. (b). Pub. L. 100-203 amended subsec. (b)
generally. Prior to amendment, subsec. (b) read as follows: "The
amount of the tax imposed by subsection (a) shall be the sum of -
"(1) 15 percent of so much of the taxable income as does not
exceed $50,000,
"(2) 25 percent of so much of the taxable income as exceeds
$50,000 but does not exceed $75,000, and
"(3) 34 percent of so much of the taxable income as exceeds
$75,000.
In the case of a corporation which has taxable income in excess of
$100,000 for any taxable year, the amount of tax determined under
the preceding sentence for such taxable year shall be increased by
the lesser of (A) 5 percent of such excess, or (B) $11,750."
1986 - Subsec. (b). Pub. L. 99-514 amended subsec. (b) generally.
Prior to amendment, subsec. (b) read as follows: "The amount of the
tax imposed by subsection (a) shall be the sum of -
"(1) 15 percent (16 percent for taxable years beginning in
1982) of so much of the taxable income as does not exceed
$25,000;
"(2) 18 percent (19 percent for taxable years beginning in
1982) of so much of the taxable income as exceeds $25,000 but
does not exceed $50,000;
"(3) 30 percent of so much of the taxable income as exceeds
$50,000 but does not exceed $75,000;
"(4) 40 percent of so much of the taxable income as exceeds
$75,000 but does not exceed $100,000; plus
"(5) 46 percent of so much of the taxable income as exceeds
$100,000.
In the case of a corporation with taxable income in excess of
$1,000,000 for any taxable year, the amount of tax determined under
the preceding sentence for such taxable year shall be increased by
the lesser of (A) 5 percent of such excess, or (B) $20,250."
1984 - Subsec. (b). Pub. L. 98-369 inserted "In the case of a
corporation with taxable income in excess of $1,000,000 for any
taxable year, the amount of tax determined under the preceding
sentence for such taxable year shall be increased by the lesser of
(A) 5 percent of such excess, or (B) $20,250."
1981 - Subsec. (b)(1). Pub. L. 97-34, Sec. 231(a)(1), substituted
"15 percent (16 percent for taxable years beginning in 1982)" for
"17 percent".
Subsec. (b)(2). Pub. L. 97-34, Sec. 231(a)(2), substituted "18
percent (19 percent for taxable years beginning in 1982)" for "20
percent".
1978 - Pub. L. 95-600 reduced corporate tax rates by substituting
provisions imposing a five-step tax rate structure on corporate
taxable income for provisions using a normal tax and surtax
approach to the taxation of corporate taxable income.
1977 - Subsec. (b)(1). Pub. L. 95-30, Sec. 201(1), substituted
"December 31, 1978" for "December 31, 1977".
Subsec. (b)(2). Pub. L. 95-30, Sec. 201(1), substituted "January
1, 1979" for "January 1, 1978" in provisions preceding subpar. (A).
Subsec. (d)(1). Pub. L. 95-30, Sec. 201(2), substituted "December
31, 1978" for "December 31, 1977".
Subsec. (d)(2). Pub. L. 95-30, Sec. 201(2), substituted "January
1, 1979" for "January 1, 1978".
1976 - Subsec. (a). Pub. L. 94-455 reenacted subsec. (a) without
change.
Subsec. (b). Pub. L. 94-455, among other changes, substituted
"December 31, 1977, 22 percent" for "December 31, 1976, 22 percent"
and "after December 31, 1974 and before January 1, 1978" for "after
December 31, 1974 and before January 1, 1977" and struck out
provisions relating to the six-month application of the general
rule.
Subsec. (c). Pub. L. 94-455 struck out provisions relating to the
special rule for 1976 for calendar year taxpayers.
Subsec. (d). Pub. L. 94-455, among other changes, substituted
provisions relating to surtax exemption of $25,000 for a taxable
year ending Dec. 31, 1977, or $50,000 for a taxable year ending
after Dec. 31, 1974, and before Jan. 1, 1978, for provisions
relating to surtax exemption of $50,000 for any taxable year and
struck out provisions relating to six-month application of the
general rule.
1975 - Subsec. (b). Pub. L. 94-164 redesignated existing pars.
(1) and (2) as pars. (1)(A) and (1)(B), and in par. (1)(A) as so
redesignated substituted "after December 31, 1976" for "before
January 1, 1975 or after December 31, 1975", and in par. (1)(B) as
so redesignated substituted "January 1, 1977" for "January 1,
1976", and added par. (2).
Pub. L. 94-12, Sec. 303(a), reduced the normal tax for a taxable
year ending after Dec. 31, 1974, and before Jan. 1, 1976, to 20
percent of so much of the taxable income as does not exceed $25,000
plus 22 percent of so much of the taxable income as exceeds
$25,000.
Subsec. (c). Pub. L. 94-164 designated existing provisions as
par. (1), struck out special percentages for taxable years
beginning before Jan. 1, 1964, and after Dec. 31, 1963 and before
Jan. 1, 1965, and added par. (2).
Subsec. (d). Pub. L. 94-164 designated existing provisions as
par. (1), substituted "$50,000" for "$25,000", inserted reference
to section 1564 of this title, and added par. (2).
Pub. L. 94-12, Sec. 303(b), substituted "$50,000" for "$25,000".
1969 - Subsec. (d). Pub. L. 91-172 substituted "section 1561 or
1564" for "section 1561".
1966 - Subsec. (e)(4). Pub. L. 89-809, Sec. 104(b)(2)(A), struck
out par. (4) which made reference to section 881(a) (relating to
foreign corporations not engaged in business in United States).
Subsec. (f). Pub. L. 89-809, Sec. 104(b)(2)(B), added subsec.
(f).
1964 - Subsec. (b). Pub. L. 88-272 applied the 30 percent tax to
years beginning before Jan. 1, 1964 instead of July 1, 1964 in par.
(1), and in par. (2), reduced the rate from 25 percent to 22
percent, and applied it to years beginning after Dec. 31, 1963,
instead of June 30, 1964.
Subsec. (c). Pub. L. 88-272 increased the percentage from 22 to
28 for taxable years beginning after Dec. 31, 1963, and before Jan.
1, 1965, and to 26 percent for taxable years beginning after Dec.
31, 1964. The surtax exemption previously carried in subsec. (c),
is now stated in subsec. (d).
Subsecs. (d), (e). Pub. L. 88-272 added subsec. (d) and
redesignated former subsec. (d) as (e).
1963 - Subsec. (b). Pub. L. 88-52 substituted "July 1, 1964" for
"July 1, 1963" and "June 30, 1964" for "June 30, 1963" wherever
appearing.
1962 - Subsec. (b). Pub. L. 87-508 substituted "July 1, 1963" for
"July 1, 1962" and "June 30, 1963" for "June 30, 1962" wherever
appearing.
1961 - Subsec. (b). Pub. L. 87-72 substituted "July 1, 1962" for
"July 1, 1961" and "June 30, 1962" for "June 30, 1961" wherever
appearing.
1960 - Subsec. (b). Pub. L. 86-564 substituted "July 1, 1961" for
"July 1, 1960" and "June 30, 1961" for "June 30, 1960" wherever
appearing.
Subsec. (d)(3). Pub. L. 86-779 inserted "and real estate
investment trusts" after "regulated investment companies".
1959 - Subsec. (b). Pub. L. 86-75 substituted "July 1, 1960" for
"July 1, 1959" and "June 30, 1960" for "June 30, 1959" wherever
appearing.
1958 - Subsec. (b). Pub. L. 85-475 substituted "July 1, 1959" for
"July 1, 1958" and "June 30, 1959" for "June 30, 1958" wherever
appearing.
1957 - Subsec. (b). Pub. L. 85-12 substituted "July 1, 1958" for
"April 1, 1957" and "June 30, 1958" for "March 31, 1957" wherever
appearing.
1956 - Subsec. (b). Act Mar. 29, 1956, substituted "April 1,
1957" for "April 1, 1956" and "March 31, 1957" for "March 31, 1956"
wherever appearing.
1955 - Subsec. (b). Act Mar. 30, 1955, substituted "April 1,
1956" for "April 1, 1955" and "March 31, 1956" for "March 31, 1955"
wherever appearing.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13221(d) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 852, 1201,
and 1445 of this title] shall apply to taxable years beginning on
or after January 1, 1993; except that the amendment made by
subsection (c)(3) [amending section 1445 of this title] shall take
effect on the date of the enactment of this Act [Aug. 10, 1993]."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Section 10224(b) of Pub. L. 100-203 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1987."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 601(b) of Pub. L. 99-514 provided that:
"(1) In general. - The amendment made by subsection (a) [amending
this section] shall apply to taxable years beginning on or after
July 1, 1987.
"(2) Cross reference. -
"For treatment of taxable years which include July 1, 1987,
see section 15 of the Internal Revenue Code of 1986."
EFFECTIVE DATE OF 1984 AMENDMENT
Section 66(c) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - The amendments made by this section [amending
this section and section 1561 of this title] shall apply to taxable
years beginning after December 31, 1983.
"(2) Amendments not treated as changed in rate of tax. - The
amendments made by this subsection [probably should be "section"]
shall not be treated as a change in a rate of tax for purposes of
section 21 of the Internal Revenue Code of 1986 [formerly I.R.C.
1954]."
EFFECTIVE DATE OF 1981 AMENDMENT
Section 231(c) of Pub. L. 97-34 provided that: "The amendments
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1981."
EFFECTIVE DATE OF 1978 AMENDMENT
Section 301(c) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section and sections 12, 57,
244, 247, 511, 527, 528, 802, 821, 826, 852, 857, 882, 907, 922,
962, 1351, 1551, 1561, 6154, and 6655 of this title] shall apply to
taxable years beginning after December 31, 1978."
EFFECTIVE DATE OF 1976 AMENDMENT
Section 901(d) of Pub. L. 94-455 provided that: "The amendment
made by subsection (a) [amending this section] shall take effect on
December 23, 1975. The amendments made by subsection (b) [amending
section 821 of this title] shall apply to taxable years ending
after December 31, 1974. The amendments made by subsection (c)
[amending sections 21, 1561, and 6154 of this title] shall apply to
taxable years ending after December 31, 1975."
EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENTS
Section 4(e) of Pub. L. 94-164 provided that: "The amendments
made by subsections (b), (c), and (d) [amending this section and
sections 21, 962, and 1561 of this title] apply to taxable years
beginning after December 31, 1975. The amendment made by subsection
(c) [amending this section] ceases to apply for taxable years
beginning after December 31, 1976."
Section 305(b)(1) of Pub. L. 94-12 provided that: "The amendments
made by section 303 [amending this section and sections 12, 962,
and 1561 of this title and enacting provisions set out as a note
under this section] shall apply to taxable years ending after
December 31, 1974. The amendments made by subsections (b) and (c)
of such section [amending this section and sections 12, 962, and
1561 of this title and enacting provisions set out as a note under
this section] shall cease to apply for taxable years ending after
December 31, 1975."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable with respect to taxable
years beginning after Dec. 31, 1969, see section 401(h)(2) of Pub.
L. 91-172, set out as a note under section 1561 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Section 104(n) of Pub. L. 89-809 provided that: "The amendments
made by this section (other than subsection (k)) [enacting section
6683 to this title and amending this section and sections 245, 301,
512, 542, 543, 545, 819, 821, 822, 831, 832, 841, 842, 881, 882,
884, 952, 953, 1249, 1442, and 6016 of this title] shall apply with
respect to taxable years beginning after December 31, 1966. The
amendment made by subsection (k) [amending section 1248(d)(4) of
this title] shall apply with respect to sales or exchanges
occurring after December 31, 1966."
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272, except for purposes of section 21 of
this title, effective with respect to taxable years beginning after
Dec. 31, 1963, see section 131 of Pub. L. 88-272, set out as a note
under section 1 of this title.
EFFECTIVE DATE OF 1960 AMENDMENT
Amendment by Pub. L. 86-779 applicable with respect to taxable
years of real estate investment trusts beginning after Dec. 31,
1960, see section 10(k) of Pub. L. 86-779, set out as an Effective
Date note under section 856 of this title.
ALLOCATION OF 1975 TAXABLE INCOME AMONG COMPONENT MEMBERS OF
CONTROLLED GROUP OF CORPORATIONS
Section 303(c)(1) of Pub. L. 94-12 provided in part that: "In
applying subsection (b)(2) of section 11 [subsec. (b)(2) of this
section], the first $25,000 of taxable income and the second
$25,000 of taxable income shall each be allocated among the
component members of a controlled group of corporations in the same
manner as the surtax exemption is allocated."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 15, 59, 80, 244, 247,
280C, 453A, 460, 468B, 511, 527, 594, 774, 801, 804, 831, 835, 847,
852, 857, 860E, 860G, 860K, 882, 891, 904, 907, 954, 962, 1201,
1291, 1293, 1351, 1374, 1375, 1381, 1446, 1551, 1561, 4942, 6033,
6242, 6425, 6655, 7518, 7704 of this title; title 46 App. section
1177.
-End-
-CITE-
26 USC Sec. 12 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART II - TAX ON CORPORATIONS
-HEAD-
Sec. 12. Cross references relating to tax on corporations
-STATUTE-
(1) For tax on the unrelated business income of certain
charitable and other corporations exempt from tax under this
chapter, see section 511.
(2) For accumulated earnings tax and personal holding company
tax, see parts I and II of subchapter G (sec. 531 and
following).
(3) For doubling of tax on corporations of certain foreign
countries, see section 891.
(4) For alternative tax in case of capital gains, see section
1201(a).
(5) For rate of withholding in case of foreign corporations,
see section 1442.
(6) For limitation on benefits of graduated rate schedule
provided in section 11(b), see section 1551.
(7) For alternative minimum tax, see section 55.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 11; Pub. L. 88-272, title II,
Sec. 234(b)(4), Feb. 26, 1964, 78 Stat. 115; Pub. L. 91-172, title
III, Sec. 301(b)(3), Dec. 30, 1969, 83 Stat. 585; Pub. L. 94-12,
title III, Sec. 303(c)(2), Mar. 29, 1975, 89 Stat. 44; Pub. L.
95-600, title III, Sec. 301(b)(1), Nov. 6, 1978, 92 Stat. 2820;
Pub. L. 98-369, div. A, title I, Sec. 474(r)(29)(E), July 18, 1984,
98 Stat. 844; Pub. L. 99-514, title VII, Sec. 701(e)(4)(B), Oct.
22, 1986, 100 Stat. 2343.)
-MISC1-
AMENDMENTS
1986 - Par. (7). Pub. L. 99-514 amended par. (7) generally,
substituting "alternative minimum tax" and "55" for "minimum tax
for tax preferences" and "56", respectively.
1984 - Pars. (6) to (8). Pub. L. 98-369 redesignated pars. (7)
and (8) as (6) and (7), respectively. Former par. (6), which
referred to section 1451 for withholding of tax on tax-free
covenant bonds, was struck out.
1978 - Par. (7). Pub. L. 95-600 substituted "benefits of
graduated rate schedule provided in section 11(b)" for "the $25,000
exemption from surtax provided in section 11(c)".
1975 - Par. (7). Pub. L. 94-12 substituted "$50,000" for
"$25,000" for a limited period. See Effective and Termination Dates
of 1975 Amendment note set out below.
1969 - Par. (8). Pub. L. 91-172 added par. (8).
1964 - Par. (8). Pub. L. 88-272 struck out par. (8) which
referred to section 1503 for additional tax for corporations filing
consolidated returns.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1986, with certain exceptions and qualifications,
see section 701(f) of Pub. L. 99-514, set out as an Effective Date
note under section 55 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 not applicable with respect to
obligations issued before Jan. 1, 1984, see section 475(b) of Pub.
L. 98-369, set out as a note under section 33 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 applicable to taxable years beginning
after Dec. 31, 1978, see section 301(c) of Pub. L. 95-600, set out
as a note under section 11 of this title.
EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT
Amendment by Pub. L. 94-12 applicable to taxable years ending
after Dec. 31, 1974, but to cease to apply for taxable years ending
after Dec. 31, 1975, see section 305(b)(1) of Pub. L. 94-12, set
out as a note under section 11 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years ending
after Dec. 31, 1969, see section 301(c) of Pub. L. 91-172, set out
as a note under section 5 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to taxable years beginning
after Dec. 31, 1963, see section 234(c) of Pub. L. 88-272, set out
as a note under section 1503 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN
RELATION TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by Pub. L. 99-514 notwithstanding
any treaty obligation of the United States in effect on Oct. 22,
1986, see section 1012(aa)(2) of Pub. L. 100-647, set out as a note
under section 861 of this title.
-End-
-CITE-
26 USC PART III - CHANGES IN RATES DURING A TAXABLE YEAR 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART III - CHANGES IN RATES DURING A TAXABLE YEAR
-HEAD-
PART III - CHANGES IN RATES DURING A TAXABLE YEAR
-MISC1-
Sec.
15. Effect of changes.
AMENDMENTS
1984 - Pub. L. 98-369, div. A, title IV, Sec. 474(b)(3), July 18,
1984, 98 Stat. 830, substituted "15. Effect of changes" for "21.
Effect of changes".
-End-
-CITE-
26 USC Sec. 15 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART III - CHANGES IN RATES DURING A TAXABLE YEAR
-HEAD-
Sec. 15. Effect of changes
-STATUTE-
(a) General rule
If any rate of tax imposed by this chapter changes, and if the
taxable year includes the effective date of the change (unless that
date is the first day of the taxable year), then -
(1) tentative taxes shall be computed by applying the rate for
the period before the effective date of the change, and the rate
for the period on and after such date, to the taxable income for
the entire taxable year; and
(2) the tax for such taxable year shall be the sum of that
proportion of each tentative tax which the number of days in each
period bears to the number of days in the entire taxable year.
(b) Repeal of tax
For purposes of subsection (a) -
(1) if a tax is repealed, the repeal shall be considered a
change of rate; and
(2) the rate for the period after the repeal shall be zero.
(c) Effective date of change
For purposes of subsections (a) and (b) -
(1) if the rate changes for taxable years "beginning after" or
"ending after" a certain date, the following day shall be
considered the effective date of the change; and
(2) if a rate changes for taxable years "beginning on or after"
a certain date, that date shall be considered the effective date
of the change.
(d) Section not to apply to inflation adjustments
This section shall not apply to any change in rates under
subsection (f) of section 1 (relating to adjustments in tax tables
so that inflation will not result in tax increases).
(e) References to highest rate
If the change referred to in subsection (a) involves a change in
the highest rate of tax imposed by section 1 or 11(b), any
reference in this chapter to such highest rate (other than in a
provision imposing a tax by reference to such rate) shall be
treated as a reference to the weighted average of the highest rates
before and after the change determined on the basis of the
respective portions of the taxable year before the date of the
change and on or after the date of the change.
(f) Rate reductions enacted by Economic Growth and Tax Relief
Reconciliation Act of 2001
This section shall not apply to any change in rates under
subsection (i) of section 1 (relating to rate reductions after
2000).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 12, Sec. 21; Pub. L. 88-272,
title I, Sec. 132, Feb. 26, 1964, 78 Stat. 30; Pub. L. 91-172,
title VIII, Sec. 803(e), Dec. 30, 1969, 83 Stat. 685; Pub. L.
92-178, title II, Sec. 205, Dec. 10, 1971, 85 Stat. 511; Pub. L.
94-12, title III, Sec. 305(b)(2), Mar. 29, 1975, 89 Stat. 45; Pub.
L. 94-164, Sec. 4(d)(2), Dec. 23, 1975, 89 Stat. 975; Pub. L.
94-455, title IX, Sec. 901(c)(2), Oct. 4, 1976, 90 Stat. 1607; Pub.
L. 95-30, title I, Sec. 101(d)(2), May 23, 1977, 91 Stat. 133; Pub.
L. 95-600, title I, Sec. 106, Nov. 6, 1978, 92 Stat. 2776; Pub. L.
97-34, title I, Sec. 101(d)(3), Aug. 13, 1981, 95 Stat. 184;
renumbered Sec. 15, Pub. L. 98-369, div. A, title IV, Sec.
474(b)(1), July 18, 1984, 98 Stat. 830; Pub. L. 99-514, title I,
Sec. 101(b), Oct. 22, 1986, 100 Stat. 2099; Pub. L. 100-647, title
I, Sec. 1006(a), Nov. 10, 1988, 102 Stat. 3393; Pub. L. 107-16,
title I, Sec. 101(c)(3), June 7, 2001, 115 Stat. 43.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2001 - Subsec. (f). Pub. L. 107-16, Secs. 101(c)(3), 901,
temporarily added subsec. (f). See Effective and Termination Dates
of 2001 Amendment note below.
1988 - Subsec. (e). Pub. L. 100-647 added subsec. (e).
1986 - Subsec. (d). Pub. L. 99-514 amended subsec. (d) generally,
substituting "apply to inflation adjustments" for "apply to section
1 rate changes made by Economic Recovery Tax Act of 1981" in
heading and struck out "section 1 attributable to the amendments
made by section 101 of the Economic Tax Act of 1981 or" before
"subsection (f)" in text.
1984 - Pub. L. 98-369 renumbered section 21 of this title as this
section.
1981 - Subsec. (d). Pub. L. 97-34 substituted provisions that
this section shall not apply to any change in rates under section 1
attributable to the amendments made by section 101 of the Economic
Recovery Tax Act of 1981 or subsec. (f) of section 1 for provisions
that had related to the changes made by section 303(b) of the Tax
Reduction Act of 1975 in the surtax exemption.
Subsecs. (e), (f). Pub. L. 97-34 struck out subsecs. (e) and (f)
which had related, respectively, to changes made by the Tax
Reduction and Simplification Act of 1977 and to changes made by
Revenue Act of 1978.
1978 - Subsec. (f). Pub. L. 95-600 added subsec. (f).
1977 - Subsec. (d). Pub. L. 95-30, Sec. 101(d)(2)(A), (B),
redesignated subsec. (f) as (d). Former subsec. (d), which directed
that, in applying subsec. (a) to a taxable year of an individual
which was not a calendar year, each change made by the Tax Reform
Act of 1969 in part I or in the application of part IV or V of
subchapter B for purposes of the determination of taxable income
should be treated as a change in a rate of tax, was struck out.
Subsec. (e). Pub. L. 95-30, Sec. 101(d)(2)(A), (C), added subsec.
(e). Former subsec. (e), which directed that, in applying subsec.
(a) to a taxable year of an individual which was not a calendar
year, each change made by the Revenue Act of 1971 in section 141
(relating to the standard deduction) and section 151 (relating to
personal exemptions) should be treated as a change in a rate of
tax, was struck out.
Subsec. (f). Pub. L. 95-30, Sec. 101(d)(2)(B), redesignated
subsec. (f) as (d).
1976 - Subsec. (f). Pub. L. 94-455 substituted "in the surtax
exemption and any change under section 11(d) in the surtax
exemption" for "and the change made by section 3(c) of the Revenue
Adjustment Act of 1975 in section 11(d) (relating to corporate
surtax exemption)".
1975 - Subsec. (f). Pub. L. 94-164 inserted reference to change
made by section 3(c) of the Revenue Adjustment Act of 1975.
Pub. L. 94-12 added subsec. (f).
1971 - Subsec. (e). Pub. L. 92-178 added subsec. (e).
1969 - Subsec. (d). Pub. L. 91-172 substituted provisions
covering changes made by the Tax Reform Act of 1969 in case of
individuals for provisions covering changes made by Revenue Act of
1964.
1964 - Subsec. (d). Pub. L. 88-272 amended subsection generally
by substituting provisions relating to changes made by the Revenue
Act of 1964, for provisions relating to taxable years beginning
before Jan. 1, 1954, and ending after Dec. 31, 1953.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to taxable years beginning
after Dec. 31, 2000, see section 101(d)(1) of Pub. L. 107-16, set
out as a note under section 1 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to taxable years beginning
after Dec. 31, 1981, see section 101(f)(1) of Pub. L. 97-34, set
out as a note under section 1 of this title.
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable with respect to taxable
years ending after Dec. 31, 1975, see section 901(d) of Pub. L.
94-455, set out as a note under section 11 of this title.
EFFECTIVE DATE OF 1975 AMENDMENT
Amendment by Pub. L. 94-164 applicable to taxable years beginning
after Dec. 31, 1975, see section 4(e) of Pub. L. 94-164, set out as
an Effective and Termination Dates of 1975 Amendments note under
section 11 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Section 132 of Pub. L. 88-272 provided that the amendment made by
that section is effective with respect to taxable years ending
after Dec. 31, 1963.
COORDINATION OF 1997 AMENDMENT WITH SECTION 15
Pub. L. 105-34, title I, Sec. 1(c), Aug. 5, 1997, 111 Stat. 788,
provided that: "No amendment made by this Act [see Tables for
classification] shall be treated as a change in a rate of tax for
purposes of section 15 of the Internal Revenue Code of 1986."
COORDINATION OF 1993 AMENDMENT WITH SECTION 15
Pub. L. 103-66, title XIII, Sec. 13001(c), Aug. 10, 1993, 107
Stat. 416, provided that: "Except in the case of the amendments
made by section 13221 [amending sections 11, 852, 1201, and 1445 of
this title] (relating to corporate rate increase), no amendment
made by this chapter [chapter 1 (Secs. 13001-13444) of title XIII
of Pub. L. 103-66, see Tables for classification] shall be treated
as a change in a rate of tax for purposes of section 15 of the
Internal Revenue Code of 1986."
COORDINATION OF 1990 AMENDMENT WITH SECTION 15
Pub. L. 101-508, title XI, Sec. 11001(c), Nov. 5, 1990, 104 Stat.
1388-400, provided that: "Except as otherwise expressly provided in
this title, no amendment made by this title [see Tables for
classification] shall be treated as a change in a rate of tax for
purposes of section 15 of the Internal Revenue Code of 1986."
COORDINATION OF 1987 AMENDMENT WITH SECTION 15
Pub. L. 100-203, title X, Sec. 10000(c), Dec. 22, 1987, 101 Stat.
1330-382, provided that: "No amendment made by this title [see
Tables for classification] shall be treated as a change in a rate
of tax for purposes [of] section 15 of the Internal Revenue Code of
1986."
COORDINATION OF 1986 AMENDMENT WITH SECTION 15
Section 3(b) of Pub. L. 99-514 provided that:
"(1) In general. - Except as provided in paragraph (2), for
purposes of section 15 of the Internal Revenue Code of 1986, no
amendment or repeal made by this Act [see Tables for
classification] shall be treated as a change in the rate of a tax
imposed by chapter 1 of such Code.
"(2) Exception. - Paragraph (1) shall not apply to the amendment
made by section 601 [amending section 11 of this title] (relating
to corporate rate reductions)."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 59A, 441, 6013 of this
title.
-End-
-CITE-
26 USC PART IV - CREDITS AGAINST TAX 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
-HEAD-
PART IV - CREDITS AGAINST TAX
-MISC1-
Subpart
A. Nonrefundable personal credits.
B. Other credits.
C. Refundable credits.
D. Business-related credits.
E. Rules for computing investment credit.
F. Rules for computing work opportunity credit.
G. Credit against regular tax for prior year minimum tax
liability.(!1)
AMENDMENTS
1996 - Pub. L. 104-188, title I, Secs. 1201(e)(3),
1601(b)(2)(F)(ii), Aug. 20, 1996, 110 Stat. 1772, 1833, substituted
"Other credits" for "Foreign tax credit, etc." in item for subpart
B and "work opportunity credit" for "targeted jobs credit" in item
for subpart F.
1990 - Pub. L. 101-508, title XI, Sec. 11813(b)(26), Nov. 5,
1990, 104 Stat. 1388-555, substituted "Rules for computing
investment credit" for "Rules for computing credit for investment
in certain depreciable property" in item for subpart E.
1984 - Pub. L. 98-369, div. A, title IV, Secs. 471(a), 474(n)(3),
July 18, 1984, 98 Stat. 825, 834, substituted "Nonrefundable
personal credits" for "Credits allowable" in item for subpart A,
"Foreign tax credit, etc" for "Rules for computing credit for
investment in certain depreciable property" in item for subpart B,
"Refundable credits" for "Rules for computing credit for expense of
work incentive programs" in item for subpart C, and
"Business-related credits" for "Rules for computing credit for
employment of certain new employees" in item for subpart D, and
added items for subparts E and F.
1977 - Pub. L. 95-30, title II, Sec. 202(d)(1)(B), May 23, 1977,
91 Stat. 147, added subpart D.
1971 - Pub. L. 92-178, title VI, Sec. 601(c)(1), Dec. 10, 1971,
85 Stat. 557, added subpart C.
-SECREF-
PART REFERRED TO IN OTHER SECTIONS
This part is referred to in sections 665, 1374, 1375, 1397E,
1398, 1503, 6096, 6425, 6428, 6429, 6654, 6655, 6682 of this title.
-FOOTNOTE-
(!1) Editorially supplied. Subpart G of part IV added by Pub. L.
99-514 without corresponding amendment of part analysis.
-End-
-CITE-
26 USC Subpart A - Nonrefundable Personal Credits 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
SUBPART A - NONREFUNDABLE PERSONAL CREDITS
-MISC1-
Sec.
21. Expenses for household and dependent care services
necessary for gainful employment.
22. Credit for the elderly and the permanently and totally
disabled.
23. Adoption expenses.
24. Child tax credit.
25. Interest on certain home mortgages.
25A. Hope and Lifetime Learning credits.
25B. Elective deferrals and IRA contributions by certain
individuals.
26. Limitation based on tax liability; definition of tax
liability.
AMENDMENTS
2001 - Pub. L. 107-16, title VI, Sec. 618(c), June 7, 2001, 115
Stat. 108, added item 25B.
1998 - Pub. L. 105-206, title VI, Sec. 6004(a)(1), July 22, 1998,
112 Stat. 792, substituted "Hope and Lifetime Learning credits" for
"Higher education tuition and related expenses" in item 25A.
1997 - Pub. L. 105-34, title I, Sec. 101(d)(3), title II, Sec.
201(e), Aug. 5, 1997, 111 Stat. 799, 806, added items 24 and 25A.
1996 - Pub. L. 104-188, title I, Sec. 1807(c)(6), Aug. 20, 1996,
110 Stat. 1902, added item 23.
1990 - Pub. L. 101-508, title XI, Sec. 11801(b)(1), Nov. 5, 1990,
104 Stat. 1388-522, struck out item 23 "Residential energy credit".
1986 - Pub. L. 99-514, title I, Sec. 112(b)(5), Oct. 22, 1986,
100 Stat. 2109, struck out item 24 "Contributions to candidates for
public office".
1984 - Pub. L. 98-369, div. A, title IV, Secs. 471(b), 612(f),
July 18, 1984, 98 Stat. 826, 913, substituted "Nonrefundable
Personal Credits" for "Credits Allowable" as subpart A heading,
struck out analysis of sections 31 through 45 formerly comprising
subpart A, and inserted a new analysis of sections consisting of
items 21 (formerly 44A), 22 (formerly 37), 23 (formerly 44C), 24
(formerly 41), and 25 and 26 (newly enacted).
1983 - Pub. L. 98-67 repealed amendments made by Pub. L. 97-248.
See 1982 Amendment note below.
Pub. L. 98-21, title I, Sec. 122(c)(7), Apr. 20, 1983, 97 Stat.
87, inserted "and the permanently and totally disabled" to item 37.
Pub. L. 97-424, title V, Sec. 515(b)(6)(D), Jan. 6, 1983, 96
Stat. 2181, substituted "and special fuels" for ", special fuels,
and lubricating oil" after "gasoline" in item 39.
Pub. L. 97-414, Sec. 4(c)(1), Jan. 4, 1983, 96 Stat. 2056, added
item 44H.
1982 - Pub. L. 97-248, title III, Secs. 307(b)(3), 308(a), Sept.
3, 1982, 96 Stat. 590, 591, provided that, applicable to payments
of interest, dividends, and patronage dividends paid or credited
after June 30, 1983, item 31 is amended to read "Tax withheld on
wages, interest, dividends, and patronage dividends". Section
102(a), (b) of Pub. L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369,
repealed subtitle A (Secs. 301-308) of title III of Pub. L. 97-248
as of the close of June 30, 1983, and provided that the Internal
Revenue Code of 1954 [now 1986] [this title] shall be applied and
administered (subject to certain exceptions) as if such subtitle A
(and the amendments made by such subtitle A) had not been enacted.
1981 - Pub. L. 97-34, title II, Sec. 221(c)(2), title III, Sec.
331(e)(2), Aug. 13, 1981, 95 Stat. 247, 295, added items 44F and
44G.
1980 - Pub. L. 96-223, title II, Secs. 231(b)(1), 232(b)(3)(B),
Apr. 2, 1980, 94 Stat. 272, 276, added items 44D and 44E.
1978 - Pub. L. 95-618, title I, Sec. 101(b)(1), Nov. 9, 1978, 92
Stat. 3179, added item 44C.
1977 - Pub. L. 95-30, title I, Sec. 101(e)(1), title II, Sec.
202(d)(1)(A), May 23, 1977, 91 Stat. 134, 147, added item 44B and
struck out item 36 "Credit not allowed to individuals taking
standard deduction".
1976 - Pub. L. 94-455, title IV, Sec. 401(a)(2)(D), title V,
Secs. 501(c)(2), 503(b)(5), 504(a)(2), title XIX, Sec.
1901(b)(1)(Z), Oct. 4, 1976, 90 Stat. 1555, 1559, 1562, 1565, 1792,
substituted in item 42 "General tax credit" for "Taxable income
credit", struck out in item 36 "pay optional tax or", inserted in
item 33 "possession tax credit", substituted in item 37 "Credit of
the elderly" for "Retirement income", added item 44A, and struck
out item 35 "Partially tax-exempt interest received by
individuals".
1975 - Pub. L. 94-164, Sec. 3(a)(2), Dec. 23, 1975, 89 Stat. 973,
substituted "Taxable income credit" for "Credit for personal
exemptions" in item 42.
Pub. L. 94-12, title II, Secs. 203(b)(1), 204(c), 208(d)(1), Mar.
29, 1975, 89 Stat. 30, 32, 35, renumbered item 42 as 45 and added
item 42 applicable to taxable years ending after Dec. 31, 1974, but
to cease to apply to taxable years ending after Dec. 31, 1975, item
43 applicable to taxable years beginning after Dec. 31, 1974, but
before Jan. 1, 1976, and item 44.
1971 - Pub. L. 92-178, title VI, Sec. 601(c)(2), Dec. 10, 1971,
85 Stat. 557, added items 40 and 41, and redesignated former item
40 as 42.
1970 - Pub. L. 91-258, title II, Sec. 207(d)(10), May 21, 1970,
84 Stat. 249, inserted ", special fuels," after "gasoline" in item
39.
1965 - Pub. L. 89-44, title VIII, Sec. 809(d)(1), June 21, 1965,
79 Stat. 167, added item 39 and redesignated former item 39 as 40.
1964 - Pub. L. 88-272, title II, Sec. 201(d)(1), Feb. 26, 1964,
78 Stat. 32, struck out item 34.
1962 - Pub. L. 87-834, Sec. 2(g)(1), (2), Oct. 16, 1962, 76 Stat.
972, 973, added headings of subparts A and B and item 38, and
redesignated former item 38 as 39.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 29, 30, 38, 53, 904,
1400C, 6401, 6428 of this title; title 12 section 1831q.
-End-
-CITE-
26 USC Sec. 21 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 21. Expenses for household and dependent care services
necessary for gainful employment
-STATUTE-
(a) Allowance of credit
(1) In general
In the case of an individual who maintains a household which
includes as a member one or more qualifying individuals (as
defined in subsection (b)(1)), there shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an
amount equal to the applicable percentage of the
employment-related expenses (as defined in subsection (b)(2))
paid by such individual during the taxable year.
(2) Applicable percentage defined
For purposes of paragraph (1), the term "applicable percentage"
means 35 percent reduced (but not below 20 percent) by 1
percentage point for each $2,000 (or fraction thereof) by which
the taxpayer's adjusted gross income for the taxable year exceeds
$15,000.
(b) Definitions of qualifying individual and employment-related
expenses
For purposes of this section -
(1) Qualifying individual
The term "qualifying individual" means -
(A) a dependent of the taxpayer who is under the age of 13
and with respect to whom the taxpayer is entitled to a
deduction under section 151(c),
(B) a dependent of the taxpayer who is physically or mentally
incapable of caring for himself, or
(C) the spouse of the taxpayer, if he is physically or
mentally incapable of caring for himself.
(2) Employment-related expenses
(A) In general
The term "employment-related expenses" means amounts paid for
the following expenses, but only if such expenses are incurred
to enable the taxpayer to be gainfully employed for any period
for which there are 1 or more qualifying individuals with
respect to the taxpayer:
(i) expenses for household services, and
(ii) expenses for the care of a qualifying individual.
Such term shall not include any amount paid for services
outside the taxpayer's household at a camp where the qualifying
individual stays overnight.
(B) Exception
Employment-related expenses described in subparagraph (A)
which are incurred for services outside the taxpayer's
household shall be taken into account only if incurred for the
care of -
(i) a qualifying individual described in paragraph (1)(A),
or
(ii) a qualifying individual (not described in paragraph
(1)(A)) who regularly spends at least 8 hours each day in the
taxpayer's household.
(C) Dependent care centers
Employment-related expenses described in subparagraph (A)
which are incurred for services provided outside the taxpayer's
household by a dependent care center (as defined in
subparagraph (D)) shall be taken into account only if -
(i) such center complies with all applicable laws and
regulations of a State or unit of local government, and
(ii) the requirements of subparagraph (B) are met.
(D) Dependent care center defined
For purposes of this paragraph, the term "dependent care
center" means any facility which -
(i) provides care for more than six individuals (other than
individuals who reside at the facility), and
(ii) receives a fee, payment, or grant for providing
services for any of the individuals (regardless of whether
such facility is operated for profit).
(c) Dollar limit on amount creditable
The amount of the employment-related expenses incurred during any
taxable year which may be taken into account under subsection (a)
shall not exceed -
(1) $3,000 if there is 1 qualifying individual with respect to
the taxpayer for such taxable year, or
(2) $6,000 if there are 2 or more qualifying individuals with
respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is
applicable) shall be reduced by the aggregate amount excludable
from gross income under section 129 for the taxable year.
(d) Earned income limitation
(1) In general
Except as otherwise provided in this subsection, the amount of
the employment-related expenses incurred during any taxable year
which may be taken into account under subsection (a) shall not
exceed -
(A) in the case of an individual who is not married at the
close of such year, such individual's earned income for such
year, or
(B) in the case of an individual who is married at the close
of such year, the lesser of such individual's earned income or
the earned income of his spouse for such year.
(2) Special rule for spouse who is a student or incapable of
caring for himself
In the case of a spouse who is a student or a qualifying
individual described in subsection (b)(1)(C), for purposes of
paragraph (1), such spouse shall be deemed for each month during
which such spouse is a full-time student at an educational
institution, or is such a qualifying individual, to be gainfully
employed and to have earned income of not less than -
(A) $250 if subsection (c)(1) applies for the taxable year,
or
(B) $500 if subsection (c)(2) applies for the taxable year.
In the case of any husband and wife, this paragraph shall apply
with respect to only one spouse for any one month.
(e) Special rules
For purposes of this section -
(1) Maintaining household
An individual shall be treated as maintaining a household for
any period only if over half the cost of maintaining the
household for such period is furnished by such individual (or, if
such individual is married during such period, is furnished by
such individual and his spouse).
(2) Married couples must file joint return
If the taxpayer is married at the close of the taxable year,
the credit shall be allowed under subsection (a) only if the
taxpayer and his spouse file a joint return for the taxable year.
(3) Marital status
An individual legally separated from his spouse under a decree
of divorce or of separate maintenance shall not be considered as
married.
(4) Certain married individuals living apart
If -
(A) an individual who is married and who files a separate
return -
(i) maintains as his home a household which constitutes for
more than one-half of the taxable year the principal place of
abode of a qualifying individual, and
(ii) furnishes over half of the cost of maintaining such
household during the taxable year, and
(B) during the last 6 months of such taxable year such
individual's spouse is not a member of such household,
such individual shall not be considered as married.
(5) Special dependency test in case of divorced parents, etc.
If -
(A) paragraph (2) or (4) of section 152(e) applies to any
child with respect to any calendar year, and
(B) such child is under the age of 13 or is physically or
mentally incapable of caring for himself,
in the case of any taxable year beginning in such calendar year,
such child shall be treated as a qualifying individual described
in subparagraph (A) or (B) of subsection (b)(1) (whichever is
appropriate) with respect to the custodial parent (within the
meaning of section 152(e)(1)), and shall not be treated as a
qualifying individual with respect to the noncustodial parent.
(6) Payments to related individuals
No credit shall be allowed under subsection (a) for any amount
paid by the taxpayer to an individual -
(A) with respect to whom, for the taxable year, a deduction
under section 151(c) (relating to deduction for personal
exemptions for dependents) is allowable either to the taxpayer
or his spouse, or
(B) who is a child of the taxpayer (within the meaning of
section 151(c)(3)) who has not attained the age of 19 at the
close of the taxable year.
For purposes of this paragraph, the term "taxable year" means the
taxable year of the taxpayer in which the service is performed.
(7) Student
The term "student" means an individual who during each of 5
calendar months during the taxable year is a full-time student at
an educational organization.
(8) Educational organization
The term "educational organization" means an educational
organization described in section 170(b)(1)(A)(ii).
(9) Identifying information required with respect to service
provider
No credit shall be allowed under subsection (a) for any amount
paid to any person unless -
(A) the name, address, and taxpayer identification number of
such person are included on the return claiming the credit, or
(B) if such person is an organization described in section
501(c)(3) and exempt from tax under section 501(a), the name
and address of such person are included on the return claiming
the credit.
In the case of a failure to provide the information required
under the preceding sentence, the preceding sentence shall not
apply if it is shown that the taxpayer exercised due diligence in
attempting to provide the information so required.
(10) Identifying information required with respect to qualifying
individuals
No credit shall be allowed under this section with respect to
any qualifying individual unless the TIN of such individual is
included on the return claiming the credit.
(f) Regulations
The Secretary shall prescribe such regulations as may be
necessary to carry out the purposes of this section.
-SOURCE-
(Added Pub. L. 94-455, title V, Sec. 504(a)(1), Oct. 4, 1976, 90
Stat. 1563, Sec. 44A; amended Pub. L. 95-600, title I, Sec. 121(a),
Nov. 6, 1978, 92 Stat. 2779; Pub. L. 97-34, title I Sec. 124
(a)-(d), Aug. 13, 1981, 95 Stat. 197, 198; Pub. L. 98-21, title I,
Sec. 122(c)(1), Apr. 20, 1983, 97 Stat. 87; renumbered Sec. 21 and
amended Pub. L. 98-369, div. A, title IV, Secs. 423(c)(4), 471(c),
474(c), July 18, 1984, 98 Stat. 801, 826, 830; Pub. L. 99-514,
title I, Sec. 104(b)(1), Oct. 22, 1986, 100 Stat. 2104; Pub. L.
100-203, title X, Sec. 10101(a), Dec. 22, 1987, 101 Stat. 1330-384;
Pub. L. 100-485, title VII, Sec. 703(a)-(c)(1), Oct. 13, 1988, 102
Stat. 2426, 2427; Pub. L. 104-188, title I, Sec. 1615(b), Aug. 20,
1996, 110 Stat. 1853; Pub. L. 107-16, title II, Sec. 204(a), (b),
June 7, 2001, 115 Stat. 49; Pub. L. 107-147, title IV, Sec. 418(b),
Mar. 9, 2002, 116 Stat. 57.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
PRIOR PROVISIONS
A prior section 21 was renumbered section 15 of this title.
AMENDMENTS
2002 - Subsec. (d)(2)(A). Pub. L. 107-147, Sec. 418(b)(1),
substituted "$250" for "$200".
Subsec. (d)(2)(B). Pub. L. 107-147, Sec. 418(b)(2), substituted
"$500" for "$400".
2001 - Subsec. (a)(2). Pub. L. 107-16, Secs. 204(b), 901,
temporarily substituted "35 percent" for "30 percent" and "$15,000"
for "$10,000". See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (c)(1). Pub. L. 107-16, Secs. 204(a)(1), 901, temporarily
substituted "$3,000" for "$2,400". See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (c)(2). Pub. L. 107-16, Secs. 204(a)(2), 901, temporarily
substituted "$6,000" for "$4,800". See Effective and Termination
Dates of 2001 Amendment note below.
1996 - Subsec. (e)(10). Pub. L. 104-188 added par. (10).
1988 - Subsec. (b)(1)(A). Pub. L. 100-485, Sec. 703(a),
substituted "age of 13" for "age of 15".
Subsec. (c). Pub. L. 100-485, Sec. 703(b), inserted at end: "The
amount determined under paragraph (1) or (2) (whichever is
applicable) shall be reduced by the aggregate amount excludable
from gross income under section 129 for the taxable year."
Subsec. (e)(5)(B). Pub. L. 100-485, Sec. 703(a), substituted "age
of 13" for "age of 15".
Subsec. (e)(9). Pub. L. 100-485, Sec. 703(c)(1), added par. (9).
1987 - Subsec. (b)(2)(A). Pub. L. 100-203 inserted at end "Such
term shall not include any amount paid for services outside the
taxpayer's household at a camp where the qualifying individual
stays overnight."
1986 - Subsecs. (b)(1)(A), (e)(6)(A). Pub. L. 99-514, Sec.
104(b)(1)(A), substituted "section 151(c)" for "section 151(e)".
Subsec. (e)(6)(B). Pub. L. 99-514, Sec. 104(b)(1)(B), substituted
"section 151(c)(3)" for "section 151(e)(3)".
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44A of
this title as this section.
Subsec. (a)(1). Pub. L. 98-369, Sec. 474(c)(2), (3), substituted
"subsection (b)(1)" for "subsection (c)(1)" and "subsection (b)(2)"
for "subsection (c)(2)".
Subsec. (b). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.
(c) as (b). Former subsec. (b), which provided that the credit
allowed by subsec. (a) could not exceed the amount of the tax
imposed by this chapter for the taxable year reduced by the sum of
the credits allowable under sections 33, 37, 38, 40, 41, 42, and
44, was struck out.
Subsec. (c). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.
(d) as (c). Former subsec. (c) redesignated (b).
Subsec. (d). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.
(e) as (d). Former subsec. (d) redesignated (c).
Subsec. (d)(2). Pub. L. 98-369, Sec. 474(c)(4), substituted
"subsection (b)(1)(C)" for "subsection (c)(1)(C)" in introductory
provisions.
Subsec. (d)(2)(A). Pub. L. 98-369, Sec. 474(c)(5), substituted
"subsection (c)(1)" for "subsection (d)(1)".
Subsec. (d)(2)(B). Pub. L. 98-369, Sec. 474(c)(6), substituted
"subsection (c)(2)" for "subsection (d)(2).
Subsec. (e). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.
(f) as (e). Former subsec. (e) redesignated (d).
Subsec. (e)(5). Pub. L. 98-369, Sec. 474(c)(7), substituted
"subsection (b)(1)" for "subsection (c)(1)" in provisions following
subpar. (B).
Pub. L. 98-369, Sec. 423(c)(4), amended par. (5) generally,
substituting subpars. (A) and (B) reading:
"(A) paragraph (2) or (4) of section 152(e) applies to any
child with respect to any calendar year, and
"(B) such child is under the age of 15 or is physically or
mentally incapable of caring for himself,"
for former provisions:
"(A) a child (as defined in section 151(e)(3)) who is under the
age of 15 or who is physically or mentally incapable of caring
for himself receives over half of his support during the calendar
year from his parents who are divorced or legally separated under
a decree of divorce or separate maintenance or who are separated
under a written separation agreement, and
"(B) such child is in the custody of one or both of his parents
for more than one-half of the calendar year."
and substituted in concluding text "(whichever is appropriate) with
respect to the custodial parent (within the meaning of section
152(e)(1)), and shall not be treated as a qualifying individual
with respect to the noncustodial parent" for ", as the case may be,
with respect to that parent who has custody for a longer period
during such calendar year than the other parent, and shall not be
treated as being a qualifying individual with respect to such other
parent."
Subsecs. (f), (g). Pub. L. 98-369, Sec. 474(c)(1), redesignated
subsecs. (f) and (g) as (e) and (f), respectively.
1983 - Subsec. (b)(2). Pub. L. 98-21 substituted "relating to
credit for the elderly and the permanently and totally disabled"
for "relating to credit for the elderly".
1981 - Subsec. (a). Pub. L. 97-34, Sec. 124(a), designated
existing provisions as par. (1), substituted "the applicable
percentage" for "20 percent" in par. (1) as so designated, and
added par. (2).
Subsec. (c)(2)(B). Pub. L. 97-34, Sec. 124(c), designated
existing provisions as cl. (i) and added cl. (ii).
Subsec. (c)(2)(C), (D). Pub. L. 97-34, Sec. 124(d), added
subpars. (C) and (D).
Subsec. (d)(1). Pub. L. 97-34, Sec. 124(b)(1)(A), substituted
"$2,400" for "$2,000".
Subsec. (d)(2). Pub. L. 97-34, Sec. 124(b)(1)(B), substituted
"$4,800" for "$4,000".
Subsec. (e)(2)(A). Pub. L. 97-34, Sec. 124(b)(2)(A), substituted
"$200" for "$166".
Subsec. (e)(2)(B). Pub. L. 97-34, Sec. 124(b)(2)(B), substituted
"$400" for "$333".
1978 - Subsec. (f)(6). Pub. L. 95-600 substituted provision
disallowing a credit for any amount paid by a taxpayer to an
individual with respect to whom, for the taxable year, a deduction
under section 151(e) is allowable either to the taxpayer or his
spouse or who is a child of the taxpayer who has not attained the
age of 19 at the close of the taxpayer year and defining "taxpayer
year" for provision disallowing a credit for any amount paid by the
taxpayer to an individual bearing a relationship described in
section 152(a)(1) through (8), or a dependent described in section
152(a)(9), except that a credit was allowed for an amount paid by a
taxpayer to an individual with respect to whom, for the taxable
year of the taxpayer in which the service was performed, neither
the taxpayer nor his spouse was entitled to a deduction under
section 151(e), provided the service constituted employment within
the meaning of section 3121(b).
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title IV, Sec. 418(c), Mar. 9, 2002, 116 Stat.
58, provided that: "The amendments made by this section [amending
this section and sections 23 and 137 of this title] shall take
effect as if included in the provisions of the Economic Growth and
Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16] to which
they relate."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title II, Sec. 204(c), June 7, 2001, 115 Stat.
50, provided that: "The amendments made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2002."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1615(d) of Pub. L. 104-188 provided that:
"(1) In general. - The amendments made by this section [amending
this section and sections 151, 6109, 6213, and 6724 of this title]
shall apply with respect to returns the due date for which (without
regard to extensions) is on or after the 30th day after the date of
the enactment of this Act [Aug. 20, 1996].
"(2) Special rule for 1995 and 1996. - In the case of returns for
taxable years beginning in 1995 or 1996, a taxpayer shall not be
required by the amendments made by this section to provide a
taxpayer identification number for a child who is born after
October 31, 1995, in the case of a taxable year beginning in 1995
or November 30, 1996, in the case of a taxable year beginning in
1996."
EFFECTIVE DATE OF 1988 AMENDMENT
Section 703(d) of Pub. L. 100-485 provided that: "The amendments
made by this section [amending this section and sections 129 and
6109 of this title] shall apply to taxable years beginning after
December 31, 1988."
EFFECTIVE DATE OF 1987 AMENDMENT
Section 10101(b) of Pub. L. 100-203, as amended by Pub. L.
100-647, title II, Sec. 2004(a), Nov. 10, 1988, 102 Stat. 3598,
provided that:
"(1) In general. - The amendment made by subsection (a) [amending
this section] shall apply to expenses paid in taxable years
beginning after December 31, 1987.
"(2) Special rule for cafeteria plans. - For purposes of section
125 of the Internal Revenue Code of 1986, a plan shall not be
treated as failing to be a cafeteria plan solely because under the
plan a participant elected before January 1, 1988, to receive
reimbursement under the plan for dependent care assistance for
periods after December 31, 1987, and such assistance included
reimbursement for expenses at a camp where the dependent stays
overnight."
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 423(c)(4) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1984, see section 423(d) of
Pub. L. 98-369, set out as a note under section 2 of this title.
Section 475(a) of Pub. L. 98-369 provided that: "The amendments
made by this title [probably means subtitle F (Secs. 471-475) of
title IV of Pub. L. 98-369, which enacted sections 25, 38, and 39
of this title, amended this section and sections 12, 15, 22 to 24,
27 to 35, 37, 39 to 41, 44A, 44C to 44H, 45 to 48, 51, 52, 55, 56,
86, 87, 103, 108, 129, 168, 196, 213, 280C, 381, 383, 401, 404,
409, 441, 527, 642, 691, 874, 882, 901, 904, 936, 1016, 1033, 1351,
1366, 1374, 1375, 1441, 1442, 1451, 3507, 6013, 6096, 6201, 6211,
6213, 6362, 6401, 6411, 6420, 6421, 6427, 6501, 6511, 7701, 7871,
9502, and 9503 of this title, repealed sections 38, 40, 44, 44B,
50A, 50B, and 53 of this title, and enacted provisions set out as
notes under sections 30, 33, 46, and 48 of this title] shall apply
to taxable years beginning after December 31, 1983, and to
carrybacks from such years."
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 98-21 applicable to taxable years beginning
after Dec. 31, 1983, except that if an individual's annuity
starting date was deferred under section 105(d)(6) of this title as
in effect on the day before Apr. 20, 1983, such deferral shall end
on the first day of such individual's first taxable year beginning
after Dec. 31, 1983, see section 122(d) of Pub. L. 98-21, set out
as a note under section 22 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 124(f) of Pub. L. 97-34 provided that:
"(1) Except as provided in paragraph (2), the amendments made by
this section [amending this section and enacting section 129 of
this title] shall apply to taxable years beginning after December
31, 1981.
"(2) The amendments made by subsection (e)(2) [amending sections
3121, 3306, and 3401 of this title and section 409 of Title 42, The
Public Health and Welfare] shall apply to remuneration paid after
December 31, 1981."
EFFECTIVE DATE OF 1978 AMENDMENT
Section 121(b) of Pub. L. 95-600 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1978."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1975, see section 508 of Pub. L. 94-455, set out as an Effective
Date of 1976 Amendment note under section 3 of this title.
PROGRAM TO INCREASE PUBLIC AWARENESS
Pub. L. 101-508, title XI, Sec. 11114, Nov. 5, 1990, 104 Stat.
1388-414, provided that: "Not later than the first calendar year
following the date of the enactment of this subtitle [Nov. 5,
1990], the Secretary of the Treasury, or the Secretary's delegate,
shall establish a taxpayer awareness program to inform the
taxpaying public of the availability of the credit for dependent
care allowed under section 21 of the Internal Revenue Code of 1986
and the earned income credit and child health insurance under
section 32 of such Code. Such public awareness program shall be
designed to assure that individuals who may be eligible are
informed of the availability of such credit and filing procedures.
The Secretary shall use appropriate means of communication to carry
out the provisions of this section."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 23, 35, 129, 213, 6213 of
this title; title 7 section 2015.
-End-
-CITE-
26 USC Sec. 22 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 22. Credit for the elderly and the permanently and totally
disabled
-STATUTE-
(a) General rule
In the case of a qualified individual, there shall be allowed as
a credit against the tax imposed by this chapter for the taxable
year an amount equal to 15 percent of such individual's section 22
amount for such taxable year.
(b) Qualified individual
For purposes of this section, the term "qualified individual"
means any individual -
(1) who has attained age 65 before the close of the taxable
year, or
(2) who retired on disability before the close of the taxable
year and who, when he retired, was permanently and totally
disabled.
(c) Section 22 amount
For purposes of subsection (a) -
(1) In general
An individual's section 22 amount for the taxable year shall be
the applicable initial amount determined under paragraph (2),
reduced as provided in paragraph (3) and in subsection (d).
(2) Initial amount
(A) In general
Except as provided in subparagraph (B), the initial amount
shall be -
(i) $5,000 in the case of a single individual, or a joint
return where only one spouse is a qualified individual,
(ii) $7,500 in the case of a joint return where both
spouses are qualified individuals, or
(iii) $3,750 in the case of a married individual filing a
separate return.
(B) Limitation in case of individuals who have not attained age
65
(i) In general
In the case of a qualified individual who has not attained
age 65 before the close of the taxable year, except as
provided in clause (ii), the initial amount shall not exceed
the disability income for the taxable year.
(ii) Special rules in case of joint return
In the case of a joint return where both spouses are
qualified individuals and at least one spouse has not
attained age 65 before the close of the taxable year -
(I) if both spouses have not attained age 65 before the
close of the taxable year, the initial amount shall not
exceed the sum of such spouses' disability income, or
(II) if one spouse has attained age 65 before the close
of the taxable year, the initial amount shall not exceed
the sum of $5,000 plus the disability income for the
taxable year of the spouse who has not attained age 65
before the close of the taxable year.
(iii) Disability income
For purposes of this subparagraph, the term "disability
income" means the aggregate amount includable in the gross
income of the individual for the taxable year under section
72 or 105(a) to the extent such amount constitutes wages (or
payments in lieu of wages) for the period during which the
individual is absent from work on account of permanent and
total disability.
(3) Reduction
(A) In general
The reduction under this paragraph is an amount equal to the
sum of the amounts received by the individual (or, in the case
of a joint return, by either spouse) as a pension or annuity or
as a disability benefit -
(i) which is excluded from gross income and payable under -
(I) title II of the Social Security Act,
(II) the Railroad Retirement Act of 1974, or
(III) a law administered by the Veterans' Administration,
or
(ii) which is excluded from gross income under any
provision of law not contained in this title.
No reduction shall be made under clause (i)(III) for any amount
described in section 104(a)(4).
(B) Treatment of certain workmen's compensation benefits
For purposes of subparagraph (A), any amount treated as a
social security benefit under section 86(d)(3) shall be treated
as a disability benefit received under title II of the Social
Security Act.
(d) Adjusted gross income limitation
If the adjusted gross income of the taxpayer exceeds -
(1) $7,500 in the case of a single individual,
(2) $10,000 in the case of a joint return, or
(3) $5,000 in the case of a married individual filing a
separate return,
the section 22 amount shall be reduced by one-half of the excess of
the adjusted gross income over $7,500, $10,000, or $5,000, as the
case may be.
(e) Definitions and special rules
For purposes of this section -
(1) Married couple must file joint return
Except in the case of a husband and wife who live apart at all
times during the taxable year, if the taxpayer is married at the
close of the taxable year, the credit provided by this section
shall be allowed only if the taxpayer and his spouse file a joint
return for the taxable year.
(2) Marital status
Marital status shall be determined under section 7703.
(3) Permanent and total disability defined
An individual is permanently and totally disabled if he is
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months. An individual shall not be considered to be permanently
and totally disabled unless he furnishes proof of the existence
thereof in such form and manner, and at such times, as the
Secretary may require.
(f) Nonresident alien ineligible for credit
No credit shall be allowed under this section to any nonresident
alien.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 15, Sec. 37; Aug. 9, 1955, ch.
659, Sec. 1, 69 Stat. 591; Jan. 28, 1956, ch. 17, Sec. 1, 70 Stat.
8; Pub. L. 87-792, Sec. 7(a), Oct. 10, 1962, 76 Stat. 828; Pub. L.
87-876, Sec. 1, Oct. 24, 1962, 76 Stat. 1199; Pub. L. 88-272, title
I, Sec. 113(a), title II, Secs. 201(d)(3), 202(a), Feb. 26, 1964,
78 Stat. 24, 32, 33; Pub. L. 93-406, title II, Sec. 2002(g)(1),
Sept. 2, 1974, 88 Stat. 968; Pub. L. 94-455, title V, Sec. 503(a),
title XIX, Sec. 1901(c)(1), Oct. 4, 1976, 90 Stat. 1559, 1803; Pub.
L. 95-600, title VII, Secs. 701(a)(1)-(3), 703(j)(11), Nov. 6,
1978, 92 Stat. 2897, 2942; Pub. L. 96-222, title I, Sec.
107(a)(1)(E)(i), Apr. 1, 1980, 94 Stat. 222; Pub. L. 97-34, title
I, Sec. 111(b)(4), Aug. 13, 1981, 95 Stat. 194; Pub. L. 98-21,
title I, Sec. 122(a), Apr. 20, 1983, 97 Stat. 85; renumbered Sec.
22 and amended Pub. L. 98-369, div. A, title IV, Secs. 471(c),
474(d), July 18, 1984, 98 Stat. 826, 830; Pub. L. 99-514, title
XIII, Sec. 1301(j)(8), Oct. 22, 1986, 100 Stat. 2658.)
-REFTEXT-
REFERENCES IN TEXT
The Social Security Act, referred to in subsec. (c)(3)(A)(i)(I),
(B), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title
II of the Social Security Act is classified generally to subchapter
II (Sec. 401 et seq.) of chapter 7 of Title 42, The Public Health
and Welfare. For complete classification of this Act to the Code,
see section 1305 of Title 42 and Tables.
The Railroad Retirement Act of 1974, referred to in subsec.
(c)(3)(A)(i)(II), is act Aug. 29, 1935, ch. 812, as amended
generally by Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88
Stat. 1305, which is classified generally to subchapter IV (Sec.
231 et seq.) of chapter 9 of Title 45, Railroads. For further
details and complete classification of this Act to the Code, see
Codification note set out preceding section 231 of Title 45,
section 231t of Title 45, and Tables.
-MISC1-
AMENDMENTS
1986 - Subsec. (e)(2). Pub. L. 99-514 substituted "section 7703"
for "section 143".
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 37 of this
title as this section.
Subsec. (a). Pub. L. 98-369, Sec. 474(d)(1), substituted "section
22 amount" for "section 37 amount".
Subsec. (c). Pub. L. 98-369, Sec. 474(d)(2), substituted "Section
22 amount" for "Section 37 amount" in heading.
Subsec. (c)(1). Pub. L. 98-369, Sec. 474(d)(1), substituted
"section 22 amount" for "section 37 amount".
Subsec. (d). Pub. L. 98-369, Sec. 474(d)(3), amended subsec. (d)
generally, striking out heading "Limitations" and designation "(1)"
before "Adjusted gross income limitation" thereby making existing
par. (1) the entire subsec. (d), redesignating existing subpars.
(A), (B), and (C) as pars. (1), (2), and (3), respectively, and
striking out provisions, formerly comprising par. (2), which had
limited the amount of the credit allowed by this section for the
taxable year to the amount of the tax imposed by this chapter for
such taxable year.
1983 - Pub. L. 98-21 inserted reference to permanently and
totally disabled in section catchline.
Subsec. (a). Pub. L. 98-21 amended subsec. (a) generally,
substituting reference to a qualified individual for reference to
an individual who has attained the age of 65 before the close of
the taxable year.
Subsec. (b). Pub. L. 98-21 in amending section generally added
subsec. (b). Former subsec. (b) redesignated (c).
Subsec. (c). Pub. L. 98-21 in amending section generally,
redesignated former subsec. (b) as (c) and, in (c) as so
redesignated, added par. (2) and struck out former (2), which had
provided that the initial amount was $2,500 in the case of a single
individual, $2,500 in the case of a joint return where only one
spouse was eligible for the credit under subsection (a), $3,750 in
the case of a joint return where both spouses were eligible for the
credit under subsection (a), or $1,875 in the case of a married
individual filing a separate return, redesignated existing
provisions as par. (3)(A), inserted "benefit" after "disability"
therein, struck out former subpars. (A) to (C), which had specified
sources of amounts received under title II of the Social Security
Act, under the Railroad Retirement Act of 1935 or 1937, or
otherwise excluded from gross income, added cls. (i) and (ii),
substituted provision that no reduction would be made under cl.
(i)(III) for any amount described in section 104(a)(4) for
provision that no reduction would be made under former par. (3) for
any amount excluded from gross income under section 72 (relating to
annuities), 101 (relating to life insurance proceeds), 104
(relating to compensation for injuries or sickness), 105 (relating
to amounts received under accident and health plans), 120 (relating
to amounts received under qualified group legal services plans),
402 (relating to taxability of beneficiary of employees' trust),
403 (relating to taxation of employee annuities), or 405 (relating
to qualified bond purchase plans), and added subpar. (B). Former
subsec. (c) redesignated (d).
Subsec. (d). Pub. L. 98-21 in amending section generally
redesignated former subsec. (c) as (d). Former subsec. (d)
redesignated (e).
Subsec. (e). Pub. L. 98-21 in amending section generally,
redesignated former subsec. (d) as (e) and struck out provision
that "joint return" meant the joint return of a husband and wife
made under section 6013 and inserted provisions defining permanent
and total disability. Former subsec. (e), which provided for an
election of prior law with respect to public retirement system
income, was struck out.
Subsec. (f). Pub. L. 98-21 reenacted subsec. (f) without change.
1981 - Subsec. (e)(9)(B). Pub. L. 97-34 substituted "section
911(d)(2)" for "section 911(b)".
1978 - Subsec. (e)(2). Pub. L. 95-600, Sec. 701(a)(1), inserted
"(and whose gross income includes income described in paragraph
(4)(B))" after "who has not attained age 65 before the close of the
taxable year".
Subsec. (e)(4)(B). Pub. L. 95-600, Sec. 701(a)(2), (3)(B), as
amended by Pub. L. 96-222, Sec. 107(a)(1)(E)(i), inserted "and who
performed the services giving rise to the pension or annuity (or is
the spouse of the individual who performed the services)" after
"before the close of the taxable year" and substituted reference to
paragraph (9)(A) for reference to paragraph (8)(A).
Subsec. (e)(5)(B). Pub. L. 95-600, Sec. 701(a)(3)(C), as amended
by Pub. L. 96-222, Sec. 107(a)(1)(E)(i), substituted reference to
paragraph (9)(A) for reference to paragraph (8)(A).
Subsec. (e)(8), (9). Pub. L. 95-600, Sec. 701(a)(3)(A), as
amended by Pub. L. 96-222, Sec. 107(a)(1)(E)(i), added par. (8) and
redesignated former par. (8) as (9).
1976 - Pub. L. 94-455, Sec. 503(a), among other changes,
substituted "Credits for the elderly" for "Retirement income" in
section catchline and in text substituted provisions permitting
taxpayers who have all types of income to be eligible for the tax
credit for provisions permitting taxpayers who have only retirement
income to be eligible for the tax credit, eliminated provisions
requiring taxpayers to earn $600 for the previous ten years for tax
credit eligibility and provisions relating variations in treatment
of married couples, and inserted provisions broadening coverage of
the tax credit relief to low and middle income taxpayers.
Pub. L. 94-455, Sec. 1901(c)(1), purported to amend subsec. (f)
of this section by striking out "a Territory". The amendment could
not be executed in view of the prior general amendment of this
section by section 503(a) of Pub. L. 94-455. Section 1901(c)(1) was
repealed by section 703(j)(11) of Pub. L. 95-600.
1974 - Subsec. (c)(1)(E), (F). Pub. L. 93-406 inserted reference
in subpar. (E) to retirement bonds described in section 409 and
added subpar. (F).
1964 - Subsec. (a). Pub. L. 88-272, Secs. 113(a), 201(d)(3),
substituted "an amount equal to 17 percent, in the case of a
taxable year beginning in 1964, or 15 percent, in the case of a
taxable year beginning after December 31, 1964, of the amount
received by such individual as retirement income (as defined in
subsection (c) and as limited by subsection (d));" for "an amount
equal to the amount received by such individual as retirement
income (as defined in subsection (c) and as limited by subsection
(d)), multiplied by the rate provided in section 1 for the first
$2,000 of taxable income;", and struck out "section 34 (relating to
credit for dividends received by individuals)", before "and section
35".
Subsecs. (i), (j). Pub. L. 88-272, Sec. 202(a), added subsec. (i)
and redesignated former subsec. (i) as (j).
1962 - Subsec. (c)(1). Pub. L. 87-792 inserted provisions in
subpar. (A) requiring inclusion, in the case of an individual who
is, or has been, an employee within the meaning of section
401(c)(1), distributions by a trust described in section 401(a)
which is exempt from tax under section 501(a), and added subpar.
(E).
Subsec. (d). Pub. L. 87-876 increased the limit on retirement
income from $1,200 to $1,524, lowered the age requirement in par.
(2)(A) from 65 to 62, and substituted provisions in par. (2)(B)
which reduce the amount of retirement income for individuals who
reach age 62, by one-half the amount of earned income in excess of
$1,200 but not in excess of $1,700, and by the amount received over
$1,700, for provisions which reduced such income by the amount
earned over $1,200 by persons having reached age 65, and which
defined income as in subsec. (g) of this section.
1956 - Subsec. (d)(2). Act Jan. 28, 1956, reduced from 75 to 72
the age at which there will be no limitation on earned income and
increased from $900 to $1,200 the amount that an individual over 65
can earn without reducing the $1,200 on which the retirement credit
is computed.
1955 - Subsec. (f). Act Aug. 9, 1955, extended the retirement
income tax credit to members of the Armed Forces.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to bonds issued after Aug.
15, 1986, except as otherwise provided, see sections 1311 to 1318
of Pub. L. 99-514, set out as an Effective Date; Transitional Rules
note under section 141 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(d) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Section 122(d) of Pub. L. 98-21, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - The amendments made by this section [amending
sections 37 [now 22], 41 [now 24], 44A [now 21], 46, 53, 85, 105,
128, 403, 415, 904, and 7871 of this title] shall apply to taxable
years beginning after December 31, 1983.
"(2) Transitional rule. - If an individual's annuity starting
date was deferred under section 105(d)(6) of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] (as in effect on the day before
the date of the enactment of this section [Apr. 20, 1983]), such
deferral shall end on the first day of such individual's first
taxable year beginning after December 31, 1983."
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable with respect to taxable
years beginning after Dec. 31, 1981, see section 115 of Pub. L.
97-34, set out as a note under section 911 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 701(a)(4) of Pub. L. 95-600 provided that:
"(A) The amendments made by paragraphs (1) and (2) [amending this
section] shall apply to taxable years beginning after December 31,
1975.
"(B) The amendments made by paragraph (3) [amending this section]
shall apply to taxable years beginning after December 31, 1977."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable with respect to taxable
years beginning after Dec. 31, 1975, see section 508 of Pub. L.
94-455, set out as a note under section 3 of this title.
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93-406 effective Jan. 1, 1974, see section
2002(i)(2) of Pub. L. 93-406, set out as an Effective Date note
under section 4973 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by section 113(a) of Pub. L. 88-272, except for
purposes of section 21 [now 15] of this title, effective with
respect to taxable years beginning after Dec. 31, 1963, see section
131 of Pub. L. 88-272, set out as a note under section 1 of this
title.
Section 201(e) of Pub. L. 88-272 provided that: "The amendments
made by subsection (a) [amending section 34 of this title] shall
apply with respect to taxable years ending after December 31, 1963.
The amendment made by subsection (b) [repealing section 34 of this
title] shall apply with respect to taxable years ending after
December 31, 1964. The amendment made by subsection (c) [amending
section 116 of this title] shall apply with respect to taxable
years beginning after December 31, 1963. The amendments made by
subsection (d) [amending sections 35, 37 [now 22], 46, 116, 584,
642, 702, 854, 857, 871, 1375, and 6014 of this title] shall apply
with respect to dividends received after December 31, 1964, in
taxable years ending after such date".
Section 202(b) of Pub. L. 88-272 provided that: "The amendments
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1963."
EFFECTIVE DATE OF 1962 AMENDMENTS
Section 2 of Pub. L. 87-876 provided that: "The amendment made by
the first section of this Act [amending this section] shall apply
only to taxable years ending after the date of the enactment of
this Act [Oct. 24, 1962]."
Section 8 of Pub. L. 87-792 provided that: "The amendments made
by this Act [enacting sections 405 and 6047 of this title and
amending sections 37 [now 22], 62, 72, 101, 104, 105, 172, 401 to
404, 503, 805, 1361, 2039, 2517, 3306, 3401 and 7207 of this title]
shall apply to taxable years beginning after December 31, 1962."
EFFECTIVE DATE OF 1956 AMENDMENT
Section 2 of act Jan. 28, 1956, provided that: "The amendment
made by the first section of this Act [amending this section] shall
apply only with respect to taxable years beginning after December
31, 1955."
EFFECTIVE DATE OF 1955 AMENDMENT
Section 2 of act Aug. 9, 1955, provided that: "The amendment made
by this Act [amending this section] shall be applicable to taxable
years beginning after December 31, 1954."
DETERMINATION OF RETIREMENT INCOME CREDIT UNDER PROVISIONS AS THEY
EXISTED PRIOR TO AMENDMENT BY PUB. L. 94-455 ELECTION
Pub. L. 95-30, title IV, Sec. 403, May 23, 1977, 91 Stat. 155, as
amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095,
provided that: "A taxpayer may elect (at such time and in such
manner as the Secretary of the Treasury or his delegate shall
prescribe) to determine the amount of his credit under section 37
[now 22] of the Internal Revenue Code of 1986 [formerly I.R.C.
1954] for his first taxable year beginning in 1976 under the
provisions of such section as they existed before the amendment
made by section 503 of the Tax Reform Act of 1976 [Pub. L.
94-455]."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 32, 86, 151, 415 of this
title.
-End-
-CITE-
26 USC Sec. 23 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 23. Adoption expenses
-STATUTE-
(a) Allowance of credit
(1) In general
In the case of an individual, there shall be allowed as a
credit against the tax imposed by this chapter the amount of the
qualified adoption expenses paid or incurred by the taxpayer.
(2) Year credit allowed
The credit under paragraph (1) with respect to any expense
shall be allowed -
(A) in the case of any expense paid or incurred before the
taxable year in which such adoption becomes final, for the
taxable year following the taxable year during which such
expense is paid or incurred, and
(B) in the case of an expense paid or incurred during or
after the taxable year in which such adoption becomes final,
for the taxable year in which such expense is paid or incurred.
(3) $10,000 credit for adoption of child with special needs
regardless of expenses
In the case of an adoption of a child with special needs which
becomes final during a taxable year, the taxpayer shall be
treated as having paid during such year qualified adoption
expenses with respect to such adoption in an amount equal to the
excess (if any) of $10,000 over the aggregate qualified adoption
expenses actually paid or incurred by the taxpayer with respect
to such adoption during such taxable year and all prior taxable
years.
(b) Limitations
(1) Dollar limitation
The aggregate amount of qualified adoption expenses which may
be taken into account under subsection (a) for all taxable years
with respect to the adoption of a child by the taxpayer shall not
exceed $10,000.
(2) Income limitation
(A) In general
The amount allowable as a credit under subsection (a) for any
taxable year (determined without regard to subsection (c))
shall be reduced (but not below zero) by an amount which bears
the same ratio to the amount so allowable (determined without
regard to this paragraph but with regard to paragraph (1)) as -
(i) the amount (if any) by which the taxpayer's adjusted
gross income exceeds $150,000, bears to
(ii) $40,000.
(B) Determination of adjusted gross income
For purposes of subparagraph (A), adjusted gross income shall
be determined without regard to sections 911, 931, and 933.
(3) Denial of double benefit
(A) In general
No credit shall be allowed under subsection (a) for any
expense for which a deduction or credit is allowed under any
other provision of this chapter.
(B) Grants
No credit shall be allowed under subsection (a) for any
expense to the extent that funds for such expense are received
under any Federal, State, or local program.
(4) Limitation based on amount of tax
The credit allowed under subsection (a) for any taxable year
shall not exceed the excess of -
(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
(B) the sum of the credits allowable under this subpart
(other than this section) and section 27 for the taxable year.
(c) Carryforwards of unused credit
If the credit allowable under subsection (a) for any taxable year
exceeds the limitation imposed by subsection (b)(4) for such
taxable year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection (a)
for such taxable year. No credit may be carried forward under this
subsection to any taxable year following the fifth taxable year
after the taxable year in which the credit arose. For purposes of
the preceding sentence, credits shall be treated as used on a
first-in first-out basis.
(d) Definitions
For purposes of this section -
(1) Qualified adoption expenses
The term "qualified adoption expenses" means reasonable and
necessary adoption fees, court costs, attorney fees, and other
expenses -
(A) which are directly related to, and the principal purpose
of which is for, the legal adoption of an eligible child by the
taxpayer,
(B) which are not incurred in violation of State or Federal
law or in carrying out any surrogate parenting arrangement,
(C) which are not expenses in connection with the adoption by
an individual of a child who is the child of such individual's
spouse, and
(D) which are not reimbursed under an employer program or
otherwise.
(2) Eligible child
The term "eligible child" means any individual who -
(A) has not attained age 18, or
(B) is physically or mentally incapable of caring for
himself.
(3) Child with special needs
The term "child with special needs" means any child if -
(A) a State has determined that the child cannot or should
not be returned to the home of his parents,
(B) such State has determined that there exists with respect
to the child a specific factor or condition (such as his ethnic
background, age, or membership in a minority or sibling group,
or the presence of factors such as medical conditions or
physical, mental, or emotional handicaps) because of which it
is reasonable to conclude that such child cannot be placed with
adoptive parents without providing adoption assistance, and
(C) such child is a citizen or resident of the United States
(as defined in section 217(h)(3)).
(e) Special rules for foreign adoptions
In the case of an adoption of a child who is not a citizen or
resident of the United States (as defined in section 217(h)(3)) -
(1) subsection (a) shall not apply to any qualified adoption
expense with respect to such adoption unless such adoption
becomes final, and
(2) any such expense which is paid or incurred before the
taxable year in which such adoption becomes final shall be taken
into account under this section as if such expense were paid or
incurred during such year.
(f) Filing requirements
(1) Married couples must file joint returns
Rules similar to the rules of paragraphs (2), (3), and (4) of
section 21(e) shall apply for purposes of this section.
(2) Taxpayer must include TIN
(A) In general
No credit shall be allowed under this section with respect to
any eligible child unless the taxpayer includes (if known) the
name, age, and TIN of such child on the return of tax for the
taxable year.
(B) Other methods
The Secretary may, in lieu of the information referred to in
subparagraph (A), require other information meeting the
purposes of subparagraph (A), including identification of an
agent assisting with the adoption.
(g) Basis adjustments
For purposes of this subtitle, if a credit is allowed under this
section for any expenditure with respect to any property, the
increase in the basis of such property which would (but for this
subsection) result from such expenditure shall be reduced by the
amount of the credit so allowed.
(h) Adjustments for inflation
In the case of a taxable year beginning after December 31, 2002,
each of the dollar amounts in subsection (a)(3) and paragraphs (1)
and (2)(A)(i) of subsection (b) shall be increased by an amount
equal to -
(1) such dollar amount, multiplied by
(2) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting "calendar year 2001" for "calendar
year 1992" in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest
multiple of $10.
(i) Regulations
The Secretary shall prescribe such regulations as may be
appropriate to carry out this section and section 137, including
regulations which treat unmarried individuals who pay or incur
qualified adoption expenses with respect to the same child as 1
taxpayer for purposes of applying the dollar amounts in subsections
(a)(3) and (b)(1) of this section and in section 137(b)(1).
-SOURCE-
(Added Pub. L. 104-188, title I, Sec. 1807(a), Aug. 20, 1996, 110
Stat. 1899; amended Pub. L. 105-34, title XVI, Sec. 1601(h)(2)(A),
(B), Aug. 5, 1997, 111 Stat. 1092; Pub. L. 105-206, title VI, Secs.
6008(d)(6), 6018(f)(1), July 22, 1998, 112 Stat. 812, 823; Pub. L.
107-16, title II, Secs. 201(b)(2)(E), 202(a)(1), (b)(1)(A), (2)(A),
(c), (d)(1), (e)(1), (f)(1), (2)(A), June 7, 2001, 115 Stat. 46-49;
Pub. L. 107-147, title IV, Secs. 411(c)(1)(A)-(E), 418(a)(1), Mar.
9, 2002, 116 Stat. 45, 57.)
-STATAMEND-
ADOPTION EXPENSES CREDIT ADJUSTMENT FOR TAX YEARS BEGINNING IN 2004
For inflation adjustment of maximum credit allowed in subsection
(a)(3) of this section for an adoption of a child with special
needs, maximum credit allowed in subsection (b)(1) of this section
for other adoptions, and the income limits for phaseout of adoption
credit in subsection (b)(2)(A) of this section, see section 3.03 of
Revenue Procedure 2003-85, set out as a note under section 1 of
this title.
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
PRIOR PROVISIONS
A prior section 23, added Pub. L. 95-618, title I, Sec. 101(a),
Nov. 9, 1978, 92 Stat. 3175, Sec. 44C; amended Pub. L. 96-223,
title II, Secs. 201, 202(a)-(d), 203(a), Apr. 2, 1980, 94 Stat.
256, 258; renumbered Sec. 23 and amended Pub. L. 98-369, div. A,
title IV, Secs. 471(c), 474(e), title VI, Sec. 612(e)(2), July 18,
1984, 98 Stat. 826, 831, 912, related to residential energy credit,
prior to repeal by Pub. L. 101-508, title XI, Sec. 11801(a)(1),
Nov. 5, 1990, 104 Stat. 1388-520.
AMENDMENTS
2002 - Subsec. (a)(1). Pub. L. 107-147, Sec. 411(c)(1)(A),
reenacted heading without change and amended text of par. (1)
generally. Prior to amendment, text read as follows: "In the case
of an individual, there shall be allowed as a credit against the
tax imposed by this chapter -
"(A) in the case of an adoption of a child other than a child
with special needs, the amount of the qualified adoption expenses
paid or incurred by the taxpayer, and
"(B) in the case of an adoption of a child with special needs,
$10,000."
Subsec. (a)(2). Pub. L. 107-147, Sec. 411(c)(1)(C), struck out
concluding provisions which read as follows: "In the case of the
adoption of a child with special needs, the credit allowed under
paragraph (1) shall be allowed for the taxable year in which the
adoption becomes final."
Subsec. (a)(3). Pub. L. 107-147, Sec. 411(c)(1)(B), added par.
(3).
Subsec. (b)(1). Pub. L. 107-147, Sec. 411(c)(1)(D), substituted
"subsection (a)" for "subsection (a)(1)(A)".
Subsec. (h). Pub. L. 107-147, Sec. 418(a)(1), substituted
"subsection (a)(3)" for "subsection (a)(1)(B)" in introductory
provisions and inserted concluding provisions.
Subsec. (i). Pub. L. 107-147, Sec. 411(c)(1)(E), substituted "the
dollar amounts in subsections (a)(3) and (b)(1)" for "the dollar
limitation in subsection (b)(1)".
2001 - Subsec. (a)(1). Pub. L. 107-16, Secs. 202(a)(1), 901,
temporarily amended heading and text of par. (1) generally. Prior
to amendment, text read as follows: "In the case of an individual,
there shall be allowed as a credit against the tax imposed by this
chapter the amount of the qualified adoption expenses paid or
incurred by the taxpayer." See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (a)(2). Pub. L. 107-16, Secs. 202(c), 901, temporarily
inserted concluding provisions. See Effective and Termination Dates
of 2001 Amendment note below.
Subsec. (b)(1). Pub. L. 107-16, Secs. 202(b)(1)(A), 901,
temporarily substituted "subsection (a)(1)(A)" for "subsection (a)"
and "$10,000" for "$5,000" and struck out "($6,000, in the case of
a child with special needs)" before period at end. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (b)(2)(A)(i). Pub. L. 107-16, Secs. 202(b)(2)(A), 901,
temporarily substituted "$150,000" for "$75,000". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (b)(4). Pub. L. 107-16, Secs. 202(f)(1), 901, temporarily
added par. (4). See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (c). Pub. L. 107-16, Secs. 202(f)(2)(A), 901, temporarily
substituted "subsection (b)(4)" for "section 26(a)" and struck out
"reduced by the sum of the credits allowable under this subpart
(other than this section and sections 24 and 1400C)" before ", such
excess". See Effective and Termination Dates of 2001 Amendment note
below.
Pub. L. 107-16, Secs. 201(b)(2)(E), 901, temporarily substituted
"and sections 24 and 1400C" for "and section 1400C". See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (d)(2). Pub. L. 107-16, Secs. 202(d)(1), 901, temporarily
amended heading and text of par. (2) generally. Prior to amendment,
text read as follows: "The term 'eligible child' means any
individual -
"(A) who -
"(i) has not attained age 18, or
"(ii) is physically or mentally incapable of caring for
himself, and
"(B) in the case of qualified adoption expenses paid or
incurred after December 31, 2001, who is a child with special
needs."
See Effective and Termination Dates of 2001 Amendment note below.
Subsecs. (h), (i). Pub. L. 107-16, Secs. 202(e)(1), 901,
temporarily added subsec. (h) and redesignated former subsec. (h)
as (i). See Effective and Termination Dates of 2001 Amendment note
below.
1998 - Subsec. (b)(2)(A). Pub. L. 105-206, Sec. 6018(f)(1),
inserted "(determined without regard to subsection (c))" after "for
any taxable year" in introductory provisions.
Subsec. (c). Pub. L. 105-206, Sec. 6008(d)(6), inserted "and
section 1400C" after "other than this section".
1997 - Subsec. (a)(2). Pub. L. 105-34, Sec. 1601(h)(2)(A),
amended heading and text of par. (2) generally. Prior to amendment,
text read as follows: "The credit under paragraph (1) with respect
to any expense shall be allowed -
"(A) for the taxable year following the taxable year during
which such expense is paid or incurred, or
"(B) in the case of an expense which is paid or incurred during
the taxable year in which the adoption becomes final, for such
taxable year."
Subsec. (b)(2)(B). Pub. L. 105-34, Sec. 1601(h)(2)(B),
substituted "determined without regard to sections 911, 931, and
933." for "determined -
"(i) without regard to sections 911, 931, and 933, and
"(ii) after the application of sections 86, 135, 137, 219, and
469."
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title IV, Sec. 411(c)(3), Mar. 9, 2002, 116
Stat. 46, provided that: "The amendments made by this subsection
[amending this section and section 137 of this title] shall apply
to taxable years beginning after December 31, 2002; except that the
amendments made by paragraphs (1)(C), (1)(D) [amending this
section], and (2)(B) [amending section 137 of this title] shall
apply to taxable years beginning after December 31, 2001."
Amendment by section 418(a)(1) of Pub. L. 107-147 effective as if
included in the provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001, Pub. L. 107-16, to which such amendment
relates, see section 418(c) of Pub. L. 107-147, set out as a note
under section 21 of this title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-147, title VI, Sec. 601(b)(2), Mar. 9, 2002, 116
Stat. 59, provided that: "The amendments made by sections 201(b),
202(f), and 618(b) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 [Pub. L. 107-16, amending this section
and sections 24, 25, 25B, 26, 904, and 1400C of this title] shall
not apply to taxable years beginning during 2002 and 2003."
Amendment by section 201(b)(2)(E) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 201(e)(2)
of Pub. L. 107-16, set out as a note under section 24 of this
title.
Pub. L. 107-16, title II, Sec. 202(g), June 7, 2001, 115 Stat.
49, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
24, 26, 137, 904, and 1400C of this title] shall apply to taxable
years beginning after December 31, 2001.
"(2) Subsection (a). - The amendments made by subsection (a)
[amending this section and section 137 of this title] shall apply
to taxable years beginning after December 31, 2002."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-206, title VI, Sec. 6018(h), July 22, 1998, 112 Stat.
823, provided that: "The amendments made by this section [amending
this section and sections 219, 408, 414, and 679 of this title and
amending provisions set out as notes under sections 167 and 4091 of
this title] shall take effect as if included in the provisions of
the Small Business Job Protection Act of 1996 [Pub. L. 104-188] to
which they relate."
Amendment by section 6008(d)(6) of Pub. L. 105-206 effective,
except as otherwise provided, as if included in the provisions of
the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which such
amendment relates, see section 6024 of Pub. L. 105-206, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1601(j) of Pub. L. 105-34 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section, sections
30A, 52, 55, 137, 401, 403, 404, 408, 414, 512, 529, 593, 641, 679,
860L, 956, 1361, 1374, 4001, 4041, 4092, 4261, 6039D, 6048, 6050R,
6501, 6693, 7701, and 9503 of this title, section 1055 of Title 29,
Labor, and provisions set out as notes under sections 529 and 4091
of this title] shall take effect as if included in the provisions
of the Small Business Job Protection Act of 1996 [Pub. L. 104-188]
to which they relate.
"(2) Certain administrative requirements with respect to certain
pension plans. - The amendment made by subsection (d)(2)(D)
[amending section 401 of this title] shall apply to calendar years
beginning after the date of the enactment of this Act [Aug. 5,
1997]."
EFFECTIVE DATE
Section 1807(e) of Pub. L. 104-188 provided that: "The amendments
made by this section [enacting this section and section 137 of this
title, renumbering former section 137 of this title as section 138,
and amending sections 25, 86, 135, 219, 469, and 1016 of this
title] shall apply to taxable years beginning after December 31,
1996."
EXPENSES PAID OR INCURRED BEFORE 2002
Pub. L. 107-147, title IV, Sec. 411(c)(1)(F), Mar. 9, 2002, 116
Stat. 45, provided that: "Expenses paid or incurred during any
taxable year beginning before January 1, 2002, may be taken into
account in determining the credit under section 23 of the Internal
Revenue Code of 1986 only to the extent the aggregate of such
expenses does not exceed the applicable limitation under section
23(b)(1) of such Code as in effect on the day before the date of
the enactment of the Economic Growth and Tax Relief Reconciliation
Act of 2001 [June 7, 2001]."
TAX CREDIT AND GROSS INCOME EXCLUSION STUDY AND REPORT
Section 1807(d) of Pub. L. 104-188 provided that: "The Secretary
of the Treasury shall study the effect on adoptions of the tax
credit and gross income exclusion established by the amendments
made by this section [enacting this section and section 137 of this
title, renumbering former section 137 of this title as section 138,
and amending sections 25, 86, 135, 219, 469, and 1016 of this
title] and shall submit a report regarding the study to the
Committee on Finance of the Senate and the Committee on Ways and
Means of the House of Representatives not later than January 1,
2000."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 24, 25, 25B, 26, 137,
904, 1016, 1400C of this title.
-End-
-CITE-
26 USC Sec. 24 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 24. Child tax credit
-STATUTE-
(a) Allowance of credit
(1) In general
There shall be allowed as a credit against the tax imposed by
this chapter for the taxable year with respect to each qualifying
child of the taxpayer an amount equal to the per child amount.
(2) Per child amount
For purposes of paragraph (1), the per child amount shall be
determined as follows:
In the case of any taxable year 2The per child
beginning in - amount is -
--------------------------------------------------------------------
2003 or 2004 $1,000
2005, 2006, 2007, or 2008 700
2009 800
2010 or thereafter 1,000.
--------------------------------------------------------------------
(b) Limitations
(1) Limitation based on adjusted gross income
The amount of the credit allowable under subsection (a) shall
be reduced (but not below zero) by $50 for each $1,000 (or
fraction thereof) by which the taxpayer's modified adjusted gross
income exceeds the threshold amount. For purposes of the
preceding sentence, the term "modified adjusted gross income"
means adjusted gross income increased by any amount excluded from
gross income under section 911, 931, or 933.
(2) Threshold amount
For purposes of paragraph (1), the term "threshold amount"
means -
(A) $110,000 in the case of a joint return,
(B) $75,000 in the case of an individual who is not married,
and
(C) $55,000 in the case of a married individual filing a
separate return.
For purposes of this paragraph, marital status shall be
determined under section 7703.
(3) Limitation based on amount of tax
The credit allowed under subsection (a) for any taxable year
shall not exceed the excess of -
(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
(B) the sum of the credits allowable under this subpart
(other than this section and sections 23 and 25B) and section
27 for the taxable year.
(c) Qualifying child
For purposes of this section -
(1) In general
The term "qualifying child" means any individual if -
(A) the taxpayer is allowed a deduction under section 151
with respect to such individual for the taxable year,
(B) such individual has not attained the age of 17 as of the
close of the calendar year in which the taxable year of the
taxpayer begins, and
(C) such individual bears a relationship to the taxpayer
described in section 32(c)(3)(B).
(2) Exception for certain noncitizens
The term "qualifying child" shall not include any individual
who would not be a dependent if the first sentence of section
152(b)(3) were applied without regard to all that follows
"resident of the United States".
(d) Portion of credit refundable
(1) In general
The aggregate credits allowed to a taxpayer under subpart C
shall be increased by the lesser of -
(A) the credit which would be allowed under this section
without regard to this subsection and the limitation under
subsection (b)(3), or
(B) the amount by which the amount of credit allowed by this
section (determined without regard to this subsection) would
increase if the limitation imposed by subsection (b)(3) were
increased by the greater of -
(i) 15 percent (10 percent in the case of taxable years
beginning before January 1, 2005) of so much of the
taxpayer's earned income (within the meaning of section 32)
which is taken into account in computing taxable income for
the taxable year as exceeds $10,000, or
(ii) in the case of a taxpayer with 3 or more qualifying
children, the excess (if any) of -
(I) the taxpayer's social security taxes for the taxable
year, over
(II) the credit allowed under section 32 for the taxable
year.
The amount of the credit allowed under this subsection shall not
be treated as a credit allowed under this subpart and shall
reduce the amount of credit otherwise allowable under subsection
(a) without regard to subsection (b)(3).
(2) Social security taxes
For purposes of paragraph (1) -
(A) In general
The term "social security taxes" means, with respect to any
taxpayer for any taxable year -
(i) the amount of the taxes imposed by sections 3101 and
3201(a) on amounts received by the taxpayer during the
calendar year in which the taxable year begins,
(ii) 50 percent of the taxes imposed by section 1401 on the
self-employment income of the taxpayer for the taxable year,
and
(iii) 50 percent of the taxes imposed by section 3211(a) on
amounts received by the taxpayer during the calendar year in
which the taxable year begins.
(B) Coordination with special refund of social security taxes
The term "social security taxes" shall not include any taxes
to the extent the taxpayer is entitled to a special refund of
such taxes under section 6413(c).
(C) Special rule
Any amounts paid pursuant to an agreement under section
3121(l) (relating to agreements entered into by American
employers with respect to foreign affiliates) which are
equivalent to the taxes referred to in subparagraph (A)(i)
shall be treated as taxes referred to in such subparagraph.
(3) Inflation adjustment
In the case of any taxable year beginning in a calendar year
after 2001, the $10,000 amount contained in paragraph (1)(B)
shall be increased by an amount equal to -
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting "calendar year 2000" for "calendar
year 1992" in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $50.
(e) Identification requirement
No credit shall be allowed under this section to a taxpayer with
respect to any qualifying child unless the taxpayer includes the
name and taxpayer identification number of such qualifying child on
the return of tax for the taxable year.
(f) Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the
death of the taxpayer, no credit shall be allowable under this
section in the case of a taxable year covering a period of less
than 12 months.
-SOURCE-
(Added Pub. L. 105-34, title I, Sec. 101(a), Aug. 5, 1997, 111
Stat. 796; amended Pub. L. 105-206, title VI, Sec. 6003(a), July
22, 1998, 112 Stat. 790; Pub. L. 105-277, div. J, title II, Sec.
2001(b), Oct. 21, 1998, 112 Stat. 2681-901; Pub. L. 106-170, title
V, Sec. 501(b)(1), Dec. 17, 1999, 113 Stat. 1919; Pub. L. 107-16,
title II, Secs. 201(a)-(b)(2)(C), (c)(1), (2), (d), 202(f)(2)(B),
title VI, Sec. 618(b)(2)(A), June 7, 2001, 115 Stat. 45-47, 49,
108; Pub. L. 107-90, title II, Sec. 204(e)(1), Dec. 21, 2001, 115
Stat. 893; Pub. L. 107-147, title IV, Secs. 411(b), 417(23)(A),
Mar. 9, 2002, 116 Stat. 45, 57; Pub. L. 108-27, title I, Sec.
101(a), May 28, 2003, 117 Stat. 753.)
-STATAMEND-
CHILD TAX CREDIT ADJUSTMENT FOR TAXABLE YEARS BEGINNING IN 2004
For inflation adjustment of value in subsection (d)(1)(B)(i) of
this section used in determining refundable amount for taxable
years beginning in 2004, see section 3.04 of Revenue Procedure
2003-85, set out as a note under section 1 of this title.
AMENDMENT OF SECTION
For termination of amendment by section 107 of Pub. L. 108-27,
see Effective and Termination Dates of 2003 Amendment note below.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
PRIOR PROVISIONS
A prior section 24, added Pub. L. 92-178, title VII, Sec. 701(a),
Dec. 10, 1971, 85 Stat. 560, Sec. 41; amended Pub. L. 93-625, Secs.
11(a)-(c), (e), 12(a), Jan. 3, 1975, 88 Stat. 2119, 2120; Pub. L.
94-455, title V, Sec. 503(b)(4), title XIX, Secs. 1901(b)(1)(B),
(H)(ii), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1562, 1790, 1791,
1834; Pub. L. 95-600, title I, Sec. 113(c), Nov. 6, 1978, 92 Stat.
2778; Pub. L. 97-473, title II, Sec. 202(b)(1), Jan. 14, 1983, 96
Stat. 2609; Pub. L. 98-21, title I, Sec. 122(c)(1), Apr. 20, 1983,
97 Stat. 87; renumbered Sec. 24 and amended Pub. L. 98-369, div. A,
title IV, Secs. 471(c), 474(f), July 18, 1984, 98 Stat. 826, 831,
related to contributions to candidates for public office, prior to
repeal by Pub. L. 99-514, title I, Secs. 112(a), 151(a), Oct. 22,
1986, 100 Stat. 2108, 2121, applicable to taxable years beginning
after Dec. 31, 1986.
AMENDMENTS
2003 - Subsec. (a)(2). Pub. L. 108-27, Secs. 101(a), 107,
temporarily amended table by deleting items relating to calendar
years 2001 and 2002 and increasing per child amount from $600 to
$1,000 for calendar years 2003 or 2004. See Effective and
Termination Dates of 2003 Amendment note below.
2002 - Subsec. (b)(3)(B). Pub. L. 107-147, Sec. 417(23)(A),
amended directory language of Pub. L. 107-16, Sec. 618(b)(2)(A).
See 2001 Amendment note below.
Subsec. (d)(1)(B). Pub. L. 107-147, Sec. 411(b), substituted
"aggregate amount of credits allowed by this subpart" for "amount
of credit allowed by this section" in introductory provisions.
2001 - Subsec. (a). Pub. L. 107-16, Secs. 201(a), 901,
temporarily amended heading and text of subsec. (a) generally.
Prior to amendment, text read as follows: "There shall be allowed
as a credit against the tax imposed by this chapter for the taxable
year with respect to each qualifying child of the taxpayer an
amount equal to $500 ($400 in the case of taxable years beginning
in 1998)." See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (b). Pub. L. 107-16, Secs. 201(b)(2)(A), 901, temporarily
amended heading generally, substituting "Limitations" for
"Limitation based on adjusted gross income". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (b)(1). Pub. L. 107-16, Secs. 201(b)(2)(B), 901,
temporarily amended heading generally, substituting "Limitation
based on adjusted gross income" for "In general". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (b)(3). Pub. L. 107-16, Secs. 201(b)(1), 901, temporarily
added par. (3). See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (b)(3)(B). Pub. L. 107-16, Secs. 618(b)(2)(A), 901, as
amended by Pub. L. 107-147, Sec. 417(23)(A), temporarily
substituted "sections 23 and 25B" for "section 23". See Effective
and Termination Dates of 2001 Amendment note below.
Pub. L. 107-16, Secs. 202(f)(2)(B), 901, temporarily substituted
"this section and section 23" for "this section". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (d). Pub. L. 107-16, Secs. 201(c)(1), 901, temporarily
amended subsec. heading and heading and text of par. (1) generally.
Prior to amendment, text read as follows: "In the case of a
taxpayer with three or more qualifying children for any taxable
year, the aggregate credits allowed under subpart C shall be
increased by the lesser of -
"(A) the credit which would be allowed under this section
without regard to this subsection and the limitation under
section 26(a); or
"(B) the amount by which the aggregate amount of credits
allowed by this subpart (without regard to this subsection) would
increase if the limitation imposed by section 26(a) were
increased by the excess (if any) of -
"(i) the taxpayer's Social Security taxes for the taxable
year, over
"(ii) the credit allowed under section 32 (determined without
regard to subsection (n)) for the taxable year.
The amount of the credit allowed under this subsection shall not be
treated as a credit allowed under this subpart and shall reduce the
amount of credit otherwise allowable under subsection (a) without
regard to section 26(a)."See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (d)(1). Pub. L. 107-16, Secs. 201(b)(2)(C)(i), 901,
temporarily substituted "subsection (b)(3)" for "section 26(a)"
wherever appearing in subsec. (d), as amended by Pub. L. 107-16,
Sec. 201(c). See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (d)(1)(B). Pub. L. 107-16, Secs. 201(b)(2)(C)(ii), 901,
temporarily substituted "amount of credit allowed by this section"
for "aggregate amount of credits allowed by this subpart" in
subpar. (B) as amended by Pub. L. 107-16, Sec. 201(c). See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (d)(2). Pub. L. 107-16, Secs. 201(d), 901, temporarily
redesignated par. (3) as (2) and struck out heading and text of
former par. (2). Text read as follows: "For taxable years beginning
after December 31, 2001, the credit determined under this
subsection for the taxable year shall be reduced by the excess (if
any) of -
"(A) the amount of tax imposed by section 55 (relating to
alternative minimum tax) with respect to such taxpayer for such
taxable year, over
"(B) the amount of the reduction under section 32(h) with
respect to such taxpayer for such taxable year." See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (d)(2)(A)(iii). Pub. L. 107-90, which directed the
amendment of par. (3)(A)(iii) by substituting "section 3211(a)" for
"section 3211(a)(1)", was executed to par. (2)(A)(iii), to reflect
the probable intent of Congress and the redesignation of par. (3)
as (2) by Pub. L. 107-16, Sec. 201(d)(2). See above.
Subsec. (d)(3). Pub. L. 107-16, Secs. 201(d)(2), 901, temporarily
redesignated par. (4) as (3). Former par. (3) temporarily
redesignated (2). See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (d)(4). Pub. L. 107-16, Secs. 201(c)(2), 901, temporarily
added par. (4). Former par. (4) temporarily redesignated (3). See
Effective and Termination Dates of 2001 Amendment note below.
1999 - Subsec. (d)(2). Pub. L. 106-170 substituted "2001" for
"1998" in introductory provisions.
1998 - Subsec. (d)(1). Pub. L. 105-206, Sec. 6003(a)(1)(C), added
par. (1) and struck out heading and text of former par. (1). Text
read as follows: "In the case of a taxpayer with 3 or more
qualifying children for any taxable year, the amount of the credit
allowed under this section shall be equal to the greater of -
"(A) the amount of the credit allowed under this section
(without regard to this subsection and after application of the
limitation under section 26), or
"(B) the alternative credit amount determined under paragraph
(2)."
Subsec. (d)(2). Pub. L. 105-277 substituted "For taxable years
beginning after December 31, 1998, the credit" for "The credit".
Pub. L. 105-206, Sec. 6003(a)(1)(C), added par. (2) and struck
out heading and text of former par. (2). Text read as follows: "For
purposes of this subsection, the alternative credit amount is the
amount of the credit which would be allowed under this section if
the limitation under paragraph (3) were applied in lieu of the
limitation under section 26."
Subsec. (d)(3). Pub. L. 105-206, Sec. 6003(a)(1)(A), (B), (2),
redesignated par. (5) as (3), substituted "paragraph (1)" for
"paragraph (3)" in introductory provisions, and struck out heading
and text of former par. (3). Text read as follows: "The limitation
under this paragraph for any taxable year is the limitation under
section 26 (without regard to this subsection) -
"(A) increased by the taxpayer's social security taxes for such
taxable year, and
"(B) reduced by the sum of -
"(i) the credits allowed under this part other than under
subpart C or this section, and
"(ii) the credit allowed under section 32 without regard to
subsection (m) thereof."
Subsec. (d)(4). Pub. L. 105-206, Sec. 6003(a)(1)(A), struck out
heading and text of par. (4). Text read as follows: "If the amount
of the credit under paragraph (1)(B) exceeds the amount of the
credit under paragraph (1)(A), such excess shall be treated as a
credit to which subpart C applies. The rule of section 32(h) shall
apply to such excess."
Subsec. (d)(5). Pub. L. 105-206, Sec. 6003(a)(1)(B), redesignated
par. (5) as (3).
EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT
Pub. L. 108-27, title I, Sec. 101(c), May 28, 2003, 117 Stat.
754, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting section 6429 of this
title and amending this section] shall apply to taxable years
beginning after December 31, 2002.
"(2) Subsection (b). - The amendments made by subsection (b)
[enacting section 6429 of this title] shall take effect on the date
of the enactment of this Act [May 28, 2003]."
Amendments by title I of Pub. L. 108-27 subject to title IX of
the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub.
L. 107-16, Sec. 901, to the same extent and in the same manner as
the provisions of such Act to which such amendments relate, see
section 107 of Pub. L. 108-27, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by section 411(b) of Pub. L. 107-147 effective as if
included in the provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001, Pub. L. 107-16, to which such amendment
relates, see section 411(x) of Pub. L. 107-147, set out as a note
under section 25B of this title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENTS
Amendment by sections 201(b), 202(f), and 618(b) of Pub. L.
107-16 inapplicable to taxable years beginning during 2002 and
2003, see section 601(b)(2) of Pub. L. 107-147, set out as a note
under section 23 of this title.
Pub. L. 107-90, title II, Sec. 204(f), Dec. 21, 2001, 115 Stat.
893, provided that: "The amendments made by this section [enacting
subchapter E of chapter 22 of this title and amending this section
and sections 72, 3201, 3211, 3221, and 3231 of this title] shall
apply to calendar years beginning after December 31, 2001."
Pub. L. 107-16, title II, Sec. 201(e), June 7, 2001, 115 Stat.
47, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
23, 25, 26, 32, 904, and 1400C of this title] shall apply to
taxable years beginning after December 31, 2000.
"(2) Subsection (b). - The amendments made by subsection (b)
[amending this section and sections 23, 25, 26, 904, and 1400C of
this title] shall apply to taxable years beginning after December
31, 2001."
Amendment by section 202(f)(2)(B) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 202(g)(1)
of Pub. L. 107-16, set out as a note under section 23 of this
title.
Pub. L. 107-16, title VI, Sec. 618(d), June 7, 2001, 115 Stat.
108, provided that: "The amendments made by this section [enacting
section 25B of this title and amending this section and sections
25, 25B, 26, 904, and 1400C of this title] shall apply to taxable
years beginning after December 31, 2001."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106-170, title V, Sec. 501(c), Dec. 17, 1999, 113 Stat.
1919, provided that: "The amendments made by this section [amending
this section and sections 26 and 904 of this title] shall apply to
taxable years beginning after December 31, 1998."
EFFECTIVE DATE OF 1998 AMENDMENTS
Pub. L. 105-277, div. J, title II, Sec. 2001(c), Oct. 21, 1998,
112 Stat. 2681-901, provided that: "The amendments made by this
section [amending this section and section 26 of this title] shall
apply to taxable years beginning after December 31, 1997."
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE
Section 101(e) of Pub. L. 105-34 provided that: "The amendments
made by this section [enacting this section and amending sections
32, 501, and 6213 of this title and section 1324 of Title 31, Money
and Finance] shall apply to taxable years beginning after December
31, 1997."
REFUNDS DISREGARDED IN ADMINISTRATION OF FEDERAL AND FEDERALLY
ASSISTED PROGRAMS
Pub. L. 107-16, title II, Sec. 203, June 7, 2001, 115 Stat. 49,
provided that: "Any payment considered to have been made to any
individual by reason of section 24 of the Internal Revenue Code of
1986, as amended by section 201, shall not be taken into account as
income and shall not be taken into account as resources for the
month of receipt and the following month, for purposes of
determining the eligibility of such individual or any other
individual for benefits or assistance, or the amount or extent of
benefits or assistance, under any Federal program or under any
State or local program financed in whole or in part with Federal
funds."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 25, 26, 32, 151, 501,
904, 1400C, 6211, 6213, 6429 of this title.
-End-
-CITE-
26 USC Sec. 25 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 25. Interest on certain home mortgages
-STATUTE-
(a) Allowance of credit
(1) In general
There shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the product
of -
(A) the certificate credit rate, and
(B) the interest paid or accrued by the taxpayer during the
taxable year on the remaining principal of the certified
indebtedness amount.
(2) Limitation where credit rate exceeds 20 percent
(A) In general
If the certificate credit rate exceeds 20 percent, the amount
of the credit allowed to the taxpayer under paragraph (1) for
any taxable year shall not exceed $2,000.
(B) Special rule where 2 or more persons hold interests in
residence
If 2 or more persons hold interests in any residence, the
limitation of subparagraph (A) shall be allocated among such
persons in proportion to their respective interests in the
residence.
(b) Certificate credit rate; certified indebtedness amount
For purposes of this section -
(1) Certificate credit rate
The term "certificate credit rate" means the rate of the credit
allowable by this section which is specified in the mortgage
credit certificate.
(2) Certified indebtedness amount
The term "certified indebtedness amount" means the amount of
indebtedness which is -
(A) incurred by the taxpayer -
(i) to acquire the principal residence of the taxpayer,
(ii) as a qualified home improvement loan (as defined in
section 143(k)(4)) with respect to such residence, or
(iii) as a qualified rehabilitation loan (as defined in
section 143(k)(5)) with respect to such residence, and
(B) specified in the mortgage credit certificate.
(c) Mortgage credit certificate; qualified mortgage credit
certificate program
For purposes of this section -
(1) Mortgage credit certificate
The term "mortgage credit certificate" means any certificate
which -
(A) is issued under a qualified mortgage credit certificate
program by the State or political subdivision having the
authority to issue a qualified mortgage bond to provide
financing on the principal residence of the taxpayer,
(B) is issued to the taxpayer in connection with the
acquisition, qualified rehabilitation, or qualified home
improvement of the taxpayer's principal residence,
(C) specifies -
(i) the certificate credit rate, and
(ii) the certified indebtedness amount, and
(D) is in such form as the Secretary may prescribe.
(2) Qualified mortgage credit certificate program
(A) In general
The term "qualified mortgage credit certificate program"
means any program -
(i) which is established by a State or political
subdivision thereof for any calendar year for which it is
authorized to issue qualified mortgage bonds,
(ii) under which the issuing authority elects (in such
manner and form as the Secretary may prescribe) not to issue
an amount of private activity bonds which it may otherwise
issue during such calendar year under section 146,
(iii) under which the indebtedness certified by mortgage
credit certificates meets the requirements of the following
subsections of section 143 (as modified by subparagraph (B)
of this paragraph):
(I) subsection (c) (relating to residence requirements),
(II) subsection (d) (relating to 3-year requirement),
(III) subsection (e) (relating to purchase price
requirement),
(IV) subsection (f) (relating to income requirements),
(V) subsection (h) (relating to portion of loans required
to be placed in targeted areas), and
(VI) paragraph (1) of subsection (i) (relating to other
requirements),
(iv) under which no mortgage credit certificate may be
issued with respect to any residence any of the financing of
which is provided from the proceeds of a qualified mortgage
bond or a qualified veterans' mortgage bond,
(v) except to the extent provided in regulations, which is
not limited to indebtedness incurred from particular lenders,
(vi) except to the extent provided in regulations, which
provides that a mortgage credit certificate is not
transferrable, and
(vii) if the issuing authority allocates a block of
mortgage credit certificates for use in connection with a
particular development, which requires the developer to
furnish to the issuing authority and the homebuyer a
certificate that the price for the residence is no higher
than it would be without the use of a mortgage credit
certificate.
Under regulations, rules similar to the rules of subparagraphs
(B) and (C) of section 143(a)(2) shall apply to the
requirements of this subparagraph.
(B) Modifications of section 143
Under regulations prescribed by the Secretary, in applying
section 143 for purposes of subclauses (II), (IV), and (V) of
subparagraph (A)(iii) -
(i) each qualified mortgage certificate credit program
shall be treated as a separate issue,
(ii) the product determined by multiplying -
(I) the certified indebtedness amount of each mortgage
credit certificate issued under such program, by
(II) the certificate credit rate specified in such
certificate,
shall be treated as proceeds of such issue and the sum of
such products shall be treated as the total proceeds of such
issue, and
(iii) paragraph (1) of section 143(d) shall be applied by
substituting "100 percent" for "95 percent or more".
Clause (iii) shall not apply if the issuing authority submits a
plan to the Secretary for administering the 95-percent
requirement of section 143(d)(1) and the Secretary is satisfied
that such requirement will be met under such plan.
(d) Determination of certificate credit rate
For purposes of this section -
(1) In general
The certificate credit rate specified in any mortgage credit
certificate shall not be less than 10 percent or more than 50
percent.
(2) Aggregate limit on certificate credit rates
(A) In general
In the case of each qualified mortgage credit certificate
program, the sum of the products determined by multiplying -
(i) the certified indebtedness amount of each mortgage
credit certificate issued under such program, by
(ii) the certificate credit rate with respect to such
certificate,
shall not exceed 25 percent of the nonissued bond amount.
(B) Nonissued bond amount
For purposes of subparagraph (A), the term "nonissued bond
amount" means, with respect to any qualified mortgage credit
certificate program, the amount of qualified mortgage bonds
which the issuing authority is otherwise authorized to issue
and elects not to issue under subsection (c)(2)(A)(ii).
(e) Special rules and definitions
For purposes of this section -
(1) Carryforward of unused credit
(A) In general
If the credit allowable under subsection (a) for any taxable
year exceeds the applicable tax limit for such taxable year,
such excess shall be a carryover to each of the 3 succeeding
taxable years and, subject to the limitations of subparagraph
(B), shall be added to the credit allowable by subsection (a)
for such succeeding taxable year.
(B) Limitation
The amount of the unused credit which may be taken into
account under subparagraph (A) for any taxable year shall not
exceed the amount (if any) by which the applicable tax limit
for such taxable year exceeds the sum of -
(i) the credit allowable under subsection (a) for such
taxable year determined without regard to this paragraph, and
(ii) the amounts which, by reason of this paragraph, are
carried to such taxable year and are attributable to taxable
years before the unused credit year.
(C) Applicable tax limit
For purposes of this paragraph, the term "applicable tax
limit" means the limitation imposed by section 26(a) for the
taxable year reduced by the sum of the credits allowable under
this subpart (other than this section and sections 23, 24, 25B,
and 1400C).
(2) Indebtedness not treated as certified where certain
requirements not in fact met
Subsection (a) shall not apply to any indebtedness if all the
requirements of subsection (c)(1), (d), (e), (f), and (i) of
section 143 and clauses (iv), (v), and (vii) of subsection
(c)(2)(A), were not in fact met with respect to such
indebtedness. Except to the extent provided in regulations, the
requirements described in the preceding sentence shall be treated
as met if there is a certification, under penalty of perjury,
that such requirements are met.
(3) Period for which certificate in effect
(A) In general
Except as provided in subparagraph (B), a mortgage credit
certificate shall be treated as in effect with respect to
interest attributable to the period -
(i) beginning on the date such certificate is issued, and
(ii) ending on the earlier of the date on which -
(I) the certificate is revoked by the issuing authority,
or
(II) the residence to which such certificate relates
ceases to be the principal residence of the individual to
whom the certificate relates.
(B) Certificate invalid unless indebtedness incurred within
certain period
A certificate shall not apply to any indebtedness which is
incurred after the close of the second calendar year following
the calendar year for which the issuing authority made the
applicable election under subsection (c)(2)(A)(ii).
(C) Notice to Secretary when certificate revoked
Any issuing authority which revokes any mortgage credit
certificate shall notify the Secretary of such revocation at
such time and in such manner as the Secretary shall prescribe
by regulations.
(4) Reissuance of mortgage credit certificates
The Secretary may prescribe regulations which allow the
administrator of a mortgage credit certificate program to reissue
a mortgage credit certificate specifying a certified mortgage
indebtedness that replaces the outstanding balance of the
certified mortgage indebtedness specified on the original
certificate to any taxpayer to whom the original certificate was
issued, under such terms and conditions as the Secretary
determines are necessary to ensure that the amount of the credit
allowable under subsection (a) with respect to such reissued
certificate is equal to or less than the amount of credit which
would be allowable under subsection (a) with respect to the
original certificate for any taxable year ending after such
reissuance.
(5) Public notice that certificates will be issued
At least 90 days before any mortgage credit certificate is to
be issued after a qualified mortgage credit certificate program,
the issuing authority shall provide reasonable public notice of -
(A) the eligibility requirements for such certificate,
(B) the methods by which such certificates are to be issued,
and
(C) such other information as the Secretary may require.
(6) Interest paid or accrued to related persons
No credit shall be allowed under subsection (a) for any
interest paid or accrued to a person who is a related person to
the taxpayer (within the meaning of section 144(a)(3)(A)).
(7) Principal residence
The term "principal residence" has the same meaning as when
used in section 121.
(8) Qualified rehabilitation and home improvement
(A) Qualified rehabilitation
The term "qualified rehabilitation" has the meaning given
such term by section 143(k)(5)(B).
(B) Qualified home improvement
The term "qualified home improvement" means an alteration,
repair, or improvement described in section 143(k)(4).
(9) Qualified mortgage bond
The term "qualified mortgage bond" has the meaning given such
term by section 143(a)(1).
(10) Manufactured housing
For purposes of this section, the term "single family
residence" includes any manufactured home which has a minimum of
400 square feet of living space and a minimum width in excess of
102 inches and which is of a kind customarily used at a fixed
location. Nothing in the preceding sentence shall be construed as
providing that such a home will be taken into account in making
determinations under section 143.
(f) Reduction in aggregate amount of qualified mortgage bonds which
may be issued where certain requirements not met
(1) In general
If for any calendar year any mortgage credit certificate
program which satisfies procedural requirements with respect to
volume limitations prescribed by the Secretary fails to meet the
requirements of paragraph (2) of subsection (d), such
requirements shall be treated as satisfied with respect to any
certified indebtedness of such program, but the applicable State
ceiling under subsection (d) of section 146 for the State in
which such program operates shall be reduced by 1.25 times the
correction amount with respect to such failure. Such reduction
shall be applied to such State ceiling for the calendar year
following the calendar year in which the Secretary determines the
correction amount with respect to such failure.
(2) Correction amount
(A) In general
For purposes of paragraph (1), the term "correction amount"
means an amount equal to the excess credit amount divided by
0.25.
(B) Excess credit amount
(i) In general
For purposes of subparagraph (A)(ii), the term "excess
credit amount" means the excess of -
(I) the credit amount for any mortgage credit certificate
program, over
(II) the amount which would have been the credit amount
for such program had such program met the requirements of
paragraph (2) of subsection (d).
(ii) Credit amount
For purposes of clause (i), the term "credit amount" means
the sum of the products determined under clauses (i) and (ii)
of subsection (d)(2)(A).
(3) Special rule for States having constitutional home rule
cities
In the case of a State having one or more constitutional home
rule cities (within the meaning of section 146(d)(3)(C)), the
reduction in the State ceiling by reason of paragraph (1) shall
be allocated to the constitutional home rule city, or to the
portion of the State not within such city, whichever caused the
reduction.
(4) Exception where certification program
The provisions of this subsection shall not apply in any case
in which there is a certification program which is designed to
ensure that the requirements of this section are met and which
meets such requirements as the Secretary may by regulations
prescribe.
(5) Waiver
The Secretary may waive the application of paragraph (1) in any
case in which he determines that the failure is due to reasonable
cause.
(g) Reporting requirements
Each person who makes a loan which is a certified indebtedness
amount under any mortgage credit certificate shall file a report
with the Secretary containing -
(1) the name, address, and social security account number of
the individual to which the certificate was issued,
(2) the certificate's issuer, date of issue, certified
indebtedness amount, and certificate credit rate, and
(3) such other information as the Secretary may require by
regulations.
Each person who issues a mortgage credit certificate shall file a
report showing such information as the Secretary shall by
regulations prescribe. Any such report shall be filed at such time
and in such manner as the Secretary may require by regulations.
(h) Regulations; contracts
(1) Regulations
The Secretary shall prescribe such regulations as may be
necessary to carry out the purposes of this section, including
regulations which may require recipients of mortgage credit
certificates to pay a reasonable processing fee to defray the
expenses incurred in administering the program.
(2) Contracts
The Secretary is authorized to enter into contracts with any
person to provide services in connection with the administration
of this section.
(i) Recapture of portion of Federal subsidy from use of mortgage
credit certificates
For provisions increasing the tax imposed by this chapter to
recapture a portion of the Federal subsidy from the use of
mortgage credit certificates, see section 143(m).
-SOURCE-
(Added Pub. L. 98-369, div. A, title VI, Sec. 612(a), July 18,
1984, 98 Stat. 905; amended Pub. L. 99-514, title XIII, Sec.
1301(f), title XVIII, Secs. 1862(a)-(d)(1), 1899A(1), Oct. 22,
1986, 100 Stat. 2655, 2883, 2884, 2958; Pub. L. 100-647, title I,
Sec. 1013(a)(25), (26), title IV, Sec. 4005(a)(2), (g)(7), Nov. 10,
1988, 102 Stat. 3543, 3645, 3651; Pub. L. 101-239, title VII, Sec.
7104(b), Dec. 19, 1989, 103 Stat. 2305; Pub. L. 101-508, title XI,
Sec. 11408(b), Nov. 5, 1990, 104 Stat. 1388-477; Pub. L. 102-227,
title I, Sec. 108(b), Dec. 11, 1991, 105 Stat. 1688; Pub. L.
103-66, title XIII, Sec. 13141(b), Aug. 10, 1993, 107 Stat. 436;
Pub. L. 104-188, title I, Sec. 1807(c)(1), Aug. 20, 1996, 110 Stat.
1902; Pub. L. 105-34, title III, Sec. 312(d)(1), Aug. 5, 1997, 111
Stat. 839; Pub. L. 105-206, title VI, Sec. 6008(d)(7), July 22,
1998, 112 Stat. 812; Pub. L. 107-16, title II, Sec. 201(b)(2)(F),
title VI, Sec. 618(b)(2)(B), June 7, 2001, 115 Stat. 46, 108.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
PRIOR PROVISIONS
A prior section 25 was renumbered section 26 of this title.
AMENDMENTS
2001 - Subsec. (e)(1)(C). Pub. L. 107-16, Secs. 618(b)(2)(B),
901, temporarily inserted "25B," after "24,". See Effective and
Termination Dates of 2001 Amendment note below.
Pub. L. 107-16, Secs. 201(b)(2)(F), 901, temporarily inserted ",
24," after "sections 23". See Effective and Termination Dates of
2001 Amendment note below.
1998 - Subsec. (e)(1)(C). Pub. L. 105-206 substituted "sections
23 and 1400C" for "section 23".
1997 - Subsec. (e)(7). Pub. L. 105-34 substituted "section 121"
for "section 1034".
1996 - Subsec. (e)(1)(C). Pub. L. 104-188 inserted "and section
23" after "other than this section".
1993 - Subsecs. (h) to (j). Pub. L. 103-66 redesignated subsecs.
(i) and (j) as (h) and (i), respectively, and struck out heading
and text of former subsec. (h). Text read as follows: "No election
may be made under subsection (c)(2)(A)(ii) for any period after
June 30, 1992."
1991 - Subsec. (h). Pub. L. 102-227 substituted "June 30, 1992"
for "December 31, 1991".
1990 - Subsec. (h). Pub. L. 101-508 substituted "December 31,
1991" for "September 30, 1990".
1989 - Subsec. (h). Pub. L. 101-239 substituted "for any period
after September 30, 1990" for "for any calendar year after 1989".
1988 - Subsec. (c)(2)(A)(ii). Pub. L. 100-647, Sec. 1013(a)(25),
amended Pub. L. 99-514, Sec. 1301(f)(2)(C)(ii), see 1986 Amendment
note below.
Subsec. (h). Pub. L. 100-647, Sec. 4005(a)(2), substituted "1989"
for "1988".
Pub. L. 100-647, Sec. 1013(a)(26), substituted "1988" for "1987".
Subsec. (j). Pub. L. 100-647, Sec. 4005(g)(7), added subsec. (j).
1986 - Subsec. (a)(1)(B). Pub. L. 99-514, Sec. 1862(d)(1),
substituted "paid or accrued" for "paid or incurred".
Subsec. (b)(2)(A)(ii). Pub. L. 99-514, Sec. 1301(f)(2)(A),
substituted "section 143(k)(4)" for "section 103A(l)(6)".
Subsec. (b)(2)(A)(iii). Pub. L. 99-514, Sec. 1301(f)(2)(B),
substituted "section 143(k)(5)" for "section 103A(l)(7)".
Subsec. (c)(2)(A). Pub. L. 99-514, Sec. 1301(f)(2)(E),
substituted "section 143(a)(2)" for "section 103A(c)(2)" in
provision following cl. (vii).
Pub. L. 99-514, Sec. 1862(b), inserted "Under regulations, rules
similar to the rules of subparagraphs (B) and (C) of section
103A(c)(2) shall apply to the requirements of this subparagraph."
Subsec. (c)(2)(A)(ii). Pub. L. 99-514, Sec. 1301(f)(2)(C)(ii), as
amended by Pub. L. 100-647, Sec. 1013(a)(25), substituted "private
activity bonds which it may otherwise issue during such calendar
year under section 146" for "qualified mortgage bonds which it may
otherwise issue during such calendar year under section 103A".
Subsec. (c)(2)(A)(iii). Pub. L. 99-514, Sec. 1301(f)(2)(C)(i),
substituted "section 143" for "section 103A" in introductory
provisions, added subcls. (I) to (VI), and struck out former
subcls. (I) to (V) which read as follows:
"(I) subsection (d) (relating to residence requirements),
"(II) subsection (e) (relating to 3-year requirement),
"(III) subsection (f) (relating to purchase price requirement),
"(IV) subsection (h) (relating to portion of loans required to be
placed in targeted areas), and
"(V) subsection (j), other than paragraph (2) thereof (relating
to other requirements),".
Subsec. (c)(2)(A)(iii)(V). Pub. L. 99-514, Sec. 1862(a),
substituted "subsection (j), other than paragraph (2) thereof" for
"paragraph (1) of subsection (j)".
Subsec. (c)(2)(B). Pub. L. 99-514, Sec. 1301(f)(2)(C)(i),
substituted in heading and introductory provisions "section 143"
for "section 103A".
Pub. L. 99-514, Sec. 1301(f)(2)(F), inserted in introductory
provisions reference to subcl. (V), added cl. (iii) and closing
provisions, and struck out former cl. (iii) and closing provisions
which read as follows:
"(iii) paragraph (1) of section 103A(e) shall be applied by
substituting '100 percent' for '90 percent or more'.
Clause (iii) shall not apply if the issuing authority submits a
plan to the Secretary for administering the 90-percent requirement
of section 103A(e)(1) and the Secretary is satisfied that such
requirement will be met under such plan."
Subsec. (d)(2)(A). Pub. L. 99-514, Sec. 1301(f)(1)(A),
substituted "25 percent" for "20 percent" in concluding provisions.
Subsec. (d)(3). Pub. L. 99-514, Sec. 1301(f)(2)(G), struck out
par. (3) "Additional limit in certain cases" which read as follows:
"In the case of a qualified mortgage credit certificate program in
a State which -
"(A) has a State ceiling (as defined in section 103A(g)(4)) for
the year an election is made that exceeds 20 percent of the
average annual aggregate principal amount of mortgages executed
during the immediately preceding 3 calendar years for single
family owner-occupied residences located within the jurisdiction
of such State, or
"(B) issued qualified mortgage bonds in an aggregate amount
less than $150,000,000 for calendar year 1983,
the certificate credit rate for any mortgage credit certificate
shall not exceed 20 percent unless the issuing authority submits a
plan to the Secretary to ensure that the weighted average of the
certificate credit rates in such mortgage credit certificate
program does not exceed 20 percent and the Secretary approves such
plan."
Subsec. (e)(1)(B). Pub. L. 99-514, Sec. 1862(c), amended subpar.
(B) generally. Prior to amendment, subpar. (B) "Limitations" read
as follows: "The amount of the unused credit which may be taken
into account under subparagraph (A) for any taxable year shall not
exceed the amount by which the applicable tax limit for such
taxable year exceeds the sum of the amounts which, by reason of
this paragraph, are carried to such taxable year and are
attributable to taxable years before the unused credit year."
Subsec. (e)(2). Pub. L. 99-514, Sec. 1301(f)(2)(H), substituted
"subsections (c)(1), (d), (e), (f), and (i) of section 143" for
"subsection (d)(1), (e), (f), and (j) of section 103A".
Subsec. (e)(6). Pub. L. 99-514, Sec. 1301(f)(2)(I), substituted
"section 144(a)(3)(A)" for "section 103(b)(6)(C)(i)".
Subsec. (e)(8)(A). Pub. L. 99-514, Sec. 1301(f)(2)(J),
substituted "section 143(k)(5)(B)" for "section 103A(l)(7)(B)".
Subsec. (e)(8)(B). Pub. L. 99-514, Sec. 1301(f)(2)(K),
substituted "section 143(k)(4)" for "section 103A(l)(6)".
Subsec. (e)(9). Pub. L. 99-514, Sec. 1301(f)(2)(L), substituted
"section 143(a)(1)" for "section 103A(c)(1)".
Subsec. (e)(10). Pub. L. 99-514, Sec. 1301(f)(2)(M), substituted
"section 143" for "section 103A".
Subsec. (f)(1). Pub. L. 99-514, Sec. 1301(f)(2)(N), substituted
"subsection (d) of section 146" for "paragraph (4) of section
103A(g)".
Subsec. (f)(2)(A). Pub. L. 99-514, Sec. 1301(f)(1)(B),
substituted "0.25" for "0.20".
Subsec. (f)(3). Pub. L. 99-514, Sec. 1301(f)(2)(O), substituted
"section 146(d)(3)(C)" for "section 103A(g)(5)(C)".
Subsec. (f)(4). Pub. L. 99-514, Sec. 1899A(1), substituted
"ensure" for "insure".
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 inapplicable to taxable years
beginning during 2002 and 2003, see section 601(b)(2) of Pub. L.
107-147, set out as a note under section 23 of this title.
Amendment by section 201(b)(2)(F) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 201(e)(2)
of Pub. L. 107-16, set out as a note under section 24 of this
title.
Amendment by section 618(b)(2)(B) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 618(d) of
Pub. L. 107-16, set out as a note under section 24 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to sales and exchanges
after May 6, 1997, with certain exceptions, see section 312(d) of
Pub. L. 105-34, set out as a note under section 121 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 applicable to taxable years
beginning after Dec. 31, 1996, see section 1807(e) of Pub. L.
104-188, set out as an Effective Date note under section 23 of this
title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13141(f)(2) of Pub. L. 103-66 provided that: "The
amendment made by subsection (b) [amending this section] shall
apply to elections for periods after June 30, 1992."
EFFECTIVE DATE OF 1991 AMENDMENT
Section 108(c)(2) of Pub. L. 102-227 provided that: "The
amendment made by subsection (b) [amending this section] shall
apply to elections for periods after December 31, 1991."
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 applicable to elections for periods
after Sept. 30, 1990, see section 11408(d)(2) of Pub. L. 101-508,
set out as a note under section 143 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1013(a)(25), (26) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the
provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which
such amendment relates, see section 1019(a) of Pub. L. 100-647, set
out as a note under section 1 of this title.
Amendment by section 4005(a)(2) of Pub. L. 100-647 applicable to
bonds issued, and nonissued bond amounts elected, after Dec. 31,
1988, see section 4005(h)(1) of Pub. L. 100-647, set out as a note
under section 143 of this title.
Amendment by section 4005(g)(7) of Pub. L. 100-647 applicable to
financing provided, and mortgage credit certificates issued, after
Dec. 31, 1990, with certain exceptions, see section 4005(h)(3) of
Pub. L. 100-647, set out as a note under section 143 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 1301(f)(1) of Pub. L. 99-514 applicable to
nonissued bond amounts elected after Aug. 15, 1986, and amendment
by section 1301(f)(2) of Pub. L. 99-514 applicable to certificates
issued with respect to nonissued bond amounts elected after Aug.
15, 1986, see section 1311(b) of Pub. L. 99-514, as amended, set
out as an Effective Date; Transitional Rules note under section 141
of this title.
Amendment by section 1862(a)-(d)(1) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE
Section 612(g) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [enacting this
section and section 6708 of this title, redesignating former
section 25 as 26, and amending sections 23, 28 to 30, 38, 55, 103A,
163, 168, and 901 of this title] shall apply to interest paid or
accrued after December 31, 1984, on indebtedness incurred after
December 31, 1984.
"(2) Elections. - The amendments made by this section shall apply
to elections under section 25(c)(2)(A)(ii) of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] (as added by this section) for
calendar years after 1983."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 143, 146, 163, 6708 of
this title; title 42 section 12852.
-End-
-CITE-
26 USC Sec. 25A 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 25A. Hope and Lifetime Learning credits
-STATUTE-
(a) Allowance of credit
In the case of an individual, there shall be allowed as a credit
against the tax imposed by this chapter for the taxable year the
amount equal to the sum of -
(1) the Hope Scholarship Credit, plus
(2) the Lifetime Learning Credit.
(b) Hope Scholarship Credit
(1) Per student credit
In the case of any eligible student for whom an election is in
effect under this section for any taxable year, the Hope
Scholarship Credit is an amount equal to the sum of -
(A) 100 percent of so much of the qualified tuition and
related expenses paid by the taxpayer during the taxable year
(for education furnished to the eligible student during any
academic period beginning in such taxable year) as does not
exceed $1,000, plus
(B) 50 percent of such expenses so paid as exceeds $1,000 but
does not exceed the applicable limit.
(2) Limitations applicable to Hope Scholarship Credit
(A) Credit allowed only for 2 taxable years
An election to have this section apply with respect to any
eligible student for purposes of the Hope Scholarship Credit
under subsection (a)(1) may not be made for any taxable year if
such an election (by the taxpayer or any other individual) is
in effect with respect to such student for any 2 prior taxable
years.
(B) Credit allowed for year only if individual is at least 1/2
time student for portion of year
The Hope Scholarship Credit under subsection (a)(1) shall not
be allowed for a taxable year with respect to the qualified
tuition and related expenses of an individual unless such
individual is an eligible student for at least one academic
period which begins during such year.
(C) Credit allowed only for first 2 years of postsecondary
education
The Hope Scholarship Credit under subsection (a)(1) shall not
be allowed for a taxable year with respect to the qualified
tuition and related expenses of an eligible student if the
student has completed (before the beginning of such taxable
year) the first 2 years of postsecondary education at an
eligible educational institution.
(D) Denial of credit if student convicted of a felony drug
offense
The Hope Scholarship Credit under subsection (a)(1) shall not
be allowed for qualified tuition and related expenses for the
enrollment or attendance of a student for any academic period
if such student has been convicted of a Federal or State felony
offense consisting of the possession or distribution of a
controlled substance before the end of the taxable year with or
within which such period ends.
(3) Eligible student
For purposes of this subsection, the term "eligible student"
means, with respect to any academic period, a student who -
(A) meets the requirements of section 484(a)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on
the date of the enactment of this section, and
(B) is carrying at least 1/2 the normal full-time work load
for the course of study the student is pursuing.
(4) Applicable limit
For purposes of paragraph (1)(B), the applicable limit for any
taxable year is an amount equal to 2 times the dollar amount in
effect under paragraph (1)(A) for such taxable year.
(c) Lifetime Learning Credit
(1) Per taxpayer credit
The Lifetime Learning Credit for any taxpayer for any taxable
year is an amount equal to 20 percent of so much of the qualified
tuition and related expenses paid by the taxpayer during the
taxable year (for education furnished during any academic period
beginning in such taxable year) as does not exceed $10,000
($5,000 in the case of taxable years beginning before January 1,
2003).
(2) Special rules for determining expenses
(A) Coordination with Hope Scholarship
The qualified tuition and related expenses with respect to an
individual who is an eligible student for whom a Hope
Scholarship Credit under subsection (a)(1) is allowed for the
taxable year shall not be taken into account under this
subsection.
(B) Expenses eligible for Lifetime Learning Credit
For purposes of paragraph (1), qualified tuition and related
expenses shall include expenses described in subsection (f)(1)
with respect to any course of instruction at an eligible
educational institution to acquire or improve job skills of the
individual.
(d) Limitation based on modified adjusted gross income
(1) In general
The amount which would (but for this subsection) be taken into
account under subsection (a) for the taxable year shall be
reduced (but not below zero) by the amount determined under
paragraph (2).
(2) Amount of reduction
The amount determined under this paragraph is the amount which
bears the same ratio to the amount which would be so taken into
account as -
(A) the excess of -
(i) the taxpayer's modified adjusted gross income for such
taxable year, over
(ii) $40,000 ($80,000 in the case of a joint return), bears
to
(B) $10,000 ($20,000 in the case of a joint return).
(3) Modified adjusted gross income
The term "modified adjusted gross income" means the adjusted
gross income of the taxpayer for the taxable year increased by
any amount excluded from gross income under section 911, 931, or
933.
(e) Election not to have section apply
A taxpayer may elect not to have this section apply with respect
to the qualified tuition and related expenses of an individual for
any taxable year.
(f) Definitions
For purposes of this section -
(1) Qualified tuition and related expenses
(A) In general
The term "qualified tuition and related expenses" means
tuition and fees required for the enrollment or attendance of -
(i) the taxpayer,
(ii) the taxpayer's spouse, or
(iii) any dependent of the taxpayer with respect to whom
the taxpayer is allowed a deduction under section 151,
at an eligible educational institution for courses of
instruction of such individual at such institution.
(B) Exception for education involving sports, etc.
Such term does not include expenses with respect to any
course or other education involving sports, games, or hobbies,
unless such course or other education is part of the
individual's degree program.
(C) Exception for nonacademic fees
Such term does not include student activity fees, athletic
fees, insurance expenses, or other expenses unrelated to an
individual's academic course of instruction.
(2) Eligible educational institution
The term "eligible educational institution" means an
institution -
(A) which is described in section 481 of the Higher Education
Act of 1965 (20 U.S.C. 1088), as in effect on the date of the
enactment of this section, and
(B) which is eligible to participate in a program under title
IV of such Act.
(g) Special rules
(1) Identification requirement
No credit shall be allowed under subsection (a) to a taxpayer
with respect to the qualified tuition and related expenses of an
individual unless the taxpayer includes the name and taxpayer
identification number of such individual on the return of tax for
the taxable year.
(2) Adjustment for certain scholarships, etc.
The amount of qualified tuition and related expenses otherwise
taken into account under subsection (a) with respect to an
individual for an academic period shall be reduced (before the
application of subsections (b), (c), and (d)) by the sum of any
amounts paid for the benefit of such individual which are
allocable to such period as -
(A) a qualified scholarship which is excludable from gross
income under section 117,
(B) an educational assistance allowance under chapter 30, 31,
32, 34, or 35 of title 38, United States Code, or under chapter
1606 of title 10, United States Code, and
(C) a payment (other than a gift, bequest, devise, or
inheritance within the meaning of section 102(a)) for such
individual's educational expenses, or attributable to such
individual's enrollment at an eligible educational institution,
which is excludable from gross income under any law of the
United States.
(3) Treatment of expenses paid by dependent
If a deduction under section 151 with respect to an individual
is allowed to another taxpayer for a taxable year beginning in
the calendar year in which such individual's taxable year begins
-
(A) no credit shall be allowed under subsection (a) to such
individual for such individual's taxable year, and
(B) qualified tuition and related expenses paid by such
individual during such individual's taxable year shall be
treated for purposes of this section as paid by such other
taxpayer.
(4) Treatment of certain prepayments
If qualified tuition and related expenses are paid by the
taxpayer during a taxable year for an academic period which
begins during the first 3 months following such taxable year,
such academic period shall be treated for purposes of this
section as beginning during such taxable year.
(5) Denial of double benefit
No credit shall be allowed under this section for any expense
for which a deduction is allowed under any other provision of
this chapter.
(6) No credit for married individuals filing separate returns
If the taxpayer is a married individual (within the meaning of
section 7703), this section shall apply only if the taxpayer and
the taxpayer's spouse file a joint return for the taxable year.
(7) Nonresident aliens
If the taxpayer is a nonresident alien individual for any
portion of the taxable year, this section shall apply only if
such individual is treated as a resident alien of the United
States for purposes of this chapter by reason of an election
under subsection (g) or (h) of section 6013.
(h) Inflation adjustments
(1) Dollar limitation on amount of credit
(A) In general
In the case of a taxable year beginning after 2001, each of
the $1,000 amounts under subsection (b)(1) shall be increased
by an amount equal to -
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year
begins, determined by substituting "calendar year 2000" for
"calendar year 1992" in subparagraph (B) thereof.
(B) Rounding
If any amount as adjusted under subparagraph (A) is not a
multiple of $100, such amount shall be rounded to the next
lowest multiple of $100.
(2) Income limits
(A) In general
In the case of a taxable year beginning after 2001, the
$40,000 and $80,000 amounts in subsection (d)(2) shall each be
increased by an amount equal to -
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year
begins, determined by substituting "calendar year 2000" for
"calendar year 1992" in subparagraph (B) thereof.
(B) Rounding
If any amount as adjusted under subparagraph (A) is not a
multiple of $1,000, such amount shall be rounded to the next
lowest multiple of $1,000.
(i) Regulations
The Secretary may prescribe such regulations as may be necessary
or appropriate to carry out this section, including regulations
providing for a recapture of the credit allowed under this section
in cases where there is a refund in a subsequent taxable year of
any amount which was taken into account in determining the amount
of such credit.
-SOURCE-
(Added Pub. L. 105-34, title II, Sec. 201(a), Aug. 5, 1997, 111
Stat. 799; amended Pub. L. 107-16, title IV, Sec. 401(g)(2)(A),
June 7, 2001, 115 Stat. 59.)
-STATAMEND-
INFLATION ADJUSTED ITEMS FOR TAXABLE YEARS BEGINNING IN 2004
For inflation adjustment of amounts in subsection (b)(1) of this
section used in determining Hope Scholarship Credit and amounts in
subsection (d)(2)(A)(ii) of this section used in determining
reduction in amount of credits otherwise allowable for taxable
years beginning in 2004, see section 3.05 of Revenue Procedure
2003-85, set out as a note under section 1 of this title.
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of this section, referred to in
subsecs. (b)(3)(A) and (f)(2)(A), is the date of enactment of Pub.
L. 105-34 which was approved Aug. 5, 1997.
The Higher Education Act of 1965, referred to in subsec.
(f)(2)(B), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 1219, as
amended. Title IV of the Act is classified generally to subchapter
IV (Sec. 1070 et seq.) of chapter 28 of Title 20, Education, and
part C (Sec. 2751 et seq.) of subchapter I of chapter 34 of Title
42, The Public Health and Welfare. For complete classification of
this Act to the Code, see Short Title note set out under section
1001 of Title 20 and Tables.
-MISC1-
AMENDMENTS
2001 - Subsec. (e). Pub. L. 107-16, Secs. 401(g)(2)(A), 901,
temporarily amended heading and text of subsec. (e) generally.
Prior to amendment, text read as follows:
"(1) In general. - No credit shall be allowed under subsection
(a) for a taxable year with respect to the qualified tuition and
related expenses of an individual unless the taxpayer elects to
have this section apply with respect to such individual for such
year.
"(2) Coordination with exclusions. - An election under this
subsection shall not take effect with respect to an individual for
any taxable year if any portion of any distribution during such
taxable year from an education individual retirement account is
excluded from gross income under section 530(d)(2)."
See Effective and Termination Dates of 2001 Amendment note below.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title IV, Sec. 401(h), June 7, 2001, 115 Stat.
60, provided that: "The amendments made by this section [amending
this section and sections 135, 530, and 4973 of this title] shall
apply to taxable years beginning after December 31, 2001."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE
Section 201(f) of Pub. L. 105-34 provided that:
"(1) In general. - The amendments made by this section [enacting
this section and section 6050S of this title and amending sections
135, 6213, and 6724 of this title] shall apply to expenses paid
after December 31, 1997 (in taxable years ending after such date),
for education furnished in academic periods beginning after such
date.
"(2) Lifetime learning credit. - Section 25A(a)(2) of the
Internal Revenue Code of 1986 shall apply to expenses paid after
June 30, 1998 (in taxable years ending after such date), for
education furnished in academic periods beginning after such
dates."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 72, 135, 221, 222, 529,
530, 6050S, 6213 of this title; title 20 sections 1087oo, 1087pp,
1087qq, 1087ss, 1087vv.
-End-
-CITE-
26 USC Sec. 25B 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 25B. Elective deferrals and IRA contributions by certain
individuals
-STATUTE-
(a) Allowance of credit
In the case of an eligible individual, there shall be allowed as
a credit against the tax imposed by this subtitle for the taxable
year an amount equal to the applicable percentage of so much of the
qualified retirement savings contributions of the eligible
individual for the taxable year as do not exceed $2,000.
(b) Applicable percentage
For purposes of this section, the applicable percentage is the
percentage determined in accordance with the following table:
Adjusted Gross Income
________________________________________________________ Applicable
Joint return Head of a All other percentage
Household cases
Over Not over Over Not over Over Not Over
-----------------------------------------------------------------------
$30,000 $22,500 $15,000 50
30,000 32,500 22,500 24,375 15,000 16,250 20
32,500 50,000 24,375 37,500 16,250 25,000 10
50,000 37,500 25,000 0
-----------------------------------------------------------------------
(c) Eligible individual
For purposes of this section -
(1) In general
The term "eligible individual" means any individual if such
individual has attained the age of 18 as of the close of the
taxable year.
(2) Dependents and full-time students not eligible
The term "eligible individual" shall not include -
(A) any individual with respect to whom a deduction under
section 151 is allowed to another taxpayer for a taxable year
beginning in the calendar year in which such individual's
taxable year begins, and
(B) any individual who is a student (as defined in section
151(c)(4)).
(d) Qualified retirement savings contributions
For purposes of this section -
(1) In general
The term "qualified retirement savings contributions" means,
with respect to any taxable year, the sum of -
(A) the amount of the qualified retirement contributions (as
defined in section 219(e)) made by the eligible individual,
(B) the amount of -
(i) any elective deferrals (as defined in section
402(g)(3)) of such individual, and
(ii) any elective deferral of compensation by such
individual under an eligible deferred compensation plan (as
defined in section 457(b)) of an eligible employer described
in section 457(e)(1)(A), and
(C) the amount of voluntary employee contributions by such
individual to any qualified retirement plan (as defined in
section 4974(c)).
(2) Reduction for certain distributions
(A) In general
The qualified retirement savings contributions determined
under paragraph (1) shall be reduced (but not below zero) by
the aggregate distributions received by the individual during
the testing period from any entity of a type to which
contributions under paragraph (1) may be made. The preceding
sentence shall not apply to the portion of any distribution
which is not includible in gross income by reason of a
trustee-to-trustee transfer or a rollover distribution.
(B) Testing period
For purposes of subparagraph (A), the testing period, with
respect to a taxable year, is the period which includes -
(i) such taxable year,
(ii) the 2 preceding taxable years, and
(iii) the period after such taxable year and before the due
date (including extensions) for filing the return of tax for
such taxable year.
(C) Excepted distributions
There shall not be taken into account under subparagraph (A)
-
(i) any distribution referred to in section 72(p),
401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), and
(ii) any distribution to which section 408A(d)(3) applies.
(D) Treatment of distributions received by spouse of individual
For purposes of determining distributions received by an
individual under subparagraph (A) for any taxable year, any
distribution received by the spouse of such individual shall be
treated as received by such individual if such individual and
spouse file a joint return for such taxable year and for the
taxable year during which the spouse receives the distribution.
(e) Adjusted gross income
For purposes of this section, adjusted gross income shall be
determined without regard to sections 911, 931, and 933.
(f) Investment in the contract
Notwithstanding any other provision of law, a qualified
retirement savings contribution shall not fail to be included in
determining the investment in the contract for purposes of section
72 by reason of the credit under this section.
(g) Limitation based on amount of tax
The credit allowed under subsection (a) for the taxable year
shall not exceed the excess of -
(1) the sum of the regular tax liability (as defined in section
26(b)) plus the tax imposed by section 55, over
(2) the sum of the credits allowable under this subpart (other
than this section and section 23) and section 27 for the taxable
year.
(h) Termination
This section shall not apply to taxable years beginning after
December 31, 2006.
-SOURCE-
(Added and amended Pub. L. 107-16, title VI, Sec. 618(a), (b)(1),
June 7, 2001, 115 Stat. 106, 108; Pub. L. 107-147, title IV, Secs.
411(m), 417(1), Mar. 9, 2002, 116 Stat. 48, 56.)
-STATAMEND-
TERMINATION OF SECTION
For termination of section by section 901 of Pub. L. 107-16, see
Effective and Termination Dates note below.
-MISC1-
AMENDMENTS
2002 - Subsec. (d)(2)(A). Pub. L. 107-147, Sec. 411(m), reenacted
heading without change and amended text of subpar. (A) generally.
Prior to amendment, text read as follows: "The qualified retirement
savings contributions determined under paragraph (1) shall be
reduced (but not below zero) by the sum of -
"(i) any distribution from a qualified retirement plan (as
defined in section 4974(c)), or from an eligible deferred
compensation plan (as defined in section 457(b)), received by the
individual during the testing period which is includible in gross
income, and
"(ii) any distribution from a Roth IRA or a Roth account
received by the individual during the testing period which is not
a qualified rollover contribution (as defined in section 408A(e))
to a Roth IRA or a rollover under section 402(c)(8)(B) to a Roth
account."
Subsecs. (g), (h). Pub. L. 107-147, Sec. 417(1), redesignated
subsec. (g), relating to termination, as (h).
2001 - Subsec. (g). Pub. L. 107-16, Secs. 618(b)(1), 901,
temporarily added subsec. (g) relating to limitation based on
amount of tax. See Effective and Termination Dates note below.
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title IV, Sec. 411(x), Mar. 9, 2002, 116 Stat.
53, provided that: "Except as provided in subsection (c) [amending
sections 23 and 137 of this title and enacting provisions set out
as a note under section 23 of this title], the amendments made by
this section [amending this section, sections 23, 24, 38, 45E, 45F,
63, 137, 401 to 404, 408, 409, 412, 414 to 417, 457, 530, 2016,
2101, 2511, 4980F, and 6428 of this title, sections 1003, 1054,
1055, 1082, and 1104 of Title 29, Labor, and provisions set out as
notes under sections 38, 415, and 4980F of this title] shall take
effect as if included in the provisions of the Economic Growth and
Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16] to which
they relate."
EFFECTIVE AND TERMINATION DATES
Amendment by section 618(b)(1) of Pub. L. 107-16 inapplicable to
taxable years beginning during 2002 and 2003, see section 601(b)(2)
of Pub. L. 107-147, set out as an Effective and Termination Dates
of 2001 Amendment note under section 23 of this title.
Amendment by section 618(b)(1) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 618(d) of
Pub. L. 107-16, set out as an Effective and Termination Dates of
2001 Amendment note under section 24 of this title.
Section inapplicable to taxable, plan, or limitation years
beginning after Dec. 31, 2010, and the Internal Revenue Code of
1986 to be applied and administered to such years as if it had
never been enacted, see section 901 of Pub. L. 107-16, set out as
an Effective and Termination Dates of 2001 Amendment note under
section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 24, 25, 26, 904, 1400C of
this title.
-End-
-CITE-
26 USC Sec. 26 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart A - Nonrefundable Personal Credits
-HEAD-
Sec. 26. Limitation based on tax liability; definition of tax
liability
-STATUTE-
(a) Limitation based on amount of tax
(1) In general
The aggregate amount of credits allowed by this subpart (other
than sections 23, 24, and 25B) for the taxable year shall not
exceed the excess (if any) of -
(A) the taxpayer's regular tax liability for the taxable
year, over
(B) the tentative minimum tax for the taxable year
(determined without regard to the alternative minimum tax
foreign tax credit).
For purposes of subparagraph (B), the taxpayer's tentative
minimum tax for any taxable year beginning during 1999 shall be
treated as being zero.
(2) Special rule for 2000, 2001, 2002, and 2003
For purposes of any taxable year beginning during 2000, 2001,
2002, or 2003, the aggregate amount of credits allowed by this
subpart for the taxable year shall not exceed the sum of -
(A) the taxpayer's regular tax liability for the taxable year
reduced by the foreign tax credit allowable under section
27(a), and
(B) the tax imposed by section 55(a) for the taxable year.
(b) Regular tax liability
For purposes of this part -
(1) In general
The term "regular tax liability" means the tax imposed by this
chapter for the taxable year.
(2) Exception for certain taxes
For purposes of paragraph (1), any tax imposed by any of the
following provisions shall not be treated as tax imposed by this
chapter:
(A) section 55 (relating to minimum tax),
(B) section 59A (relating to environmental tax),
(C) subsection (m)(5)(B), (q), (t), or (v) of section 72
(relating to additional taxes on certain distributions),
(D) section 143(m) (relating to recapture of proration of
Federal subsidy from use of mortgage bonds and mortgage credit
certificates),
(E) section 530(d)(3) (relating to additional tax on certain
distributions from Coverdell education savings accounts),
(F) section 531 (relating to accumulated earnings tax),
(G) section 541 (relating to personal holding company tax),
(H) section 1351(d)(1) (relating to recoveries of foreign
expropriation losses),
(I) section 1374 (relating to tax on certain built-in gains
of S corporations),
(J) section 1375 (relating to tax imposed when passive
investment income of corporation having subchapter C earnings
and profits exceeds 25 percent of gross receipts),
(K) subparagraph (A) of section 7518(g)(6) (relating to
nonqualified withdrawals from capital construction funds taxed
at highest marginal rate),
(L) sections 871(a) and 881 (relating to certain income of
nonresident aliens and foreign corporations),
(M) section 860E(e) (relating to taxes with respect to
certain residual interests),
(N) section 884 (relating to branch profits tax),
(O) sections 453(l)(3) and 453A(c) (relating to interest on
certain deferred tax liabilities),
(P) section 860K (relating to treatment of transfers of
high-yield interests to disqualified holders),
(Q) section 220(f)(4) (relating to additional tax on Archer
MSA distributions not used for qualified medical expenses), and
(R) section 138(c)(2) (relating to penalty for distributions
from Medicare+Choice (!1) MSA not used for qualified medical
expenses if minimum balance not maintained).
(c) Tentative minimum tax
For purposes of this part, the term "tentative minimum tax" means
the amount determined under section 55(b)(1).
-SOURCE-
(Added Sec. 25, renumbered Sec. 26, Pub. L. 98-369, div. A, title
IV, Sec. 472, title VI, Sec. 612(a), July 18, 1984, 98 Stat. 827,
905; amended Pub. L. 99-499, title V, Sec. 516(b)(1)(A), Oct. 17,
1986, 100 Stat. 1770; Pub. L. 99-514, title II, Sec. 261(c), title
VI, Sec. 632(c)(1), title VII, Sec. 701(c)(1), Oct. 22, 1986, 100
Stat. 2214, 2277, 2340; Pub. L. 100-647, title I, Secs.
1006(t)(16)(C), 1007(g)(1), 1011A(c)(10), 1012(q)(8), title IV,
Sec. 4005(g)(4), title V, Sec. 5012(b)(2), Nov. 10, 1988, 102 Stat.
3425, 3434, 3476, 3524, 3650, 3662; Pub. L. 101-239, title VII,
Secs. 7811(c)(1), (2), 7821(a)(4)(A), Dec. 19, 1989, 103 Stat.
2406, 2407, 2424; Pub. L. 104-188, title I, Sec. 1621(b)(1), Aug.
20, 1996, 110 Stat. 1866; Pub. L. 105-34, title II, Sec. 213(e)(1),
title XVI, Sec. 1602(a)(1), Aug. 5, 1997, 111 Stat. 817, 1093; Pub.
L. 105-277, div. J, title II, Sec. 2001(a), Oct. 21, 1998, 112
Stat. 2681-901; Pub. L. 106-170, title V, Sec. 501(a), Dec. 17,
1999, 113 Stat. 1918; Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec.
202(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-628; Pub. L.
107-16, title II, Secs. 201(b)(2)(D), 202(f)(2)(C), title VI, Sec.
618(b)(2)(C), June 7, 2001, 115 Stat. 46, 49, 108; Pub. L. 107-22,
Sec. 1(b)(2)(A), July 26, 2001, 115 Stat. 197; Pub. L. 107-147,
title IV, Secs. 415(a), 417(23)(B), title VI, Sec. 601(a), Mar. 9,
2002, 116 Stat. 54, 57, 59.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2002 - Subsec. (a)(1). Pub. L. 107-147, Sec. 417(23)(B), amended
directory language of Pub. L. 107-16, Sec. 618(b)(2)(C). See 2001
Amendment note below.
Subsec. (a)(2). Pub. L. 107-147, Sec. 601(a), substituted "rule
for 2000, 2001, 2002, and 2003" for "rule for 2000 and 2001" in
heading and "during 2000, 2001, 2002, or 2003," for "during 2000 or
2001," in introductory provisions.
Subsec. (b)(2)(P), (Q). Pub. L. 107-147, Sec. 415(a), which
directed striking "and" at end of subpar. (P) and substituting ",
and" for the period at the end of subpar. (Q), was executed to
subpars. (P) and (Q) as redesignated by Pub. L. 105-34, Sec.
213(e)(1), to reflect the probable intent of Congress. See 1997
Amendment notes below.
Subsec. (b)(2)(R). Pub. L. 107-147, Sec. 415(a), added subpar.
(R).
2001 - Subsec. (a)(1). Pub. L. 107-16, Secs. 618(b)(2)(C), 901,
as amended by Pub. L. 107-147, Sec. 417(23)(B), temporarily
substituted ", 24, and 25B" for "and 24" in introductory
provisions. See Effective and Termination Dates of 2001 Amendment
note below.
Pub. L. 107-16, Secs. 202(f)(2)(C), 901, temporarily substituted
"sections 23 and 24" for "section 24" in introductory provisions.
See Effective and Termination Dates of 2001 Amendment note below.
Pub. L. 107-16, Secs. 201(b)(2)(D), 901, temporarily inserted
"(other than section 24)" after "this subpart" in introductory
provisions. See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (b)(2)(E). Pub. L. 107-22 substituted "Coverdell
education savings" for "education individual retirement".
2000 - Subsec. (b)(2)(Q). Pub. L. 106-554 substituted "Archer
MSA" for "medical savings account".
1999 - Subsec. (a). Pub. L. 106-170 reenacted subsec. heading
without change and amended text generally. Prior to amendment, text
read as follows: "The aggregate amount of credits allowed by this
subpart for the taxable year shall not exceed the excess (if any)
of -
"(1) the taxpayer's regular tax liability for the taxable year,
over
"(2) the tentative minimum tax for the taxable year (determined
without regard to the alternative minimum tax foreign tax
credit).
For purposes of paragraph (2), the taxpayer's tentative minimum tax
for any taxable year beginning during 1998 shall be treated as
being zero."
1998 - Subsec. (a). Pub. L. 105-277 inserted concluding
provisions.
1997 - Subsec. (b)(2)(E) to (O). Pub. L. 105-34, Sec. 213(e)(1),
added subpar. (E) and redesignated former subpars. (E) to (N) as
(F) to (O), respectively. Former subpar. (O) redesignated (P).
Subsec. (b)(2)(P). Pub. L. 105-34, Sec. 213(e)(1), redesignated
subpar. (P) as (Q).
Pub. L. 105-34, Sec. 1602(a)(1), added subpar. (P).
Subsec. (b)(2)(Q). Pub. L. 105-34, Sec. 213(e)(1), redesignated
subpar. (P) as (Q).
1996 - Subsec. (b)(2)(O). Pub. L. 104-188 added subpar. (O).
1989 - Subsec. (b)(2)(C), (D). Pub. L. 101-239, Sec. 7811(c)(1),
amended subpars. (C) and (D) generally. Prior to amendment,
subpars. (C) and (D) read as follows:
"(C) subsection (m)(5)(B) (q), or (v) of section 72 (relating to
additional tax on certain distributions),
"(D) section 72(t) (relating to 10-percent additional tax on
early distributions from qualified retirement plans),".
Subsec. (b)(2)(K). Pub. L. 101-239, Sec. 7811(c)(2), added
subpar. (K) and struck out former subpar. (K) which was identical.
Subsec. (b)(2)(L), (M). Pub. L. 101-239, Sec. 7811(c)(2), added
subpars. (L) and (M) and struck out former subpars. (L) and (M)
which read as follows:
"(L) section 860E(e) (relating to taxes with respect to certain
residual interests), and
"(L) section 884 (relating to branch profits tax), and
"(M) section 143(m) (relating to recapture of portion of federal
subsidy from use of mortgage bonds and mortgage credit
certificates)."
Subsec. (b)(2)(N). Pub. L. 101-239, Sec. 7821(a)(4)(A), which
directed amendment of subsec. (b)(2) of this section "as amended by
section 11811" by adding subpar. (N), was executed as if it
directed amendment of subsec. (b)(2) of this section "as amended by
section 7811", to reflect the probable intent of Congress and the
renumbering of section 11811 of H.R. 3299 as section 7811 prior to
the enactment of H.R. 3299 into law as Pub. L. 101-239.
1988 - Subsec. (b)(2)(C). Pub. L. 100-647, Sec. 1011A(c)(10)(A),
struck out ", (o)(2)," after "subsection (m)(5)(B)".
Pub. L. 100-647, Sec. 5012(b)(2), substituted "(q), or (v)" for
"or (q)".
Subsec. (b)(2)(D). Pub. L. 100-647, Sec. 1011A(c)(10)(B),
substituted "72(t) (relating to 10-percent additional tax on early
distributions from qualified retirement plans)" for "408(f)
(relating to additional tax on income from certain retirement
accounts)".
Subsec. (b)(2)(K). Pub. L. 100-647, Sec. 1007(g)(1), substituted
"corporations)." for "corporations,".
Subsec. (b)(2)(L). Pub. L. 100-647, Sec. 1012(q)(8), added
subpar. (L) relating to branch profits tax.
Pub. L. 100-647, Sec. 1006(t)(16)(C), added subpar. (L) relating
to taxes with respect to certain residual interests.
Subsec. (b)(2)(M). Pub. L. 100-647, Sec. 4005(g)(4), added
subpar. (M).
1986 - Subsec. (a). Pub. L. 99-514, Sec. 701(c)(1)(A), amended
subsec. (a) generally. Prior to amendment, subsec. (a) read as
follows: "The aggregate amount of credits allowed by this subpart
for the taxable year shall not exceed the taxpayer's tax liability
for such taxable year."
Subsec. (b). Pub. L. 99-514, Sec. 701(c)(1)(B)(i), (v),
substituted "Regular tax liability" for "Tax liability" in heading
and "this part" for "this section" in introductory provisions.
Subsec. (b)(1). Pub. L. 99-514, Sec. 701(c)(1)(B)(ii),
substituted "regular tax liability" for "tax liability".
Subsec. (b)(2). Pub. L. 99-499 added subpar. (B) and redesignated
former subpars. (B) to (J) as (C) to (K), respectively.
Pub. L. 99-514, Sec. 701(c)(1)(B)(iii), substituted "section 55
(relating to minimum tax)" for "section 56 (relating to corporate
minimum tax)" in subpar. (A).
Pub. L. 99-514, Sec. 632(c)(1), substituted "certain built-in
gains" for "certain capital gains" in subpar. (G).
Pub. L. 99-514, Sec. 261(c), added subpar. (I).
Pub. L. 99-514, Sec. 701(c)(1)(B)(iv), added subpar. (J).
Subsec. (c). Pub. L. 99-514, Sec. 701(c)(1)(C), amended subsec.
(c) generally, substituting provisions relating to tentative
minimum tax for provisions referring to section 55(c) of this title
for similar rule for alternative minimum tax for taxpayers other
than corporations.
-CHANGE-
CHANGE OF NAME
References to Medicare+Choice deemed to refer to Medicare
Advantage or MA, subject to an appropriate transition provided by
the Secretary of Health and Human Services in the use of those
terms, see section 201 of Pub. L. 108-173, set out as a note under
section 1395w-21 of Title 42, The Public Health and Welfare.
-MISC2-
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title IV, Sec. 415(b), Mar. 9, 2002, 116 Stat.
54, provided that: "The amendment made by this section [amending
this section] shall take effect as if included in section 4006 of
the Balanced Budget Act of 1997 [Pub. L. 105-33]."
Pub. L. 107-147, title VI, Sec. 601(c), Mar. 9, 2002, 116 Stat.
59, provided that: "The amendments made by this section [amending
this section and section 904 of this title] shall apply to taxable
years beginning after December 31, 2001."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENTS
Amendment by Pub. L. 107-16 inapplicable to taxable years
beginning during 2002 and 2003, see section 601(b)(2) of Pub. L.
107-147, set out as a note under section 23 of this title.
Pub. L. 107-22, Sec. 1(c), July 26, 2001, 115 Stat. 197, provided
that: "The amendments made by this section [amending this section
and sections 72, 135, 529, 530, 4973, 4975, and 6693 of this title]
shall take effect on the date of the enactment of this Act [July
26, 2001]."
Amendment by section 201(b)(2)(D) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 201(e)(2)
of Pub. L. 107-16, set out as a note under section 24 of this
title.
Amendment by section 202(f)(2)(C) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 202(g)(1)
of Pub. L. 107-16, set out as a note under section 23 of this
title.
Amendment by section 618(b)(2)(C) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2001, see section 618(d) of
Pub. L. 107-16, set out as a note under section 24 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106-170 applicable to taxable years
beginning after Dec. 31, 1998, see section 501(c) of Pub. L.
106-170, set out as a note under section 24 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-277 applicable to taxable years
beginning after Dec. 31, 1997, see section 2001(c) of Pub. L.
105-277, set out as a note under section 24 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 213(f) of Pub. L. 105-34 provided that: "The amendments
made by this section [enacting section 530 of this title and
amending this section and sections 135, 4973, 4975, and 6693 of
this title] shall apply to taxable years beginning after December
31, 1997."
Section 1602(i) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section and sections 162, 220,
264, 877, 2107, 2501, 4975, 6050Q, 6652, 6693, 6724, and 7702B of
this title, renumbering section 6039F of this title as section
6039G of this title, and amending provisions set out as a note
under section 264 of this title] shall take effect as if included
in the provisions of the Health Insurance Portability and
Accountability Act of 1996 [Pub. L. 104-191] to which such
amendments relate."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1621(d) of Pub. L. 104-188 provided that: "The amendments
made by this section [enacting sections 860H to 860L of this title
and amending this section and sections 56, 382, 582, 856, 860G,
1202, and 7701 of this title] shall take effect on September 1,
1997."
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7811(c)(1), (2) of Pub. L. 101-239
effective, except as otherwise provided, as if included in the
provision of the Technical and Miscellaneous Revenue Act of 1988,
Pub. L. 100-647, to which such amendment relates, see section 7817
of Pub. L. 101-239, set out as a note under section 1 of this
title.
Section 7823 of Pub. L. 101-239 provided that: "Except as
otherwise provided in this part [part II (Secs. 7821-7823) of
subtitle H of title VII of Pub. L. 101-239, amending this section
and sections 453A, 842, 1503, 6427, 6655, 6863, 7519, 7611, 9502,
9503, and 9508 of this title and enacting provisions set out as
notes under sections 56 and 7519 of this title], any amendment made
by this part shall take effect as if included in the provision of
the 1987 Act [Pub. L. 100-203, title X] to which such amendment
relates."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1006(t)(16)(C) of Pub. L. 100-647
applicable, with certain exceptions, to transfers after Mar. 31,
1988, and to excess inclusions for periods after Mar. 31, 1988, see
section 1006(t)(16)(D)(ii)-(iv) of Pub. L. 100-647, set out as a
note under section 860E of this title.
Amendment by sections 1007(g)(1), 1011A(c)(10), and 1012(q)(8) of
Pub. L. 100-647 effective, except as otherwise provided, as if
included in the provision of the Tax Reform Act of 1986, Pub. L.
99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by section 4005(g)(4) of Pub. L. 100-647 applicable,
with certain exceptions, to financing provided, and mortgage credit
certificates issued, after Dec. 31, 1990, see section 4005(h)(3) of
Pub. L. 100-647, set out as a note under section 143 of this title.
Amendment by section 5012(b)(2) of Pub. L. 100-647 applicable to
contracts entered into on or after June 21, 1988, with special rule
where death benefit increases by more than $150,000, certain other
material changes taken into account, and certain exchanges
permitted, see section 5012(e) of Pub. L. 100-647, set out as an
Effective Date note under section 7702A of this title.
EFFECTIVE DATE OF 1986 AMENDMENTS
Amendment by section 261(c) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 261(g) of
Pub. L. 99-514, set out as an Effective Date note under section
7518 of this title.
Amendment by section 632(c)(1) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, but only in cases
where the return for the taxable year is filed pursuant to an S
election made after Dec. 31, 1986, see section 633(b) of Pub. L.
99-514, as amended, set out as an Effective Date note under section
336 of this title.
Amendment by section 632(c)(1) of Pub. L. 99-514 not applicable
in the case of certain transactions, see section 54(d)(3)(D) of
Pub. L. 98-369, as amended, set out as an Effective Date of 1984
Amendment note under section 311 of this title.
Amendment by section 701(c)(1) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
Section 516(c) of Pub. L. 99-499 provided that: "The amendments
made by this section [enacting section 59A of this title and
amending this section and sections 164, 275, 936, 1561, 6154, 6425,
and 6655 of this title] shall apply to taxable years beginning
after December 31, 1986."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1983, and to carrybacks from such years, see section 475(a) of Pub.
L. 98-369, set out as an Effective Date of 1984 Amendment note
under section 21 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN
RELATION TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(c)(1) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had
been included in the provision of Pub. L. 99-514 to which such
amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,
set out as a note under section 861 of this title.
TREATMENT OF TAX IMPOSED UNDER FORMER SECTION 409(C)
Section 491(f)(5) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "For
purposes of section 26(b) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] (as amended by this Act), any tax imposed by
section 409(c) of such Code (as in effect before its repeal by this
section) shall be treated as a tax imposed by section 408(f) of
such Code."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 24, 25, 25B, 39, 55, 163,
469, 901, 1397E, 1400C, 6428, 6429 of this title.
-FOOTNOTE-
(!1) See Change of Name note below.
-End-
-CITE-
26 USC Subpart B - Other Credits 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart B - Other Credits
-HEAD-
SUBPART B - OTHER CREDITS
-MISC1-
Sec.
27. Taxes of foreign countries and possessions of the
United States; possession tax credit.
[28. Renumbered.]
29. Credit for producing fuel from a nonconventional
source.
30. Credit for qualified electric vehicles.
30A. Puerto Rico economic activity credit.
AMENDMENTS
1997 - Pub. L. 105-34, title XVI, Sec. 1601(f)(1)(B), Aug. 5,
1997, 111 Stat. 1090, substituted "Puerto Rico" for "Puerto Rican"
in item 30A.
1996 - Pub. L. 104-188, title I, Secs. 1205(a)(3)(A),
1601(b)(2)(E), (F)(i), Aug. 20, 1996, 110 Stat. 1775, 1833,
substituted "Other Credits" for "Foreign Tax Credits, Etc." in
subpart heading, struck out item 28 "Clinical testing expenses for
certain drugs for rare diseases or conditions", and added item 30A.
1992 - Pub. L. 102-486, title XIX, Sec. 1913(b)(2)(A), Oct. 24,
1992, 106 Stat. 3020, added item 30.
1986 - Pub. L. 99-514, title II, Sec. 231(d)(3)(J), Oct. 22,
1986, 100 Stat. 2180, struck out item 30 "Credit for increasing
research activities".
1984 - Pub. L. 98-369, div. A, title IV, Sec. 471(b), July 18,
1984, 98 Stat. 826, added subpart B heading and analysis of
sections for subpart B consisting of items 27 (formerly 33), 28
(formerly 44H), 29 (formerly 44D), and 30 (formerly 44F). Former
subpart B was redesignated E.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 38, 53, 469, 6401 of this
title.
-End-
-CITE-
26 USC Sec. 27 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart B - Other Credits
-HEAD-
Sec. 27. Taxes of foreign countries and possessions of the United
States; possession tax credit
-STATUTE-
(a) Foreign tax credit
The amount of taxes imposed by foreign countries and possessions
of the United States shall be allowed as a credit against the tax
imposed by this chapter to the extent provided in section 901.
(b) Section 936 credit
In the case of a domestic corporation, the amount provided by
section 936 (relating to Puerto Rico and possession tax credit)
shall be allowed as a credit against the tax imposed by this
chapter.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 13, Sec. 33; Pub. L. 94-455,
title X, Sec. 1051(a), Oct. 4, 1976, 90 Stat. 1643; renumbered Sec.
27, Pub. L. 98-369, div. A, title IV, Sec. 471(c), July 18, 1984,
98 Stat. 826.)
-MISC1-
AMENDMENTS
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 33 of this
title as this section.
1976 - Pub. L. 94-455 designated existing provisions as subsec.
(a) and added subsec. (b).
EFFECTIVE DATE OF 1976 AMENDMENT
Section 1051(i) of Pub. L. 94-455, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) Except as provided by paragraph (2), the amendments made by
this section [enacting section 936 of this title and amending
sections 33 [now 27], 48, 116, 243, 246, 861, 901, 904, 931, 1504,
and 6091 of this title] shall apply to taxable years beginning
after December 31, 1975, except that 'qualified possession source
investment income' as defined in section 936(d)(2) of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954] shall include income
from any source outside the United States if the taxpayer
establishes to the satisfaction of the Secretary of the Treasury or
his delegate that the income from such sources was earned before
October 1, 1976.
"(2) The amendment made by subsection (d)(2) [amending section
901 of this title] shall not apply to any tax imposed by a
possession of the United States with respect to the complete
liquidation occurring before January 1, 1979, of a corporation to
the extent that such tax is attributable to earnings and profits
accumulated by such corporation during periods ending before
January 1, 1976."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 23, 24, 25B, 26, 29, 30,
55, 59, 108, 469, 691, 1351 of this title.
-End-
-CITE-
26 USC Sec. 28 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart B - Other Credits
-HEAD-
[Sec. 28. Renumbered Sec. 45C]
-STATUTE-
-End-
-CITE-
26 USC Sec. 29 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart B - Other Credits
-HEAD-
Sec. 29. Credit for producing fuel from a nonconventional source
-STATUTE-
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to -
(1) $3, multiplied by
(2) the barrel-of-oil equivalent of qualified fuels -
(A) sold by the taxpayer to an unrelated person during the
taxable year, and
(B) the production of which is attributable to the taxpayer.
(b) Limitations and adjustments
(1) Phaseout of credit
The amount of the credit allowable under subsection (a) shall
be reduced by an amount which bears the same ratio to the amount
of the credit (determined without regard to this paragraph) as -
(A) the amount by which the reference price for the calendar
year in which the sale occurs exceeds $23.50, bears to
(B) $6.
(2) Credit and phaseout adjustment based on inflation
The $3 amount in subsection (a) and the $23.50 and $6 amounts
in paragraph (1) shall each be adjusted by multiplying such
amount by the inflation adjustment factor for the calendar year
in which the sale occurs. In the case of gas from a tight
formation, the $3 amount in subsection (a) shall not be adjusted.
(3) Credit reduced for grants, tax-exempt bonds, and subsidized
energy financing
(A) In general
The amount of the credit allowable under subsection (a) with
respect to any project for any taxable year (determined after
the application of paragraphs (1) and (2)) shall be reduced by
the amount which is the product of the amount so determined for
such year and a fraction -
(i) the numerator of which is the sum, for the taxable year
and all prior taxable years, of -
(I) grants provided by the United States, a State, or a
political subdivision of a State for use in connection with
the project,
(II) proceeds of any issue of State or local government
obligations used to provide financing for the project the
interest on which is exempt from tax under section 103, and
(III) the aggregate amount of subsidized energy financing
(within the meaning of section 48(a)(4)(C)) provided in
connection with the project, and
(ii) the denominator of which is the aggregate amount of
additions to the capital account for the project for the
taxable year and all prior taxable years.
(B) Amounts determined at close of year
The amounts under subparagraph (A) for any taxable year shall
be determined as of the close of the taxable year.
(4) Credit reduced for energy credit
The amount allowable as a credit under subsection (a) with
respect to any project for any taxable year (determined after the
application of paragraphs (1), (2), and (3)) shall be reduced by
the excess of -
(A) the aggregate amount allowed under section 38 for the
taxable year or any prior taxable year by reason of the energy
percentage with respect to property used in the project, over
(B) the aggregate amount recaptured with respect to the
amount described in subparagraph (A) -
(i) under section 49(b) or 50(a) for the taxable year or
any prior taxable year, or
(ii) under this paragraph for any prior taxable year.
The amount recaptured under section 49(b) or 50(a) with respect
to any property shall be appropriately reduced to take into
account any reduction in the credit allowed by this section by
reason of the preceding sentence.
(5) Credit reduced for enhanced oil recovery credit
The amount allowable as a credit under subsection (a) with
respect to any project for any taxable year (determined after
application of paragraphs (1), (2), (3), and (4)) shall be
reduced by the excess (if any) of -
(A) the aggregate amount allowed under section 38 for the
taxable year and any prior taxable year by reason of any
enhanced oil recovery credit determined under section 43 with
respect to such project, over
(B) the aggregate amount recaptured with respect to the
amount described in subparagraph (A) under this paragraph for
any prior taxable year.
(6) Application with other credits
The credit allowed by subsection (a) for any taxable year shall
not exceed the excess (if any) of -
(A) the regular tax for the taxable year reduced by the sum
of the credits allowable under subpart A and section 27, over
(B) the tentative minimum tax for the taxable year.
(c) Definition of qualified fuels
For purposes of this section -
(1) In general
The term "qualified fuels" means -
(A) oil produced from shale and tar sands,
(B) gas produced from -
(i) geopressured brine, Devonian shale, coal seams, or a
tight formation, or
(ii) biomass, and
(C) liquid, gaseous, or solid synthetic fuels produced from
coal (including lignite), including such fuels when used as
feedstocks.
(2) Gas from geopressured brine, etc.
(A) In general
Except as provided in subparagraph (B), the determination of
whether any gas is produced from geopressured brine, Devonian
shale, coal seams, or a tight formation shall be made in
accordance with section 503 of the Natural Gas Policy Act of
1978.
(B) Special rules for gas from tight formations
The term "gas produced from a tight formation" shall only
include gas from a tight formation -
(i) which, as of April 20, 1977, was committed or dedicated
to interstate commerce (as defined in section 2(18) of the
Natural Gas Policy Act of 1978, as in effect on the date of
the enactment of this clause), or
(ii) which is produced from a well drilled after such date
of enactment.
(3) Biomass
The term "biomass" means any organic material other than -
(A) oil and natural gas (or any product thereof), and
(B) coal (including lignite) or any product thereof.
(d) Other definitions and special rules
For purposes of this section -
(1) Only production within the United States taken into account
Sales shall be taken into account under this section only with
respect to qualified fuels the production of which is within -
(A) the United States (within the meaning of section 638(1)),
or
(B) a possession of the United States (within the meaning of
section 638(2)).
(2) Computation of inflation adjustment factor and reference
price
(A) In general
The Secretary shall, not later than April 1 of each calendar
year, determine and publish in the Federal Register the
inflation adjustment factor and the reference price for the
preceding calendar year in accordance with this paragraph.
(B) Inflation adjustment factor
The term "inflation adjustment factor" means, with respect to
a calendar year, a fraction the numerator of which is the GNP
implicit price deflator for the calendar year and the
denominator of which is the GNP implicit price deflator for
calendar year 1979. The term "GNP implicit price deflator"
means the first revision of the implicit price deflator for the
gross national product as computed and published by the
Department of Commerce.
(C) Reference price
The term "reference price" means with respect to a calendar
year the Secretary's estimate of the annual average wellhead
price per barrel for all domestic crude oil the price of which
is not subject to regulation by the United States.
(3) Production attributable to the taxpayer
In the case of a property or facility in which more than 1
person has an interest, except to the extent provided in
regulations prescribed by the Secretary, production from the
property or facility (as the case may be) shall be allocated
among such persons in proportion to their respective interests in
the gross sales from such property or facility.
(4) Gas from geopressured brine, Devonian shale, coal seams, or a
tight formation
The amount of the credit allowable under subsection (a) shall
be determined without regard to any production attributable to a
property from which gas from Devonian shale, coal seams,
geopressured brine, or a tight formation was produced in
marketable quantities before January 1, 1980.
(5) Barrel-of-oil equivalent
The term "barrel-of-oil equivalent" with respect to any fuel
means that amount of such fuel which has a Btu content of 5.8
million; except that in the case of qualified fuels described in
subparagraph (C) of subsection (c)(1), the Btu content shall be
determined without regard to any material from a source not
described in such subparagraph.
(6) Barrel defined
The term "barrel" means 42 United States gallons.
(7) Related persons
Persons shall be treated as related to each other if such
persons would be treated as a single employer under the
regulations prescribed under section 52(b). In the case of a
corporation which is a member of an affiliated group of
corporations filing a consolidated return, such corporation shall
be treated as selling qualified fuels to an unrelated person if
such fuels are sold to such a person by another member of such
group.
(8) Pass-thru in the case of estates and trusts
Under regulations prescribed by the Secretary, rules similar to
the rules of subsection (d) of section 52 shall apply.
(e) Application with the Natural Gas Policy Act of 1978
(1) No credit if section 107 of the Natural Gas Policy Act of
1978 is utilized
Subsection (a) shall apply with respect to any natural gas
described in subsection (c)(1)(B)(i) which is sold during the
taxable year only if such natural gas is sold at a lawful price
which is determined without regard to the provisions of section
107 of the Natural Gas Policy Act of 1978 and subtitle B of title
I of such Act.
(2) Treatment of this section
For purposes of section 107(d) of the Natural Gas Policy Act of
1978, this section shall not be treated as allowing any credit,
exemption, deduction, or comparable adjustment applicable to the
computation of any Federal tax.
(f) Application of section
This section shall apply with respect to qualified fuels -
(1) which are -
(A) produced from a well drilled after December 31, 1979, and
before January 1, 1993, or
(B) produced in a facility placed in service after December
31, 1979, and before January 1, 1993, and
(2) which are sold before January 1, 2003.
(g) Extension for certain facilities
(1) In general
In the case of a facility for producing qualified fuels
described in subparagraph (B)(ii) or (C) of subsection (c)(1) -
(A) for purposes of subsection (f)(1)(B), such facility shall
be treated as being placed in service before January 1, 1993,
if such facility is placed in service before July 1, 1998,
pursuant to a binding written contract in effect before January
1, 1997, and
(B) if such facility is originally placed in service after
December 31, 1992, paragraph (2) of subsection (f) shall be
applied with respect to such facility by substituting "January
1, 2008" for "January 1, 2003".
(2) Special rule
Paragraph (1) shall not apply to any facility which produces
coke or coke gas unless the original use of the facility
commences with the taxpayer.
-SOURCE-
(Added Pub. L. 96-223, title II, Sec. 231(a), Apr. 2, 1980, 94
Stat. 268, Sec. 44D; amended Pub. L. 97-34, title VI Sec. 611(a),
Aug. 13, 1981, 95 Stat. 339; Pub. L. 97-354, Sec. 5(a)(1), Oct. 19,
1982, 96 Stat. 1692; Pub. L. 97-448, title II, Sec. 202(a), Jan.
12, 1983, 96 Stat. 2396; renumbered Sec. 29 and amended Pub. L.
98-369, div. A, title IV, Secs. 471(c), 474(h), title VI, Sec.
612(e)(1), title VII, Sec. 722(d)(1), (2), July 18, 1984, 98 Stat.
826, 831, 912, 973; Pub. L. 99-514, title VII, Sec. 701(c)(3),
title XVIII, Sec. 1879(c)(1), Oct. 22, 1986, 100 Stat. 2340, 2906;
Pub. L. 100-647, title VI, Sec. 6302, Nov. 10, 1988, 102 Stat.
3755; Pub. L. 101-508, title XI, Secs. 11501(a), (b)(1), (c)(1),
11813(b)(1), 11816, Nov. 5, 1990, 104 Stat. 1388-479, 1388-550,
1388-558; Pub. L. 102-486, title XIX, Sec. 1918, Oct. 24, 1992, 106
Stat. 3025; Pub. L. 104-188, title I, Secs. 1205(d)(3), 1207(a),
Aug. 20, 1996, 110 Stat. 1776.)
-REFTEXT-
REFERENCES IN TEXT
The Natural Gas Policy Act of 1978, referred to in subsecs.
(c)(2)(A), (B)(i) and (e), is Pub. L. 95-621, Nov. 9, 1978, 92
Stat. 3350, as amended, which is classified generally to chapter 60
(Sec. 3301 et seq.) of Title 15, Commerce and Trade. Subtitle B of
title I of the Act, which was classified generally to part B of
subchapter I (Sec. 3331 et seq.) of chapter 60 of Title 15, was
repealed by Pub. L. 101-60, Sec. 2(b), July 26, 1989, 103 Stat.
158, effective Jan. 1, 1993. Section 2(18) of the Act is classified
to section 3301(18) of Title 15. Sections 107 and 503 of the Act,
which were classified to sections 3317 and 3413 of Title 15,
respectively, were repealed by Pub. L. 101-60, Secs. 2(b), 3(b)(5),
July 26, 1989, 103 Stat. 158, 159, effective Jan. 1, 1993. For
complete classification of this Act to the Code, see Short Title
note set out under section 3301 of Title 15 and Tables.
The date of the enactment of this clause, and such date of
enactment, referred to in subsec. (c)(2)(B), probably mean the date
of enactment of Pub. L. 101-508, which amended subsec. (c)(2)(B) of
this section generally, and which was approved Nov. 5, 1990.
-MISC1-
AMENDMENTS
1996 - Subsec. (b)(6)(A). Pub. L. 104-188, Sec. 1205(d)(3),
substituted "section 27" for "sections 27 and 28".
Subsec. (g)(1)(A). Pub. L. 104-188, Sec. 1207(a), substituted
"July 1, 1998" for "January 1, 1997" and "January 1, 1997" for
"January 1, 1996".
1992 - Subsec. (g). Pub. L. 102-486 added subsec. (g).
1990 - Subsec. (b)(3)(A)(i)(III). Pub. L. 101-508, Sec.
11813(b)(1)(A), substituted "section 48(a)(4)(C)" for "section
48(l)(11)(C)".
Subsec. (b)(4). Pub. L. 101-508, Sec. 11813(b)(1)(B), substituted
"section 49(b) or 50(a)" for "section 47" in two places.
Subsec. (b)(5), (6). Pub. L. 101-508, Sec. 11501(c)(1), added
par. (5) and redesignated former par. (5) as (6).
Subsec. (c)(1)(B) to (E). Pub. L. 101-508, Sec. 11816(a),
inserted "and" at end of subpar. (B), substituted a period for a
comma at end of subpar. (C), and struck out subpar. (D) which
related to qualifying processed wood fuels, and subpar. (E) which
related to steam produced from solid agricultural byproducts (not
including timber byproducts).
Subsec. (c)(2)(B). Pub. L. 101-508, Sec. 11501(b)(1), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: "The term 'gas produced from a tight formation' shall only
include -
"(i) gas the price of which is regulated by the United States,
and
"(ii) gas for which the maximum lawful price applicable under
the Natural Gas Policy Act of 1978 is at least 150 percent of the
then applicable price under section 103 of such Act."
Subsec. (c)(3). Pub. L. 101-508, Sec. 11813(b)(1)(C), amended
par. (3) generally. Prior to amendment, par. (3) read as follows:
"The term 'biomass' means any organic material which is an
alternate substance (as defined in section 48(l)(3)(B)) other than
coal (including lignite) or any product of such coal."
Subsec. (c)(4). Pub. L. 101-508, Sec. 11816(b)(1), struck out
par. (4) "Qualifying processed wood fuel" which read as follows:
"(A) In general. - The term 'qualifying processed wood fuel'
means any processed solid wood fuel (other than charcoal, fireplace
products, or a product used for ornamental or recreational
purposes) which has a Btu content per unit of volume or weight,
determined without regard to any nonwood elements, which is at
least 40 percent greater per unit of volume or weight than the Btu
content of the wood from which it is produced (determined
immediately before the processing).
"(B) Election. - A taxpayer shall elect, at such time and in such
manner as the Secretary by regulations may prescribe, as to whether
Btu content per unit shall be determined for purposes of this
paragraph on a volume or weight basis. Any such election -
"(i) shall apply to all production from a facility; and
"(ii) shall be effective for the taxable year with respect to
which it is made and for all subsequent taxable years and, once
made, may be revoked only with the consent of the Secretary."
Subsec. (c)(5). Pub. L. 101-508, Sec. 11816(b)(1), struck out
par. (5) "Agricultural byproduct steam" which read as follows:
"Steam produced from solid agricultural byproducts which is used by
the taxpayer in his trade or business shall be treated as having
been sold by the taxpayer to an unrelated person on the date on
which it is used."
Subsec. (d)(4). Pub. L. 101-508, Sec. 11816(b)(2), amended par.
(4) generally, striking out "Special rules applicable to" before
"Gas" in heading, redesignating former subpar. (A) as par. (4),
striking out subpar. (B) which related to the reference price and
application of phaseout for Devonian shale, and making minor
changes in phraseology.
Subsec. (d)(5), (6). Pub. L. 101-508, Sec. 11816(b)(3), (4),
redesignated par. (6) as (5), substituted "subparagraph (C)" for
"subparagraph (C), (D), or (E)", and struck out former par. (5)
which read as follows: "In the case of a facility for the
production of -
"(A) qualifying processed wood fuel,
or
"(B) steam from solid agricultural byproducts,
paragraph (1) of subsection (b) shall not apply with respect to the
amount of the credit allowable under subsection (a) for fuels sold
during the 3-year period beginning on the date the facility is
placed in service."
Subsec. (d)(7) to (9). Pub. L. 101-508, Sec. 11816(b)(3),
redesignated pars. (7) to (9) as (6) to (8), respectively.
Subsec. (f). Pub. L. 101-508, Sec. 11816(b)(5), amended subsec.
(f) generally, redesignating former par. (1) as subsec. (f), making
minor changes in phraseology, substituting par. (2) for former par.
(1)(B) which read as follows: "which are sold after December 31,
1979, and before January 1, 2003.", and striking out former par.
(2) which related to special rules applicable to qualified
processed wood and solid agricultural byproduct steam.
Subsec. (f)(1)(A)(i), (ii). Pub. L. 101-508, Sec. 11501(a)(1),
substituted "1993" for "1991".
Subsec. (f)(1)(B). Pub. L. 101-508, Sec. 11501(a)(2), substituted
"2003" for "2001".
1988 - Subsec. (f)(1)(A)(i), (ii). Pub. L. 100-647 substituted
"1991" for "1990".
1986 - Subsec. (b)(5). Pub. L. 99-514, Sec. 701(c)(3), amended
par. (5) generally. Prior to amendment, par. (5) read as follows:
"The credit allowed by subsection (a) for a taxable year shall not
exceed the taxpayer's tax liability for the taxable year (as
defined in section 26(b)), reduced by the sum of the credits
allowable under subpart A and sections 27 and 28."
Subsec. (d)(8). Pub. L. 99-514, Sec. 1879(c)(1), inserted
provision directing that a corporation which is a member of an
affiliated group of corporations filing a consolidated return shall
be treated as selling qualified fuels to an unrelated person if
such fuels are sold to such person by another member of such group.
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44D of
this title as this section.
Subsec. (b)(1)(A). Pub. L. 98-369, Sec. 722(d)(1), substituted
"in which the sale occurs" for "in which the taxable year begins".
Subsec. (b)(2). Pub. L. 98-369, Sec. 722(d)(2), substituted "in
which the sale occurs" for "in which a taxable year begins".
Subsec. (b)(5). Pub. L. 98-369, Sec. 612(e)(1), substituted
"section 26(b)" for "section 25(b)".
Pub. L. 98-369, Sec. 474(h), amended par. (5) generally,
substituting "shall not exceed the taxpayer's tax liability for the
taxable year (as defined in section 25(b)), reduced by the sum of
the credits allowable under subpart A and sections 27 and 28" for
"shall not exceed the tax imposed by this chapter for such taxable
year, reduced by the sum of the credits allowable under a section
of this subpart having a lower number or letter designation than
this section, other than the credits allowable by sections 31, 39,
and 43. For purposes of the preceding sentence, the term 'tax
imposed by this chapter' shall not include any tax treated as not
imposed by this chapter under the last sentence of section 53(a)".
1983 - Subsec. (f)(1)(B), (2)(A)(i). Pub. L. 97-448 substituted
"December 31, 1979" for "December 3, 1979".
1982 - Subsec. (d)(9). Pub. L. 97-354 substituted "Pass-thru in
the case of estates and trusts" for "Pass-through in the case of
subchapter S corporations, etc." in par. heading, and substituted
provisions relating to the applicability of rules similar to rules
of subsec. (d) of section 52 for provisions relating to the
applicability of rules similar to rules of subsecs. (d) and (e) of
section 52.
1981 - Subsec. (e). Pub. L. 97-34 substituted provisions
respecting application with the Natural Gas Policy Act of 1978 for
prior provision reading "If the taxpayer makes an election under
section 107(d) of the Natural Gas Policy Act of 1978 to have
subsections (a) and (b) of section 107 of that Act, and subtitle B
of title I of that Act, apply with respect to gas described in
subsection (c)(1)(B)(i) produced from any well on a property, then
the credit allowable by subsection (a) shall not be allowed with
respect to any gas produced on that property."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1205(e) of Pub. L. 104-188 provided that: "The amendments
made by this section [amending this section and sections 30, 38,
39, 45C, 53, 55, and 280C of this title] shall apply to amounts
paid or incurred in taxable years ending after June 30, 1996."
Section 1207(b) of Pub. L. 104-188 provided that: "The amendment
made by this section [amending this section] shall take effect on
the date of the enactment of this Act [Aug. 20, 1996]."
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11501(b)(2) of Pub. L. 101-508 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to gas produced after December 31, 1990."
Section 11501(c)(2) of Pub. L. 101-508 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to taxable years beginning after December 31, 1990."
Section 11813(c) of Pub. L. 101-508 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting section 50 of this title
and amending this section and sections 38, 42, 46 to 49, 52, 55,
108, 145, 147, 168, 170, 179, 196, 280F, 312, 465, 469, 861, 865,
1016, 1033, 1245, 1274A, 1371, 1388 and 1503 of this title] shall
apply to property placed in service after December 31, 1990.
"(2) Exceptions. - The amendments made by this section shall not
apply to -
"(A) any transition property (as defined in section 49(e) of
the Internal Revenue Code of 1986 (as in effect on the day before
the date of the enactment of this Act [Nov. 5, 1990]),
"(B) any property with respect to which qualified progress
expenditures were previously taken into account under section
46(d) of such Code (as so in effect), and
"(C) any property described in section 46(b)(2)(C) of such Code
(as so in effect)."
Section 11821(a) of Pub. L. 101-508 provided that: "Except as
otherwise provided in this part, the amendments made by this part
[part I (Secs. 11801-11821) of subtitle H of title XI of Pub. L.
101-508, see Tables for classification] shall take effect on the
date of the enactment of this Act [Nov. 5, 1990]."
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 701(c)(3) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
Section 1879(c)(2) of Pub. L. 99-514 provided that: "The
amendment made by paragraph (1) [amending this section] shall take
effect as if included in the amendments made by section 231 of
Public Law 96-223 [see Effective Date note below]."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(h) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Amendment by section 612(e)(1) of Pub. L. 98-369 applicable to
interest paid or accrued after Dec. 31, 1984, on indebtedness
incurred after Dec. 31, 1984, see section 612(g) of Pub. L. 98-369,
set out as an Effective Date note under section 25 of this title.
Section 722(d)(3) of Pub. L. 98-369 provided that: "The
amendments made by this subsection [amending this section] shall
apply to taxable years ending after December 31, 1979."
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the Crude
Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223 to which such
amendment relates, see section 203(a) of Pub. L. 97-448, set out as
a note under section 6652 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 611(b) of Pub. L. 97-34 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years ending after December 31, 1979."
EFFECTIVE DATE
Section 231(c) of Pub. L. 96-223 provided that: "The amendments
made by this section [enacting this section and amending section
6096 of this title] shall apply to taxable years ending after
December 31, 1979."
SAVINGS PROVISION
Section 11821(b) of Pub. L. 101-508 provided that: "If -
"(1) any provision amended or repealed by this part [part I
(Secs. 11801-11821) of subtitle H of title XI of Pub. L. 101-508,
see Tables for classification] applied to -
"(A) any transaction occurring before the date of the
enactment of this Act [Nov. 5, 1990],
"(B) any property acquired before such date of enactment, or
"(C) any item of income, loss, deduction, or credit taken
into account before such date of enactment, and
"(2) the treatment of such transaction, property, or item under
such provision would (without regard to the amendments made by
this part) affect liability for tax for periods ending after such
date of enactment,
nothing in the amendments made by this part shall be construed to
affect the treatment of such transaction, property, or item for
purposes of determining liability for tax for periods ending after
such date of enactment."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(c)(3) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had
been included in the provision of Pub. L. 99-514 to which such
amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,
set out as a note under section 861 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 30, 43, 53, 55, 613A, 772
of this title; title 42 section 13317.
-End-
-CITE-
26 USC Sec. 30 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart B - Other Credits
-HEAD-
Sec. 30. Credit for qualified electric vehicles
-STATUTE-
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to 10 percent of
the cost of any qualified electric vehicle placed in service by the
taxpayer during the taxable year.
(b) Limitations
(1) Limitation per vehicle
The amount of the credit allowed under subsection (a) for any
vehicle shall not exceed $4,000.
(2) Phaseout
In the case of any qualified electric vehicle placed in service
after December 31, 2003, the credit otherwise allowable under
subsection (a) (determined after the application of paragraph
(1)) shall be reduced by -
(A) 25 percent in the case of property placed in service in
calendar year 2004,
(B) 50 percent in the case of property placed in service in
calendar year 2005, and
(C) 75 percent in the case of property placed in service in
calendar year 2006.
(3) Application with other credits
The credit allowed by subsection (a) for any taxable year shall
not exceed the excess (if any) of -
(A) the regular tax for the taxable year reduced by the sum
of the credits allowable under subpart A and sections 27 and
29, over -
(B) the tentative minimum tax for the taxable year.
(c) Qualified electric vehicle
For purposes of this section -
(1) In general
The term "qualified electric vehicle" means any motor vehicle -
(A) which is powered primarily by an electric motor drawing
current from rechargeable batteries, fuel cells, or other
portable sources of electrical current,
(B) the original use of which commences with the taxpayer,
and
(C) which is acquired for use by the taxpayer and not for
resale.
(2) Motor vehicle
For purposes of paragraph (1), the term "motor vehicle" means
any vehicle which is manufactured primarily for use on public
streets, roads, and highways (not including a vehicle operated
exclusively on a rail or rails) and which has at least 4 wheels.
(d) Special rules
(1) Basis reduction
The basis of any property for which a credit is allowable under
subsection (a) shall be reduced by the amount of such credit
(determined without regard to subsection (b)(3)).
(2) Recapture
The Secretary shall, by regulations, provide for recapturing
the benefit of any credit allowable under subsection (a) with
respect to any property which ceases to be property eligible for
such credit.
(3) Property used outside United States, etc., not qualified
No credit shall be allowed under subsection (a) with respect to
any property referred to in section 50(b) or with respect to the
portion of the cost of any property taken into account under
section 179.
(4) Election to not take credit
No credit shall be allowed under subsection (a) for any vehicle
if the taxpayer elects to not have this section apply to such
vehicle.
(e) Termination
This section shall not apply to any property placed in service
after December 31, 2006.
-SOURCE-
(Added Pub. L. 102-486, title XIX, Sec. 1913(b)(1), Oct. 24, 1992,
106 Stat. 3019; amended Pub. L. 104-188, title I, Secs. 1205(d)(4),
1704(j)(4)(A), Aug. 20, 1996, 110 Stat. 1776, 1881; Pub. L.
107-147, title VI, Sec. 602(a), Mar. 9, 2002, 116 Stat. 59.)
-MISC1-
PRIOR PROVISIONS
A prior section 30 was renumbered section 41 of this title.
AMENDMENTS
2002 - Subsec. (b)(2). Pub. L. 107-147, Sec. 602(a)(1)(A),
substituted "December 31, 2003," for "December 31, 2001," in
introductory provisions.
Subsec. (b)(2)(A). Pub. L. 107-147, Sec. 602(a)(1)(B),
substituted "2004" for "2002".
Subsec. (b)(2)(B). Pub. L. 107-147, Sec. 602(a)(1)(B),
substituted "2005" for "2003".
Subsec. (b)(2)(C). Pub. L. 107-147, Sec. 602(a)(1)(B),
substituted "2006" for "2004".
Subsec. (e). Pub. L. 107-147, Sec. 602(a)(2), substituted
"December 31, 2006" for "December 31, 2004".
1996 - Subsec. (b)(3)(A). Pub. L. 104-188, Sec. 1205(d)(4),
substituted "sections 27 and 29" for "sections 27, 28, and 29".
Subsec. (d)(1). Pub. L. 104-188, Sec. 1704(j)(4)(A)(i), inserted
"(determined without regard to subsection (b)(3))" before period at
end.
Subsec. (d)(4). Pub. L. 104-188, Sec. 1704(j)(4)(A)(ii), added
par. (4).
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title VI, Sec. 602(c), Mar. 9, 2002, 116 Stat.
59, provided that: "The amendments made by this section [amending
this section, section 280F of this title, and provisions set out as
a note under section 280F of this title] shall apply to property
placed in service after December 31, 2001."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1205(d)(4) of Pub. L. 104-188 applicable to
amounts paid or incurred in taxable years ending after June 30,
1996, see section 1205(e) of Pub. L. 104-188, set out as a note
under section 29 of this title.
EFFECTIVE DATE
Section 1913(c) of Pub. L. 102-486 provided that: "The amendments
made by this section [enacting this section and 179A of this title
and amending sections 53, 55, 62, and 1016 of this title] shall
apply to property placed in service after June 30, 1993."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 53, 55, 179A, 1016, 6501
of this title.
-End-
-CITE-
26 USC Sec. 30A 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart B - Other Credits
-HEAD-
Sec. 30A. Puerto Rico economic activity credit
-STATUTE-
(a) Allowance of credit
(1) In general
Except as otherwise provided in this section, if the conditions
of both paragraph (1) and paragraph (2) of subsection (b) are
satisfied with respect to a qualified domestic corporation, there
shall be allowed as a credit against the tax imposed by this
chapter an amount equal to the portion of the tax which is
attributable to the taxable income, from sources without the
United States, from -
(A) the active conduct of a trade or business within Puerto
Rico, or
(B) the sale or exchange of substantially all of the assets
used by the taxpayer in the active conduct of such trade or
business.
In the case of any taxable year beginning after December 31,
2001, the aggregate amount of taxable income taken into account
under the preceding sentence (and in applying subsection (d))
shall not exceed the adjusted base period income of such
corporation, as determined in the same manner as under section
936(j).
(2) Qualified domestic corporation
For purposes of paragraph (1), the term "qualified domestic
corporation" means a domestic corporation -
(A) which is an existing credit claimant with respect to
Puerto Rico, and
(B) with respect to which section 936(a)(4)(B) does not apply
for the taxable year.
(3) Separate application
For purposes of determining -
(A) whether a taxpayer is an existing credit claimant with
respect to Puerto Rico, and
(B) the amount of the credit allowed under this section,
this section (and so much of section 936 as relates to this
section) shall be applied separately with respect to Puerto Rico.
(b) Conditions which must be satisfied
The conditions referred to in subsection (a) are -
(1) 3-year period
If 80 percent or more of the gross income of the qualified
domestic corporation for the 3-year period immediately preceding
the close of the taxable year (or for such part of such period
immediately preceding the close of such taxable year as may be
applicable) was derived from sources within a possession
(determined without regard to section 904(f)).
(2) Trade or business
If 75 percent or more of the gross income of the qualified
domestic corporation for such period or such part thereof was
derived from the active conduct of a trade or business within a
possession.
(c) Credit not allowed against certain taxes
The credit provided by subsection (a) shall not be allowed
against the tax imposed by -
(1) section 59A (relating to environmental tax),
(2) section 531 (relating to the tax on accumulated earnings),
(3) section 541 (relating to personal holding company tax), or
(4) section 1351 (relating to recoveries of foreign
expropriation losses).
(d) Limitations on credit for active business income
The amount of the credit determined under subsection (a) for any
taxable year shall not exceed the sum of the following amounts:
(1) 60 percent of the sum of -
(A) the aggregate amount of the qualified domestic
corporation's qualified possession wages for such taxable year,
plus
(B) the allocable employee fringe benefit expenses of the
qualified domestic corporation for such taxable year.
(2) The sum of -
(A) 15 percent of the depreciation allowances for the taxable
year with respect to short-life qualified tangible property,
(B) 40 percent of the depreciation allowances for the taxable
year with respect to medium-life qualified tangible property,
and
(C) 65 percent of the depreciation allowances for the taxable
year with respect to long-life qualified tangible property.
(3) If the qualified domestic corporation does not have an
election to use the method described in section 936(h)(5)(C)(ii)
(relating to profit split) in effect for the taxable year, the
amount of the qualified possession income taxes for the taxable
year allocable to nonsheltered income.
(e) Administrative provisions
For purposes of this title -
(1) the provisions of section 936 (including any applicable
election thereunder) shall apply in the same manner as if the
credit under this section were a credit under section
936(a)(1)(A) for a domestic corporation to which section
936(a)(4)(A) applies,
(2) the credit under this section shall be treated in the same
manner as the credit under section 936, and
(3) a corporation to which this section applies shall be
treated in the same manner as if it were a corporation electing
the application of section 936.
(f) Denial of double benefit
Any wages or other expenses taken into account in determining the
credit under this section may not be taken into account in
determining the credit under section 41.
(g) Definitions
For purposes of this section, any term used in this section which
is also used in section 936 shall have the same meaning given such
term by section 936.
(h) Application of section
This section shall apply to taxable years beginning after
December 31, 1995, and before January 1, 2006.
-SOURCE-
(Added Pub. L. 104-188, title I, Sec. 1601(b)(1), Aug. 20, 1996,
110 Stat. 1830; amended Pub. L. 105-34, title XVI, Sec.
1601(f)(1)(A), Aug. 5, 1997, 111 Stat. 1090; Pub. L. 106-554, Sec.
1(a)(7) [title III, Sec. 311(a)(2)], Dec. 21, 2000, 114 Stat. 2763,
2763A-640.)
-MISC1-
AMENDMENTS
2000 - Subsecs. (f) to (h). Pub. L. 106-554 added subsec. (f) and
redesignated former subsecs. (f) and (g) as (g) and (h),
respectively.
1997 - Pub. L. 105-34 substituted "Puerto Rico" for "Puerto
Rican" in section catchline.
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 311(d)], Dec. 21,
2000, 114 Stat. 2763, 2763A-640, provided that: "Subsection (c)
[not classified to the Code] and the amendments made by this
section [amending this section and sections 280C and 857 of this
title] shall take effect as if included in the provisions of the
Ticket to Work and Work Incentives Improvement Act of 1999 [Pub. L.
106-170, see Tables for classification] to which they relate."
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 effective as if included in the
provisions of the Small Business Job Protection Act of 1996, Pub.
L. 104-188, to which it relates, see section 1601(j) of Pub. L.
105-34, set out as a note under section 23 of this title.
EFFECTIVE DATE
Section 1601(c) of Pub. L. 104-188 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting this section and amending
sections 55, 56, 59, and 936 of this title] shall apply to taxable
years beginning after December 31, 1995.
"(2) Special rule for qualified possession source investment
income. - The amendments made by this section shall not apply to
qualified possession source investment income received or accrued
before July 1, 1996, without regard to the taxable year in which
received or accrued.
"(3) Special transition rule for payment of estimated tax
installment. - In determining the amount of any installment due
under section 6655 of the Internal Revenue Code of 1986 after the
date of the enactment of this Act [Aug. 20, 1996] and before
October 1, 1996, only 1/2 of any increase in tax (for the taxable
year for which such installment is made) by reason of the
amendments made by subsections (a) and (b) [enacting this section
and amending sections 55, 56, 59, and 936 of this title] shall be
taken into account. Any reduction in such installment by reason of
the preceding sentence shall be recaptured by increasing the next
required installment for such year by the amount of such
reduction."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 55, 56, 59, 936 of this
title.
-End-
-CITE-
26 USC Subpart C - Refundable Credits 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
SUBPART C - REFUNDABLE CREDITS
-MISC1-
Sec.
31. Tax withheld on wages.
32. Earned income.
33. Tax withheld at source on nonresident aliens and
foreign corporations.
34. Certain uses of gasoline and special fuels.
35. Health insurance costs of eligible individuals.
36. Overpayments of tax.
AMENDMENTS
2002 - Pub. L. 107-210, div. A, title II, Sec. 201(c)(2), Aug. 6,
2002, 116 Stat. 960, which directed amendment of the table of
sections for subpart C of part IV of this chapter by adding items
35 and 36 and striking out the last item, was executed to the table
of sections for this subpart which is in part IV of subchapter A of
this chapter by adding those items and striking out former item 35
"Overpayments of tax" to reflect the probable intent of Congress.
1984 - Pub. L. 98-369, div. A, title IV, Sec. 471(b), July 18,
1984, 98 Stat. 826, added subpart C heading and analysis of
sections for subpart C consisting of items 31, 32 (formerly 43), 33
(formerly 32), 34 (formerly 39), and 35 (formerly 45). Former
subpart C, setting out the rules for computing credit for expenses
of work incentive programs, was repealed.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 24, 1397E, 6096, 6401,
6428 of this title.
-End-
-CITE-
26 USC Sec. 31 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
Sec. 31. Tax withheld on wages
-STATUTE-
(a) Wage withholding for income tax purposes
(1) In general
The amount withheld as tax under chapter 24 shall be allowed to
the recipient of the income as a credit against the tax imposed
by this subtitle.
(2) Year of credit
The amount so withheld during any calendar year shall be
allowed as a credit for the taxable year beginning in such
calendar year. If more than one taxable year begins in a calendar
year, such amount shall be allowed as a credit for the last
taxable year so beginning.
(b) Credit for special refunds of social security tax
(1) In general
The Secretary may prescribe regulations providing for the
crediting against the tax imposed by this subtitle of the amount
determined by the taxpayer or the Secretary to be allowable under
section 6413(c) as a special refund of tax imposed on wages. The
amount allowed as a credit under such regulations shall, for
purposes of this subtitle, be considered an amount withheld at
source as tax under section 3402.
(2) Year of credit
Any amount to which paragraph (1) applies shall be allowed as a
credit for the taxable year beginning in the calendar year during
which the wages were received. If more than one taxable year
begins in the calendar year, such amount shall be allowed as a
credit for the last taxable year so beginning.
(c) Special rule for backup withholding
Any credit allowed by subsection (a) for any amount withheld
under section 3406 shall be allowed for the taxable year of the
recipient of the income in which the income is received.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 12; Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(D), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97-248,
title III, Secs. 302(a), 308(a), Sept. 3, 1982, 96 Stat. 585, 591;
Pub. L. 97-354, Sec. 3(i)(4), Oct. 19, 1982, 96 Stat. 1691; Pub. L.
97-448, title III, Sec. 306(b)(1), Jan. 12, 1983, 96 Stat. 2405;
Pub. L. 98-67, title I, Secs. 102(a), 104(d)(2), Aug. 5, 1983, 97
Stat. 369, 379; Pub. L. 98-369, div. A, title IV, Sec. 471(c),
title VII, Sec. 714(j)(2), July 18, 1984, 98 Stat. 826, 962.)
-MISC1-
AMENDMENTS
1984 - Subsec. (a)(1). Pub. L. 98-369, Sec. 714(j)(2),
substituted "as tax under chapter 24" for "under section 3402 as
tax on the wages of any individual".
1983 - Pub. L. 98-67 added subsec. (c) and repealed amendments
made by Pub. L. 97-248. See 1982 Amendment note below.
Pub. L. 97-448 amended subsec. (d) generally. See 1982 Amendment
note below.
1982 - Pub. L. 97-248, as amended by Pub. L. 97-354 and Pub. L.
97-448, amended section generally, applicable to payments of
interest, dividends, and patronage dividends paid or credited after
June 30, 1983. Section 102(a), (b) of Pub. L. 98-67, title I, Aug.
5, 1983, 97 Stat. 369, repealed subtitle A (Secs. 301-308) of title
III of Pub. L. 97-248 as of the close of June 30, 1983, and
provided that the Internal Revenue Code of 1954 [now 1986] [this
title] shall be applied and administered (subject to certain
exceptions) as if such subtitle A (and the amendments made by such
subtitle A) had not been enacted.
1976 - Subsec. (b)(1). Pub. L. 94-455 struck out "or his
delegate" after "The Secretary" and "(or his delegate)" after
"taxpayer or the Secretary".
EFFECTIVE DATE OF 1984 AMENDMENT
Section 715 of Pub. L. 98-369 provided that: "Any amendment made
by this subtitle [subtitle A (Secs. 711-715) of title VII of Pub.
L. 98-369, see Tables for classification] shall take effect as if
included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982 [Pub. L. 97-248] to which such amendment
relates."
EFFECTIVE DATE OF 1983 AMENDMENTS
Section 110 of title I of Pub. L. 98-67 provided that:
"(a) General Rule. - Except as otherwise provided in this
section, the amendments made by this title [enacting sections 3406
and 6705 of this title, amending this section and sections 274,
275, 643, 661, 3402, 3403, 3502, 3507, 6011, 6013, 6015, 6042,
6044, 6049, 6051, 6365, 6401, 6413, 6652, 6653, 6654, 6676, 6678,
6682, 7205, 7215, 7431, 7654, and 7701 of this title, repealing
sections 3451 to 3456 of this title, enacting provisions set out as
notes under sections 1, 3451, and 6011 of this title, and repealing
provisions set out as a note under section 3451 of this title]
shall apply with respect to payments made after December 31, 1983.
"(b) Section 102. - The amendments made by section 102 [amending
this section and sections 274, 275, 643, 661, 3403, 3502, 3507,
6013, 6015, 6042, 6044, 6049, 6051, 6365, 6401, 6413, 6654, 6682,
7205, 7215, 7654, and 7701 of this title, repealing sections 3451
to 3456 of this title, enacting provisions set out as a note under
section 3451 of this title, and repealing provisions set out as a
note under section 3451 of this title] shall take effect as of the
close of June 30, 1983.
"(c) Sections 104(b) and 107. - The amendments made by sections
104(b) and 107 [amending sections 6682, 7205, and 7431 of this
title] shall take effect on the date of the enactment of this Act
[Aug. 5, 1983]."
Section 311(d) of Pub. L. 97-448 provided that: "The amendments
made by section 306 [amending this section and sections 48, 55,
263, 291, 312, 338, 401, 501, 1232, 6038A, 6226, 6228, 6679, and
7701 of this title, enacting provisions set out as notes under
sections 338 and 1232 of this title, and amending provisions set
out as notes under sections 56, 72, 101, 103, 168, 302, 311, 338,
415, 907, and 5701 of this title] shall take effect as if included
in the provisions of the Tax Equity and Fiscal Responsibility Act
of 1982 [Pub. L. 97-248] to which such amendments relate."
CONSTRUCTION OF AMENDMENT BY TITLE VII OF DIVISION A OF PUB. L.
98-369
Section 701 of title VII of div. A of Pub. L. 98-369 provided
that: "For purposes of applying the amendments made by any title of
this Act [see Tables for classification] other than this title, the
provisions of this title shall be treated as having been enacted
immediately before the provisions of such other titles."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 643, 874, 995, 3406,
3510, 6211, 6413, 6513, 6654 of this title.
-End-
-CITE-
26 USC Sec. 32 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
Sec. 32. Earned income
-STATUTE-
(a) Allowance of credit
(1) In general
In the case of an eligible individual, there shall be allowed
as a credit against the tax imposed by this subtitle for the
taxable year an amount equal to the credit percentage of so much
of the taxpayer's earned income for the taxable year as does not
exceed the earned income amount.
(2) Limitation
The amount of the credit allowable to a taxpayer under
paragraph (1) for any taxable year shall not exceed the excess
(if any) of -
(A) the credit percentage of the earned income amount, over
(B) the phaseout percentage of so much of the adjusted gross
income (or, if greater, the earned income) of the taxpayer for
the taxable year as exceeds the phaseout amount.
(b) Percentages and amounts
For purposes of subsection (a) -
(1) Percentages
The credit percentage and the phaseout percentage shall be
determined as follows:
(A) In general
In the case of taxable years beginning after 1995:
In the case of an eligible The credit The
individual with: percentage phaseout
is: percentage
is:
--------------------------------------------------------------------
1 qualifying child 34 15.98
2 or more qualifying children 40 21.06
No qualifying children 7.65 7.65
--------------------------------------------------------------------
(B) Transitional percentages for 1995
In the case of taxable years beginning in 1995:
In the case of an eligible The credit The
individual with: percentage phaseout
is: percentage
is:
--------------------------------------------------------------------
1 qualifying child 34 15.98
2 or more qualifying children 36 20.22
No qualifying children 7.65 7.65
--------------------------------------------------------------------
(C) Transitional percentages for 1994
In the case of a taxable year beginning in 1994:
In the case of an eligible The credit The
individual with: percentage phaseout
is: percentage
is:
--------------------------------------------------------------------
1 qualifying child 26.3 15.98
2 or more qualifying children 30 17.68
No qualifying children 7.65 7.65
--------------------------------------------------------------------
(2) Amounts
(A) In general
Subject to subparagraph (B), the earned income amount and the
phaseout amount shall be determined as follows:
In the case of an eligible The earned The
individual with: income amount phaseout
is: amount is:
--------------------------------------------------------------------
1 qualifying child $6,330 $11,610
2 or more qualifying children $8,890 $11,610
No qualifying children $4,220 $5,280
--------------------------------------------------------------------
(B) Joint returns
In the case of a joint return filed by an eligible individual
and such individual's spouse, the phaseout amount determined
under subparagraph (A) shall be increased by -
(i) $1,000 in the case of taxable years beginning in 2002,
2003, and 2004,
(ii) $2,000 in the case of taxable years beginning in 2005,
2006, and 2007, and
(iii) $3,000 in the case of taxable years beginning after
2007.
(c) Definitions and special rules
For purposes of this section -
(1) Eligible individual
(A) In general
The term "eligible individual" means -
(i) any individual who has a qualifying child for the
taxable year, or
(ii) any other individual who does not have a qualifying
child for the taxable year, if -
(I) such individual's principal place of abode is in the
United States for more than one-half of such taxable year,
(II) such individual (or, if the individual is married,
either the individual or the individual's spouse) has
attained age 25 but not attained age 65 before the close of
the taxable year, and
(III) such individual is not a dependent for whom a
deduction is allowable under section 151 to another
taxpayer for any taxable year beginning in the same
calendar year as such taxable year.
For purposes of the preceding sentence, marital status shall
be determined under section 7703.
(B) Qualifying child ineligible
If an individual is the qualifying child of a taxpayer for
any taxable year of such taxpayer beginning in a calendar year,
such individual shall not be treated as an eligible individual
for any taxable year of such individual beginning in such
calendar year.
(C) 2 or more claiming qualifying child
(i) In general
Except as provided in clause (ii), if (but for this
paragraph) an individual may be claimed, and is claimed, as a
qualifying child by 2 or more taxpayers for a taxable year
beginning in the same calendar year, such individual shall be
treated as the qualifying child of the taxpayer who is -
(I) a parent of the individual, or
(II) if subclause (I) does not apply, the taxpayer with
the highest adjusted gross income for such taxable year.
(ii) More than 1 claiming credit
If the parents claiming the credit with respect to any
qualifying child do not file a joint return together, such
child shall be treated as the qualifying child of -
(I) the parent with whom the child resided for the
longest period of time during the taxable year, or
(II) if the child resides with both parents for the same
amount of time during such taxable year, the parent with
the highest adjusted gross income.
(D) Exception for individual claiming benefits under section
911
The term "eligible individual" does not include any
individual who claims the benefits of section 911 (relating to
citizens or residents living abroad) for the taxable year.
(E) Limitation on eligibility of nonresident aliens
The term "eligible individual" shall not include any
individual who is a nonresident alien individual for any
portion of the taxable year unless such individual is treated
for such taxable year as a resident of the United States for
purposes of this chapter by reason of an election under
subsection (g) or (h) of section 6013.
(F) Identification number requirement
No credit shall be allowed under this section to an eligible
individual who does not include on the return of tax for the
taxable year -
(i) such individual's taxpayer identification number, and
(ii) if the individual is married (within the meaning of
section 7703), the taxpayer identification number of such
individual's spouse.
(G) Individuals who do not include TIN, etc., of any qualifying
child
No credit shall be allowed under this section to any eligible
individual who has one or more qualifying children if no
qualifying child of such individual is taken into account under
subsection (b) by reason of paragraph (3)(D).
(2) Earned income
(A) The term "earned income" means -
(i) wages, salaries, tips, and other employee compensation,
but only if such amounts are includible in gross income for the
taxable year, plus
(ii) the amount of the taxpayer's net earnings from
self-employment for the taxable year (within the meaning of
section 1402(a)), but such net earnings shall be determined
with regard to the deduction allowed to the taxpayer by section
164(f).
(B) For purposes of subparagraph (A) -
(i) the earned income of an individual shall be computed
without regard to any community property laws,
(ii) no amount received as a pension or annuity shall be
taken into account,
(iii) no amount to which section 871(a) applies (relating to
income of nonresident alien individuals not connected with
United States business) shall be taken into account,
(iv) no amount received for services provided by an
individual while the individual is an inmate at a penal
institution shall be taken into account, and
(v) no amount described in subparagraph (A) received for
service performed in work activities as defined in paragraph
(4) or (7) of section 407(d) of the Social Security Act to
which the taxpayer is assigned under any State program under
part A of title IV of such Act shall be taken into account, but
only to the extent such amount is subsidized under such State
program.
(3) Qualifying child
(A) In general
The term "qualifying child" means, with respect to any
taxpayer for any taxable year, an individual -
(i) who bears a relationship to the taxpayer described in
subparagraph (B),
(ii) who has the same principal place of abode as the
taxpayer for more than one-half of such taxable year, and
(iii) who meets the age requirements of subparagraph (C).
(B) Relationship test
(i) In general
An individual bears a relationship to the taxpayer
described in this subparagraph if such individual is -
(I) a son, daughter, stepson, or stepdaughter, or a
descendant of any such individual,
(II) a brother, sister, stepbrother, or stepsister, or a
descendant of any such individual, who the taxpayer cares
for as the taxpayer's own child, or
(III) an eligible foster child of the taxpayer.
(ii) Married children
Clause (i) shall not apply to any individual who is married
as of the close of the taxpayer's taxable year unless the
taxpayer is entitled to a deduction under section 151 for
such taxable year with respect to such individual (or would
be so entitled but for paragraph (2) or (4) of section
152(e)).
(iii) Eligible foster child
For purposes of clause (i), the term "eligible foster
child" means an individual not described in subclause (I) or
(II) of clause (i) who -
(I) is placed with the taxpayer by an authorized
placement agency, and
(II) the taxpayer cares for as the taxpayer's own child.
(iv) Adoption
For purposes of this subparagraph, a child who is legally
adopted, or who is placed with the taxpayer by an authorized
placement agency for adoption by the taxpayer, shall be
treated as a child by blood.
(C) Age requirements
An individual meets the requirements of this subparagraph if
such individual -
(i) has not attained the age of 19 as of the close of the
calendar year in which the taxable year of the taxpayer
begins,
(ii) is a student (as defined in section 151(c)(4)) who has
not attained the age of 24 as of the close of such calendar
year, or
(iii) is permanently and totally disabled (as defined in
section 22(e)(3)) at any time during the taxable year.
(D) Identification requirements
(i) In general
A qualifying child shall not be taken into account under
subsection (b) unless the taxpayer includes the name, age,
and TIN of the qualifying child on the return of tax for the
taxable year.
(ii) Other methods
The Secretary may prescribe other methods for providing the
information described in clause (i).
(E) Abode must be in the United States
The requirements of subparagraph (A)(ii) shall be met only if
the principal place of abode is in the United States.
(4) Treatment of military personnel stationed outside the United
States
For purposes of paragraphs (1)(A)(ii)(I) and (3)(E), the
principal place of abode of a member of the Armed Forces of the
United States shall be treated as in the United States during any
period during which such member is stationed outside the United
States while serving on extended active duty with the Armed
Forces of the United States. For purposes of the preceding
sentence, the term "extended active duty" means any period of
active duty pursuant to a call or order to such duty for a period
in excess of 90 days or for an indefinite period.
(d) Married individuals
In the case of an individual who is married (within the meaning
of section 7703), this section shall apply only if a joint return
is filed for the taxable year under section 6013.
(e) Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the
death of the taxpayer, no credit shall be allowable under this
section in the case of a taxable year covering a period of less
than 12 months.
(f) Amount of credit to be determined under tables
(1) In general
The amount of the credit allowed by this section shall be
determined under tables prescribed by the Secretary.
(2) Requirements for tables
The tables prescribed under paragraph (1) shall reflect the
provisions of subsections (a) and (b) and shall have income
brackets of not greater than $50 each -
(A) for earned income between $0 and the amount of earned
income at which the credit is phased out under subsection (b),
and
(B) for adjusted gross income between the dollar amount at
which the phaseout begins under subsection (b) and the amount
of adjusted gross income at which the credit is phased out
under subsection (b).
(g) Coordination with advance payments of earned income credit
(1) Recapture of excess advance payments
If any payment is made to the individual by an employer under
section 3507 during any calendar year, then the tax imposed by
this chapter for the individual's last taxable year beginning in
such calendar year shall be increased by the aggregate amount of
such payments.
(2) Reconciliation of payments advanced and credit allowed
Any increase in tax under paragraph (1) shall not be treated as
tax imposed by this chapter for purposes of determining the
amount of any credit (other than the credit allowed by subsection
(a)) allowable under this part.
[(h) Repealed. Pub. L. 107-16, title III, Sec. 303(c), June 7,
2001, 115 Stat. 55]
(i) Denial of credit for individuals having excessive investment
income
(1) In general
No credit shall be allowed under subsection (a) for the taxable
year if the aggregate amount of disqualified income of the
taxpayer for the taxable year exceeds $2,200.
(2) Disqualified income
For purposes of paragraph (1), the term "disqualified income"
means -
(A) interest or dividends to the extent includible in gross
income for the taxable year,
(B) interest received or accrued during the taxable year
which is exempt from tax imposed by this chapter,
(C) the excess (if any) of -
(i) gross income from rents or royalties not derived in the
ordinary course of a trade or business, over
(ii) the sum of -
(I) the deductions (other than interest) which are
clearly and directly allocable to such gross income, plus
(II) interest deductions properly allocable to such gross
income,
(D) the capital gain net income (as defined in section 1222)
of the taxpayer for such taxable year, and
(E) the excess (if any) of -
(i) the aggregate income from all passive activities for
the taxable year (determined without regard to any amount
included in earned income under subsection (c)(2) or
described in a preceding subparagraph), over
(ii) the aggregate losses from all passive activities for
the taxable year (as so determined).
For purposes of subparagraph (E), the term "passive activity" has
the meaning given such term by section 469.
(j) Inflation adjustments
(1) In general
In the case of any taxable year beginning after 1996, each of
the dollar amounts in subsections (b)(2) and (i)(1) shall be
increased by an amount equal to -
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
determined -
(i) in the case of amounts in subsections (b)(2)(A) and
(i)(1), by substituting "calendar year 1995" for "calendar
year 1992" in subparagraph (B) thereof, and
(ii) in the case of the $3,000 amount in subsection
(b)(2)(B)(iii), by substituting "calendar year 2007" for
"calendar year 1992" in subparagraph (B) of such section 1.
(2) Rounding
(A) In general
If any dollar amount in subsection (b)(2)(A) (after being
increased under subparagraph (B) thereof), after being
increased under paragraph (1), is not a multiple of $10, such
dollar amount shall be rounded to the nearest multiple of $10.
(B) Disqualified income threshold amount
If the dollar amount in subsection (i)(1), after being
increased under paragraph (1), is not a multiple of $50, such
amount shall be rounded to the next lowest multiple of $50.
(k) Restrictions on taxpayers who improperly claimed credit in
prior year
(1) Taxpayers making prior fraudulent or reckless claims
(A) In general
No credit shall be allowed under this section for any taxable
year in the disallowance period.
(B) Disallowance period
For purposes of paragraph (1), the disallowance period is -
(i) the period of 10 taxable years after the most recent
taxable year for which there was a final determination that
the taxpayer's claim of credit under this section was due to
fraud, and
(ii) the period of 2 taxable years after the most recent
taxable year for which there was a final determination that
the taxpayer's claim of credit under this section was due to
reckless or intentional disregard of rules and regulations
(but not due to fraud).
(2) Taxpayers making improper prior claims
In the case of a taxpayer who is denied credit under this
section for any taxable year as a result of the deficiency
procedures under subchapter B of chapter 63, no credit shall be
allowed under this section for any subsequent taxable year unless
the taxpayer provides such information as the Secretary may
require to demonstrate eligibility for such credit.
(l) Coordination with certain means-tested programs
For purposes of -
(1) the United States Housing Act of 1937,
(2) title V of the Housing Act of 1949,
(3) section 101 of the Housing and Urban Development Act of
1965,
(4) sections 221(d)(3), 235, and 236 of the National Housing
Act, and
(5) the Food Stamp Act of 1977,
any refund made to an individual (or the spouse of an individual)
by reason of this section, and any payment made to such individual
(or such spouse) by an employer under section 3507, shall not be
treated as income (and shall not be taken into account in
determining resources for the month of its receipt and the
following month).
(m) Identification numbers
Solely for purposes of subsections (c)(1)(F) and (c)(3)(D), a
taxpayer identification number means a social security number
issued to an individual by the Social Security Administration
(other than a social security number issued pursuant to clause (II)
(or that portion of clause (III) that relates to clause (II)) of
section 205(c)(2)(B)(i) of the Social Security Act).
-SOURCE-
(Added Pub. L. 94-12, title II, Sec. 204(a), Mar. 29, 1975, 89
Stat. 30, Sec. 43; amended Pub. L. 94-164, Sec. 2(c), Dec. 23,
1975, 89 Stat. 971; Pub. L. 94-455, title IV, Sec. 401(c)(1)(B),
(2), Oct. 4, 1976, 90 Stat. 1557; Pub. L. 95-600, title I, Secs.
104(a)-(e), 105(a), Nov. 6, 1978, 92 Stat. 2772, 2773; Pub. L.
95-615, Sec. 202(g)(5), formerly Sec. 202(f)(5), Nov. 8, 1978, 92
Stat. 3100, renumbered Sec. 202(g)(5) and amended Pub. L. 96-222,
title I, Secs. 101(a)(1), (2)(E), 108(a)(1)(A), Apr. 1, 1980, 94
Stat. 194, 195, 223; Pub. L. 97-34, title I, Secs. 111(b)(2),
112(b)(3), Aug. 13, 1981, 95 Stat. 194, 195; Pub. L. 98-21, title
I, Sec. 124(c)(4)(B), Apr. 20, 1983, 97 Stat. 91; renumbered Sec.
32 and amended Pub. L. 98-369, div. A, title IV, Secs. 423(c)(3),
471(c), title X, Sec. 1042(a)-(d)(2), July 18, 1984, 98 Stat. 801,
826, 1043; Pub. L. 99-514, title I, Secs. 104(b)(1)(B),
111(a)-(d)(1), title XII, Sec. 1272(d)(4), title XIII, Sec.
1301(j)(8), Oct. 22, 1986, 100 Stat. 2104, 2107, 2594, 2658; Pub.
L. 100-647, title I, Secs. 1001(c), 1007(g)(12), Nov. 10, 1988, 102
Stat. 3350, 3436; Pub. L. 101-508, title XI, Secs. 11101(d)(1)(B),
11111(a), (b), (e), Nov. 5, 1990, 104 Stat. 1388-405, 1388-408,
1388-412, 1388-413; Pub. L. 103-66, title XIII, Sec.
13131(a)-(d)(1), Aug. 10, 1993, 107 Stat. 433-435; Pub. L. 103-465,
title VII, Secs. 721(a), 722(a), 723(a), 742(a), Dec. 8, 1994, 108
Stat. 5002, 5003, 5010; Pub. L. 104-7, Sec. 4(a), Apr. 11, 1995,
109 Stat. 95; Pub. L. 104-193, title IV, Sec. 451(a), (b), title
IX, Secs. 909(a), (b), 910(a), (b), Aug. 22, 1996, 110 Stat. 2276,
2277, 2351, 2352; Pub. L. 105-34, title I, Sec. 101(b), title III,
Sec. 312(d)(2), title X, Sec. 1085(a)(1), (b)-(d), Aug. 5, 1997,
111 Stat. 798, 840, 955, 956; Pub. L. 105-206, title VI, Secs.
6003(b), 6010(p)(1), (2), 6021(a), (b), July 22, 1998, 112 Stat.
791, 816, 817, 823, 824; Pub. L. 106-170, title IV, Sec. 412(a),
Dec. 17, 1999, 113 Stat. 1917; Pub. L. 107-16, title II, Sec.
201(c)(3), title III, Sec. 303(a)-(f), (h), June 7, 2001, 115 Stat.
47, 55-57; Pub. L. 107-147, title IV, Sec. 416(a)(1), Mar. 9, 2002,
116 Stat. 55.)
-STATAMEND-
EARNED INCOME TAXABLE CREDIT ADJUSTMENT FOR TAXABLE YEARS BEGINNING
IN 2004
For adjustment of earned income tax credit under this section for
taxable years beginning in 2004, see section 3.06 of Revenue
Procedure 2003-85, set out as a note under section 1 of this title.
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The Social Security Act, referred to in subsecs. (c)(2)(B)(v) and
(m), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Part
A of title IV of the Act is classified generally to part A (Sec.
601 et seq.) of subchapter IV of chapter 7 of Title 42, The Public
Health and Welfare. Sections 205(c)(2)(B)(i) and 407(d)(4), (7) of
the Act are classified to sections 405(c)(2)(B)(i) and 607(d)(4),
(7), respectively, of Title 42. For complete classification of this
Act to the Code, see section 1305 of Title 42 and Tables.
The United States Housing Act of 1937, referred to in subsec.
(l)(1), is act Sept. 1, 1937, ch. 896, as revised generally by Pub.
L. 93-383, title II, Sec. 201(a), Aug. 22, 1974, 88 Stat. 653,
which is classified generally to chapter 8 (Sec. 1437 et seq.) of
Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title note under
section 1437 of Title 42 and Tables.
The Housing Act of 1949, referred to in subsec. (l)(2), is act
July 15, 1949, ch. 338, 63 Stat. 413, as amended. Title V of the
Act is classified generally to subchapter III (Sec. 1471 et seq.)
of chapter 8A of Title 42. For complete classification of this Act
to the Code, see Short Title note set out under section 1441 of
Title 42 and Tables.
Section 101 of the Housing and Urban Development Act of 1965,
referred to in subsec. (l)(3), is section 101 of Pub. L. 89-117,
title I, Aug. 10, 1965, 79 Stat. 451, which enacted section 1701s
of Title 12, Banks and Banking, and amended sections 1451 and 1465
of Title 42.
Sections 221(d)(3), 235, and 236 of the National Housing Act,
referred to in subsec. (l)(4), are classified to sections
1715l(d)(3), 1715z, and 1715z-1, respectively, of Title 12.
The Food Stamp Act of 1977, referred to in subsec. (l)(5), is
Pub. L. 88-525, Aug. 31, 1964, 78 Stat. 703, as amended, which is
classified generally to chapter 51 (Sec. 2011 et seq.) of Title 7,
Agriculture. For complete classification of this Act to the Code,
see Short Title note set out under section 2011 of Title 7 and
Tables.
-MISC1-
PRIOR PROVISIONS
A prior section 32 was renumbered section 33 of this title.
AMENDMENTS
2002 - Subsec. (g)(2). Pub. L. 107-147 substituted "part" for
"subpart".
2001 - Subsec. (a)(2)(B). Pub. L. 107-16, Secs. 303(d)(1), 901,
temporarily struck out "modified" before "adjusted gross income".
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b)(2). Pub. L. 107-16, Secs. 303(a)(1), 901, temporarily
reenacted par. heading without change, designated existing
provisions as subpar. (A), inserted subpar. heading, substituted
"Subject to subparagraph (B), the earned" for "The earned", and
added subpar. (B). See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (c)(1)(C). Pub. L. 107-16, Secs. 303(f), 901, temporarily
amended heading and text of subpar. (C) generally. Prior to
amendment, text read as follows: "If 2 or more individuals would
(but for this subparagraph and after application of subparagraph
(B)) be treated as eligible individuals with respect to the same
qualifying child for taxable years beginning in the same calendar
year, only the individual with the highest modified adjusted gross
income for such taxable years shall be treated as an eligible
individual with respect to such qualifying child." See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (c)(2)(A)(i). Pub. L. 107-16, Secs. 303(b), 901,
temporarily inserted ", but only if such amounts are includible in
gross income for the taxable year" after "other employee
compensation". See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (c)(3)(A)(ii). Pub. L. 107-16, Secs. 303(e)(2)(B), 901,
temporarily struck out "except as provided in subparagraph
(B)(iii)," before "who has". See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (c)(3)(B)(i). Pub. L. 107-16, Secs. 303(e)(1), 901,
temporarily reenacted heading, introductory provisions, and subcl.
(III) of cl. (i) without change and amended subcls. (I) and (II)
generally. Prior to amendment, subcls. (I) and (II) read as
follows:
"(I) a son or daughter of the taxpayer, or a descendant of
either,
"(II) a stepson or stepdaughter of the taxpayer, or."
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(B)(iii). Pub. L. 107-16, Secs. 303(e)(2)(A), 901,
temporarily reenacted heading without change and amended text
generally. Prior to amendment, text read as follows: "For purposes
of clause (i)(III), the term 'eligible foster child' means an
individual not described in clause (i)(I) or (II) who -
"(I) is a brother, sister, stepbrother, or stepsister of the
taxpayer (or a descendant of any such relative) or is placed with
the taxpayer by an authorized placement agency,
"(II) the taxpayer cares for as the taxpayer's own child, and
"(III) has the same principal place of abode as the taxpayer
for the taxpayer's entire taxable year."
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(E). Pub. L. 107-16, Secs. 303(h), 901, temporarily
substituted "subparagraph (A)(ii)" for "subparagraphs (A)(ii) and
(B)(iii)(II)". See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (c)(5). Pub. L. 107-16, Secs. 303(d)(2)(A), 901,
temporarily struck out heading and text of par. (5), which defined
"modified adjusted gross income" as meaning adjusted gross income
without regard to certain described amounts and increased by
certain described amounts. See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (f)(2)(B). Pub. L. 107-16, Secs. 303(d)(2)(B), 901,
temporarily struck out "modified" before "adjusted gross income" in
two places. See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (h). Pub. L. 107-16, Secs. 303(c), 901, temporarily
struck out heading and text of subsec. (h). Text read as follows:
"The credit allowed under this section for the taxable year shall
be reduced by the amount of tax imposed by section 55 (relating to
alternative minimum tax) with respect to such taxpayer for such
taxable year." See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (j)(1)(B). Pub. L. 107-16, Secs. 303(a)(2), 901,
temporarily amended subpar. (B) generally. Prior to amendment,
subpar. (B) read as follows: "the cost-of-living adjustment
determined under section 1(f)(3) for the calendar year in which the
taxable year begins, determined by substituting 'calendar year
1995' for 'calendar year 1992' in subparagraph (B) thereof." See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (j)(2)(A). Pub. L. 107-16, Secs. 303(a)(3), 901,
temporarily substituted "subsection (b)(2)(A) (after being
increased under subparagraph (B) thereof)" for "subsection (b)(2)".
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (n). Pub. L. 107-16, Secs. 201(c)(3), 901, temporarily
struck out heading and text of subsec. (n), which had increased
credit allowable under this section in the case of a taxpayer with
respect to whom a child tax credit is allowed under section 24(a),
described amount of increase, and set forth provisions relating to
coordination with other credits allowable under this part. See
Effective and Termination Dates of 2001 Amendment note below.
1999 - Subsec. (c)(3)(B)(iii). Pub. L. 106-170 added subcl. (I)
and redesignated former subcls. (I) and (II) as (II) and (III),
respectively.
1998 - Subsec. (c)(1)(F). Pub. L. 105-206, Sec. 6021(a), added
introductory provisions and struck out former introductory
provisions which read as follows: "The term 'eligible individual'
does not include any individual who does not include on the return
of tax for the taxable year - ".
Subsec. (c)(1)(G). Pub. L. 105-206, Sec. 6021(b)(2), added
subpar. (G).
Subsec. (c)(2)(B)(v). Pub. L. 105-206, Sec. 6010(p)(2), inserted
"shall be taken into account" before ", but only".
Subsec. (c)(3)(A)(ii) to (iv). Pub. L. 105-206, Sec. 6021(b)(3),
inserted "and" at end of cl. (ii), substituted a period for ", and"
at end of cl. (iii), and struck out cl. (iv) which read as follows:
"with respect to whom the taxpayer meets the identification
requirements of subparagraph (D)".
Subsec. (c)(3)(D)(i). Pub. L. 105-206, Sec. 6021(b)(1), reenacted
heading without change and amended text of cl. (i) generally. Prior
to amendment, text read as follows: "The requirements of this
subparagraph are met if the taxpayer includes the name, age, and
TIN of each qualifying child (without regard to this subparagraph)
on the return of tax for the taxable year."
Subsec. (c)(5)(A). Pub. L. 105-206, Sec. 6010(p)(1)(A), inserted
"and increased by the amounts described in subparagraph (C)" before
period at end.
Subsec. (c)(5)(B). Pub. L. 105-206, Sec. 6010(p)(1)(B), (C),
inserted "or" at end of cl. (iii) and substituted cl. (iv)(III) and
concluding provisions for former cls. (iv)(III), (v), (vi), and
concluding provisions which read as follows:
"(III) other trades or businesses
"(v) interest received or accrued during the taxable year which
is exempt from tax imposed by this chapter, and
"(vi) amounts received as a pension or annuity, and any
distributions or payments received from an individual retirement
plan, by the taxpayer during the taxable year to the extent not
included in gross income.
For purposes of clause (iv), there shall not be taken into account
items which are attributable to a trade or business which consists
of the performance of services by the taxpayer as an employee.
Clause (vi) shall not include any amount which is not includible in
gross income by reason of section 402(c), 403(a)(4), 403(b),
408(d)(3), (4), or (5), or 457(e)(10)."
Subsec. (c)(5)(C). Pub. L. 105-206, Sec. 6010(p)(1)(C), added
subpar. (C).
Subsecs. (m), (n). Pub. L. 105-206, Sec. 6003(b), redesignated
subsec. (m), relating to supplemental child credit, as (n) and
amended text generally. Prior to amendment, text read as follows:
"(1) In general. - In the case of a taxpayer with respect to whom
a credit is allowed under section 24 for the taxable year, there
shall be allowed as a credit under this section an amount equal to
the supplemental child credit (if any) determined for such taxpayer
for such taxable year under paragraph (2). Such credit shall be in
addition to the credit allowed under subsection (a).
"(2) Supplemental child credit. - For purposes of this
subsection, the supplemental child credit is an amount equal to the
excess (if any) of -
"(A) the amount determined under section 24(d)(1)(A), over
"(B) the amount determined under section 24(d)(1)(B).
The amounts referred to in subparagraphs (A) and (B) shall be
determined as if section 24(d) applied to all taxpayers.
"(3) Coordination with section 24. - The amount of the credit
under section 24 shall be reduced by the amount of the credit
allowed under this subsection."
1997 - Subsec. (c)(2)(B)(v). Pub. L. 105-34, Sec. 1085(c), added
cl. (v).
Subsec. (c)(4). Pub. L. 105-34, Sec. 312(d)(2), struck out "(as
defined in section 1034(h)(3)" after "serving on extended active
duty" and inserted at end "For purposes of the preceding sentence,
the term 'extended active duty' means any period of active duty
pursuant to a call or order to such duty for a period in excess of
90 days or for an indefinite period."
Subsec. (c)(5)(B). Pub. L. 105-34, Sec. 1085(d)(4), inserted at
end of concluding provisions "Clause (vi) shall not include any
amount which is not includible in gross income by reason of section
402(c), 403(a)(4), 403(b), 408(d)(3), (4), or (5), or 457(e)(10)."
Subsec. (c)(5)(B)(iv). Pub. L. 105-34, Sec. 1085(b), substituted
"75 percent" for "50 percent" in introductory provisions.
Subsec. (c)(5)(B)(v), (vi). Pub. L. 105-34, Sec. 1085(d)(1)-(3),
added cls. (v) and (vi).
Subsec. (k). Pub. L. 105-34, Sec. 1085(a)(1), added subsec. (k).
Former subsec. (k) redesignated (l).
Subsec. (l). Pub. L. 105-34, Sec. 1085(a)(1), redesignated
subsec. (k) as (l). Former subsec. (l) redesignated (m).
Subsec. (m). Pub. L. 105-34, Sec. 1085(a)(1), redesignated
subsec. (l) as (m) relating to identification numbers.
Pub. L. 105-34, Sec. 101(b), added subsec. (m) relating to
supplemental child credit.
1996 - Subsec. (a)(2)(B). Pub. L. 104-193, Sec. 910(a), inserted
"modified" before "adjusted gross income".
Subsec. (b)(2). Pub. L. 104-193, Sec. 909(a)(3), reenacted
heading without change and amended text generally. Prior to
amendment, text consisted of subpars. (A) and (B) setting out
tables for determining the earned income amount for taxable years
beginning after 1994 and for taxable years beginning in 1994.
Subsec. (c)(1)(C). Pub. L. 104-193, Sec. 910(a), inserted
"modified" before "adjusted gross income".
Subsec. (c)(1)(F). Pub. L. 104-193, Sec. 451(a), added subpar.
(F).
Subsec. (c)(5). Pub. L. 104-193, Sec. 910(b), added par. (5).
Subsec. (f)(2)(B). Pub. L. 104-193, Sec. 910(a), inserted
"modified" before "adjusted gross income" in two places.
Subsec. (i)(1). Pub. L. 104-193, Sec. 909(a)(1), substituted
"$2,200" for "$2,350".
Subsec. (i)(2). Pub. L. 104-193, Sec. 909(b), added subpars. (D)
and (E) and concluding provisions.
Subsec. (j). Pub. L. 104-193, Sec. 909(a)(2), reenacted heading
without change and amended text generally. Prior to amendment, text
read as follows:
"(1) In general. - In the case of any taxable year beginning
after 1994, each dollar amount contained in subsection (b)(2)(A)
shall be increased by an amount equal to -
"(A) such dollar amount, multiplied by
"(B) the cost-of-living adjustment determined under section
1(f)(3), for the calendar year in which the taxable year begins,
by substituting 'calendar year 1993' for 'calendar year 1992'.
"(2) Rounding. - If any dollar amount after being increased under
paragraph (1) is not a multiple of $10, such dollar amount shall be
rounded to the nearest multiple of $10 (or, if such dollar amount
is a multiple of $5, such dollar amount shall be increased to the
next higher multiple of $10)."
Subsec. (l). Pub. L. 104-193, Sec. 451(b), added subsec. (l).
1995 - Subsecs. (i) to (k). Pub. L. 104-7 added subsec. (i) and
redesignated former subsecs. (i) and (j) as (j) and (k),
respectively.
1994 - Subsec. (c)(1)(E). Pub. L. 103-465, Sec. 722(a), added
subpar. (E).
Subsec. (c)(2)(B)(iv). Pub. L. 103-465, Sec. 723(a), added cl.
(iv).
Subsec. (c)(3)(D)(i). Pub. L. 103-465, Sec. 742(a), amended
heading and text of cl. (i) generally. Prior to amendment, text
read as follows: "The requirements of this subparagraph are met if
-
"(I) the taxpayer includes the name and age of each qualifying
child (without regard to this subparagraph) on the return of tax
for the taxable year, and
"(II) in the case of an individual who has attained the age of
1 year before the close of the taxpayer's taxable year, the
taxpayer includes the taxpayer identification number of such
individual on such return of tax for such taxable year."
Subsec. (c)(4). Pub. L. 103-465, Sec. 721(a), added par. (4).
1993 - Subsec. (a). Pub. L. 103-66, Sec. 13131(a), amended
heading and text of subsec. (a) generally. Prior to amendment, text
read as follows: "In the case of an eligible individual, there
shall be allowed as a credit against the tax imposed by this
subtitle for the taxable year an amount equal to the sum of -
"(1) the basic earned income credit, and
"(2) the health insurance credit."
Subsec. (b). Pub. L. 103-66, Sec. 13131(a), substituted
"Percentages and amounts" for "Computation of credit" in heading
and amended text generally. Prior to amendment, text related to
method of computation of both earned income credit and health
insurance credit.
Subsec. (c)(1)(A). Pub. L. 103-66, Sec. 13131(b), amended heading
and text of subpar. (A) generally. Prior to amendment, text read as
follows: "The term 'eligible individual' means any individual who
has a qualifying child for the taxable year."
Subsec. (c)(3)(D)(ii). Pub. L. 103-66, Sec. 13131(d)(1),
redesignated cl. (iii) as (ii), substituted "clause (i)" for
"clause (i) or (ii)", and struck out heading and text of former cl.
(ii). Text read as follows: "In the case of any taxpayer with
respect to which the health insurance credit is allowed under
subsection (a)(2), the Secretary may require a taxpayer to include
an insurance policy number or other adequate evidence of insurance
in addition to any information required to be included in clause
(i)."
Subsec. (i)(1). Pub. L. 103-66, Sec. 13131(c)(1), added par. (1)
and struck out text and heading of former par. (1). Text read as
follows: "In the case of any taxable year beginning after the
applicable calendar year, each dollar amount referred to in
paragraph (2)(B) shall be increased by an amount equal to -
"(A) such dollar amount, multiplied by
"(B) the cost-of-living adjustment determined under section
1(f)(3), for the calendar year in which the taxable year begins,
by substituting 'calendar year 1984' for 'calendar year 1989' in
subparagraph (B) thereof."
Subsec. (i)(2), (3). Pub. L. 103-66, Sec. 13131(c), redesignated
par. (3) as (2) and struck out former par. (2) which defined terms
for purposes of the inflation adjustment in par. (1).
1990 - Subsec. (a). Pub. L. 101-508, Sec. 11111(a), amended
subsec. (a) generally. Prior to amendment, subsec. (a) read as
follows: "In the case of an eligible individual, there is allowed
as a credit against the tax imposed by this subtitle for the
taxable year an amount equal to 14 percent of so much of the earned
income for the taxable year as does not exceed $5,714."
Subsec. (b). Pub. L. 101-508, Sec. 11111(a), substituted heading
for one which read "Limitation" and amended subsec. (b) generally.
Prior to amendment, subsec. (b) read as follows: "The amount of the
credit allowable to a taxpayer under subsection (a) for any taxable
year shall not exceed the excess (if any) of -
"(1) the maximum credit allowable under subsection (a) to any
taxpayer, over
"(2) 10 percent of so much of the adjusted gross income (or, if
greater, the earned income) of the taxpayer for the taxable year
as exceeds $9,000.
In the case of any taxable year beginning in 1987, paragraph (2)
shall be applied by substituting '$6,500' for '$9,000'."
Subsec. (c). Pub. L. 101-508, Sec. 11111(a), amended subsec. (c)
generally, inserting "and special rules" in heading and
substituting present provisions for provisions defining "eligible
individual" and "earned income".
Subsec. (i)(1)(B). Pub. L. 101-508, Sec. 11101(d)(1)(B),
substituted "1989" for "1987".
Subsec. (i)(2)(A). Pub. L. 101-508, Sec. 11111(e)(1), (2),
substituted "clause (i) of subparagraph (B)" for "clause (i) or
(ii) of subparagraph (B)" in cl. (i) and "clause (ii)" for "clause
(iii)" in cl. (ii).
Subsec. (i)(2)(B). Pub. L. 101-508, Sec. 11111(e)(3), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: "The dollar amounts referred to in this subparagraph are -
"(i) the $5,714 amount contained in subsection (a),
"(ii) the $6,500 amount contained in the last sentence of
subsection (b), and
"(iii) the $9,000 amount contained in subsection (b)(2)."
Subsec. (j). Pub. L. 101-508, Sec. 11111(b), added subsec. (j).
1988 - Subsec. (h). Pub. L. 100-647, Sec. 1007(g)(12), struck out
"for taxpayers other than corporations" after "alternative minimum
tax".
Subsec. (i)(3). Pub. L. 100-647, Sec. 1001(c), amended par. (3)
generally. Prior to amendment, par. (3) read as follows: "If any
increase determined under paragraph (1) is not a multiple of $10,
such increase shall be rounded to the nearest multiple of $10 (or,
if such increase is a multiple of $5, such increase shall be
increased to the next higher multiple of $10)."
1986 - Subsec. (a). Pub. L. 99-514, Sec. 111(a), substituted "14
percent" for "11 percent" and "$5,714" for "$5,000".
Subsec. (b). Pub. L. 99-514, Sec. 111(b), amended subsec. (b)
generally. Prior to amendment, subsec. (b) read as follows: "The
amount of the credit allowable to a taxpayer under subsection (a)
for any taxable year shall not exceed the excess (if any) of -
"(1) $550, over
"(2) 12 2/9 percent of so much of the adjusted gross income
(or, if greater, the earned income) of the taxpayer for the
taxable year as exceeds $6,500."
Subsec. (c)(1)(A)(i). Pub. L. 99-514, Sec. 1301(j)(8),
substituted "section 7703" for "section 143".
Pub. L. 99-514, Sec. 104(b)(1)(B), substituted "section
151(c)(3)" for "section 151(e)(3)".
Subsec. (c)(1)(C). Pub. L. 99-514, Sec. 1272(d)(4), struck out
"or 931" after "911" in heading, and amended text generally. Prior
to amendment, text read as follows: "The term 'eligible individual'
does not include an individual who, for the taxable year, claims
the benefits of -
"(i) section 911 (relating to citizens or residents of the
United States living abroad),
"(ii) section 931 (relating to income from sources within
possessions of the United States)."
Subsec. (d). Pub. L. 99-514, Sec. 1301(j)(8), substituted
"section 7703" for "section 143".
Subsec. (f)(2)(A), (B). Pub. L. 99-514, Sec. 111(d)(1), added
subpars. (A) and (B) and struck out former subpars. (A) and (B)
which read as follows:
"(A) for earned income between $0 and $11,000, and
"(B) for adjusted gross income between $6,500 and $11,000."
Subsec. (i). Pub. L. 99-514, Sec. 111(c), added subsec. (i).
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 43 of this
title as this section.
Subsec. (a). Pub. L. 98-369, Sec. 1042(a), substituted "11
percent" for "10 percent".
Subsec. (b)(1). Pub. L. 98-369, Sec. 1042(d)(1), substituted
"$550" for "$500".
Subsec. (b)(2). Pub. L. 98-369, Sec. 1042(b), substituted "12 2/9
percent" for "12.5 percent" and "$6,500" for "$6,000".
Subsec. (c)(1)(A)(i). Pub. L. 98-369, Sec. 423(c)(3)(A), inserted
"or would be so entitled but for paragraph (2) or (4) of section
152(e)".
Subsec. (c)(1)(B). Pub. L. 98-369, Sec. 423(c)(3)(B), substituted
"as the individual for more than one-half of the taxable year" for
"as the individual".
Subsec. (f)(2)(A). Pub. L. 98-369, Sec. 1042(d)(2), substituted
"between $0 and $11,000" for "between $0 and $10,000".
Subsec. (f)(2)(B). Pub. L. 98-369, Sec. 1042(d)(2), substituted
"between $6,500 and $11,000" for "between $6,000 and $10,000".
Subsec. (h). Pub. L. 98-369, Sec. 1042(c), added subsec. (h).
1983 - Subsec. (c)(2)(A)(ii). Pub. L. 98-21 inserted before
period at end ", but such net earnings shall be determined with
regard to the deduction allowed to the taxpayer by section 164(f)".
1981 - Subsec. (c)(1)(C). Pub. L. 97-34 struck out reference to
section 913 in heading, substituted "relating to citizens or
residents of the United States living abroad" for "relating to
income earned by individuals in certain camps outside the United
States" in cl. (i), struck out cl. (ii) which made reference to
section 913, and redesignated cl. (iii) as (ii).
1980 - Subsec. (c)(1)(C). Pub. L. 96-222, Sec. 101(a)(1), in
heading substituted "who claims benefit of section 911, 913, or
931" for "entitled to exclude income under section 911" and in text
substituted "claims the benefits of" for "is entitled to exclude
any amounts from gross income under" and inserted reference to
section 913 (relating to deduction for certain expenses of living
abroad).
Subsecs. (g), (h). Pub. L. 96-222, Sec. 101(a)(2)(E),
redesignated subsec. (h) as (g).
1978 - Subsec. (a). Pub. L. 95-600, Sec. 104(a), substituted
"subtitle" for "chapter" and "$5,000" for "$4,000".
Subsec. (b). Pub. L. 95-600, Sec. 104(b), substituted provision
limiting the allowable credit to an amount not to exceed the excess
of $500 over 12.5 percent of so much of the adjusted gross income
for the taxable year as exceeds $6,000 for provision limiting the
allowable credit to an amount reduced by 10 percent of so much of
the adjusted gross income for the taxable year as exceeds $4,000.
Subsec. (c)(1). Pub. L. 95-600, Sec. 104(e), amended par. (1)
generally, substituting in definition of eligible individual one
who is married and is entitled to a deduction under section 151 for
a child, provided the child has the same principal abode as the
individual and the abode is in the United States, is a surviving
spouse, or is a head of household, provided the household is in the
United States for one who maintains a household in the United
States which is the principal abode of that individual and a child
of that individual who meets the requirements of section
151(e)(1)(B) or a child of that individual who is disabled within
the meaning of section 72(m)(7) and to whom the individual is
entitled to claim a deduction under section 151.
Subsec. (c)(1)(C). Pub. L. 95-615, Sec. 202(f)(5), which directed
the amendment of subsec. (c)(1)(B) by substituting "(relating to
income earned by employees in certain camps)" for "(relating to
earned income from sources without the United States)", was
executed to subsec. (c)(1)(C) to reflect the probable intent of
Congress and the general amendment of subsec. (c)(1) by Pub. L.
95-600 which enacted provisions formerly contained in subsec.
(c)(1)(B) in subsec. (c)(1)(C).
Subsec. (c)(2)(B). Pub. L. 95-600, Sec. 104(d), redesignated cls.
(ii) to (iv) as (i) to (iii), respectively. Former cl. (i), which
provided that amounts be taken into account only if includible in
the gross income of the taxpayer for the taxable year, was struck
out.
Subsec. (f). Pub. L. 95-600, Sec. 104(c), added subsec. (f).
Subsec. (h). Pub. L. 95-600, Sec. 105(a), added subsec. (h).
1976 - Subsec. (a). Pub. L. 94-455, Sec. 401(c)(1)(B),
substituted "is allowed" for "shall be allowed" and struck out
provisions relating to the application of the six-month rule.
Subsec. (b). Pub. L. 94-455, Sec. 401(c)(1)(B), struck out
provisions relating to the application of the six-month rule.
Subsec. (c)(1)(A). Pub. L. 94-455, Sec. 401(c)(2), among other
changes, substituted "section 44A(f)(1)" for "section 214(b)(3)"
and "if such child meets the requirements of section 151(e)(1)(B)"
for "with respect to whom he is entitled to claim a deduction under
section 151(e)(1)(B)" and inserted reference to a child of that
individual who is disabled (within the meaning of section 72(m)(7))
and with respect to whom that individual is entitled to claim a
deduction under section 151.
1975 - Subsec. (a). Pub. L. 94-164 designated existing provisions
as par. (1) and added par. (2).
Subsec. (b). Pub. L. 94-164 designated existing provisions as
par. (1) and added par. (2).
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title IV, Sec. 416(a)(2), Mar. 9, 2002, 116
Stat. 55, provided that: "The amendment made by this subsection
[amending this section] shall take effect as if included in section
474 of the Tax Reform Act of 1984 [Pub. L. 98-369]."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by section 201(c)(3) of Pub. L. 107-16 applicable to
taxable years beginning after Dec. 31, 2000, see section 201(e)(1)
of Pub. L. 107-16, set out as a note under section 24 of this
title.
Pub. L. 107-16, title III, Sec. 303(i), June 7, 2001, 115 Stat.
57, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and section
6213 of this title] shall apply to taxable years beginning after
December 31, 2001.
"(2) Subsection (g). - The amendment made by subsection (g)
[amending section 6213 of this title] shall take effect on January
1, 2004."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106-170, title IV, Sec. 412(b), Dec. 17, 1999, 113 Stat.
1917, provided that: "The amendments made by this section [amending
this section] shall apply to taxable years beginning after December
31, 1999."
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-206, title VI, Sec. 6021(c), July 22, 1998, 112 Stat.
824, provided that:
"(1) Eligible individuals. - The amendment made by subsection (a)
[amending this section] shall take effect as if included in the
amendments made by section 451 of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 [Pub. L. 104-193].
"(2) Qualifying children. - The amendments made by subsection (b)
[amending this section] shall take effect as if included in the
amendments made by section 11111 of Revenue Reconciliation Act of
1990 [Pub. L. 101-508]."
Amendment by sections 6003(b) and 6010(p)(1), (2) of Pub. L.
105-206 effective, except as otherwise provided, as if included in
the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105-34,
to which such amendment relates, see section 6024 of Pub. L.
105-206, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by section 101(b) of Pub. L. 105-34 applicable to
taxable years beginning after Dec. 31, 1997, see section 101(e) of
Pub. L. 105-34, set out as an Effective Date note under section 24
of this title.
Amendment by section 312(d)(2) of Pub. L. 105-34 applicable to
sales and exchanges after May 6, 1997, with certain exceptions, see
section 312(d) of Pub. L. 105-34, set out as a note under section
121 of this title.
Section 1085(e) of Pub. L. 105-34 provided that:
"(1) The amendments made by subsection (a) [amending this section
and sections 6213 and 6695 of this title] shall apply to taxable
years beginning after December 31, 1996.
"(2) The amendments made by subsections (b), (c), and (d)
[amending this section] shall apply to taxable years beginning
after December 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 451(d) of Pub. L. 104-193 provided that: "The amendments
made by this section [amending this section and section 6213 of
this title] shall apply with respect to returns the due date for
which (without regard to extensions) is more than 30 days after the
date of the enactment of this Act [Aug. 22, 1996]."
Section 909(c) of Pub. L. 104-193 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section] shall apply
to taxable years beginning after December 31, 1995.
"(2) Advance payment individuals. - In the case of any individual
who on or before June 26, 1996, has in effect an earned income
eligibility certificate for the individual's taxable year beginning
in 1996, the amendments made by this section shall apply to taxable
years beginning after December 31, 1996."
Section 910(c) of Pub. L. 104-193 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section] shall apply
to taxable years beginning after December 31, 1995.
"(2) Advance payment individuals. - In the case of any individual
who on or before June 26, 1996, has in effect an earned income
eligibility certificate for the individual's taxable year beginning
in 1996, the amendments made by this section shall apply to taxable
years beginning after December 31, 1996."
EFFECTIVE DATE OF 1995 AMENDMENT
Section 4(b) of Pub. L. 104-7 provided that: "The amendments made
by this section [amending this section] shall apply to taxable
years beginning after December 31, 1995."
EFFECTIVE DATE OF 1994 AMENDMENT
Section 721(d)(1) of Pub. L. 103-465 provided that: "The
amendment made by subsection (a) [amending this section] shall
apply to taxable years beginning after December 31, 1994."
Section 722(b) of Pub. L. 103-465 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1994."
Section 723(b) of Pub. L. 103-465 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1993."
Section 742(c) of Pub. L. 103-465 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and section
6109 of this title] shall apply to returns for taxable years
beginning after December 31, 1994.
"(2) Exception. - The amendments made by this section shall not
apply to -
"(A) returns for taxable years beginning in 1995 with respect
to individuals who are born after October 31, 1995, and
"(B) returns for taxable years beginning in 1996 with respect
to individuals who are born after November 30, 1996."
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13131(e) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 162, 213,
and 3507 of this title] shall apply to taxable years beginning
after December 31, 1993."
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(1)(B) of Pub. L. 101-508 applicable
to taxable years beginning after Dec. 31, 1990, see section
11101(e) of Pub. L. 101-508, set out as a note under section 1 of
this title.
Section 11111(f) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section and sections
162, 213, and 3507 of this title] shall apply to taxable years
beginning after December 31, 1990."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by sections 104(b)(1)(B) and 111(a)-(d)(1) of Pub. L.
99-514 applicable to taxable years beginning after Dec. 31, 1986,
see section 151(a) of Pub. L. 99-514, set out as a note under
section 1 of this title.
Amendment by section 1272(d)(4) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 1277 of Pub. L. 99-514,
set out as a note under section 931 of this title.
Amendment by section 1301(j)(8) of Pub. L. 99-514 applicable to
bonds issued after Aug. 15, 1986, except as otherwise provided, see
sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective
Date; Transitional Rules note under section 141 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 423(c)(3) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1984, see section 423(d) of
Pub. L. 98-369, set out as a note under section 2 of this title.
Section 1042(e) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending sections 32 and 3507 of this title]
shall apply to taxable years beginning after December 31, 1984."
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 98-21 applicable to taxable years beginning
after Dec. 31, 1989, see section 124(d)(2) of Pub. L. 98-21, set
out as a note under section 1401 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable with respect to taxable
years beginning after Dec. 31, 1981, see section 115 of Pub. L.
97-34, set out as a note under section 911 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Section 101(b)(1)(A) of Pub. L. 96-222 provided that: "The
amendment made by subsection (a)(1) [amending this section] shall
apply to taxable years beginning after December 31, 1977."
Section 201 of Pub. L. 96-222 provided that: "Except as otherwise
provided in title I, any amendment made by title I [see Tables for
classification] shall take effect as if it had been included in the
provision of the Revenue Act of 1978 [Pub. L. 95-600, see Tables
for classification] to which such amendment relates."
EFFECTIVE DATE OF 1978 AMENDMENT
Section 104(f) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1978."
Section 105(g)(1) of Pub. L. 95-600 provided that: "The
amendments made by subsections (a) and (d) [amending this section
and section 6012 of this title] shall apply to taxable years
beginning after December 31, 1978."
EFFECTIVE DATE OF 1978 AMENDMENT; ELECTION OF PRIOR LAW
Amendment by Pub. L. 95-615 applicable to taxable years beginning
after Dec. 31, 1977, with provision for election of prior law, see
section 209 of Pub. L. 95-615, set out as a note under section 911
of this title.
EFFECTIVE AND TERMINATION DATES OF 1976 AMENDMENT
Section 401(e) of Pub. L. 94-455, as amended by Pub. L. 95-30,
title I, Sec. 103(c), May 23, 1977, 91 Stat. 139; Pub. L. 95-600,
title I, Sec. 103(b), Nov. 6, 1978, 92 Stat. 2771, provided that:
"The amendments made by subsection (a) [amending sections 43 [now
32] and 6096 of this title] shall apply to taxable years ending
after December 31, 1975, and shall cease to apply to taxable years
ending after December 31, 1978. The amendments made by subsection
(c) [amending this section] shall apply to taxable years ending
after December 31, 1975. The amendments made by subsection (b)
[amending sections 141 and 6012 of this title] shall apply to
taxable years ending after December 31, 1975. The amendments made
by subsection (d) [amending section 3402 of this title] shall apply
to wages paid after September 14, 1976."
EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENTS
Section 2(g) of Pub. L. 94-164, as amended by Pub. L. 94-455,
Sec. 402(b), provided that: "The amendments made by this section
[amending sections 43 [now 32], 141, 3402, and 6012 of this title
and provisions set out as notes under sections 42 and 43 [now 32]
of this title] (other than by subsection (d) [enacting provisions
set out as a note under this section]) apply to taxable years
ending after December 31, 1975, and before January 1, 1978.
Subsection (d) applies to taxable years ending after December 31,
1975."
Section 209(b) of Pub. L. 94-12, as amended by Pub. L. 94-164,
Sec. 2(f), Dec. 23, 1975, 89 Stat. 972; Pub. L. 94-455, title IV,
Sec. 401(c)(1)(A), Oct. 4, 1976, 90 Stat. 1557; Pub. L. 95-30,
title I, Sec. 103(b), May 23, 1977, 91 Stat. 139; Pub. L. 95-600,
title I, Sec. 103(a), Nov. 6, 1978, 92 Stat. 2771, provided that:
"The amendments made by section 204 [enacting this section and
amending sections 6201 and 6401 of this title] shall apply to
taxable years beginning after December 31, 1974."
PROGRAM TO INCREASE PUBLIC AWARENESS
Secretary of the Treasury, or Secretary's delegate, to establish
taxpayer awareness program to inform taxpaying public of
availability of earned income credit and child health insurance
under this section, see section 11114 of Pub. L. 101-508, set out
as a note under section 21 of this title.
EMPLOYEE NOTIFICATION
Section 111(e) of Pub. L. 99-514 provided that: "The Secretary of
the Treasury is directed to require, under regulations, employers
to notify any employee who has not had any tax withheld from wages
(other than an employee whose wages are exempt from withholding
pursuant to section 3402(n) of the Internal Revenue Code of 1986)
that such employee may be eligible for a refund because of the
earned income credit."
DISREGARD OF REFUND FOR DETERMINATION OF ELIGIBILITY FOR FEDERAL
BENEFITS OR ASSISTANCE
Section 2(d) of Pub. L. 94-164, as amended by Pub. L. 94-455,
title IV, Sec. 402(a), Oct. 4, 1976, 90 Stat. 1558; Pub. L. 95-600,
title I, Sec. 105(f), Nov. 6, 1978, 92 Stat. 2776; Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Any refund
of Federal income taxes made to any individual by reason of section
43 [now 32] of the Internal Revenue Code of 1986 [formerly I.R.C.
1954] (relating to earned income credit), and any payment made by
an employer under section 3507 of such Code (relating to advance
payment of earned income credit) shall not be taken into account in
any year ending before 1980 as income or receipts for purposes of
determining the eligibility, for the month in which such refund is
made or any month thereafter of such individual or any other
individual for benefits or assistance, or the amount or extent of
benefits or assistance, under any Federal program or under any
State or local program financed in whole or in part with Federal
funds, but only if such individual (or the family unit of which he
is a member) is a recipient of benefits or assistance under such a
program for the month before the month in which such refund is
made."
[Section 105(g)(3) of Pub. L. 95-600 provided that: "Subsection
(f) [amending section 2(d) of Pub. L. 94-164, set out above] shall
take effect on the date of enactment of this Act [Nov. 6, 1978]."]
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 24, 86, 129, 151, 995,
3507, 6051, 6211, 6213, 6695 of this title; title 2 section 905;
title 42 sections 502, 653, 1382a, 1382b.
-End-
-CITE-
26 USC Sec. 33 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
Sec. 33. Tax withheld at source on nonresident aliens and foreign
corporations
-STATUTE-
There shall be allowed as a credit against the tax imposed by
this subtitle the amount of tax withheld at source under subchapter
A of chapter 3 (relating to withholding of tax on nonresident
aliens and on foreign corporations).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 13, Sec. 32; renumbered Sec. 33
and amended Pub. L. 98-369, div. A, title IV, Secs. 471(c), 474(j),
July 18, 1984, 98 Stat. 826, 832.)
-MISC1-
PRIOR PROVISIONS
A prior section 33 was renumbered section 27 of this title.
AMENDMENTS
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 32 of this
title as this section.
Pub. L. 98-369, Sec. 474(j), amended section generally, striking
out "and on tax-free covenant bonds" after "foreign corporations"
in section catchline, and, in text, substituting "as a credit
against the tax imposed by this subtitle" for "as credits against
the tax imposed by this chapter", and striking out designation
"(1)" before "the amount of tax withheld", and ", and (2) the
amount of tax withheld at source under subchapter B of chapter 3
(relating to interest on tax-free covenant bonds)" after "on
foreign corporations)".
EFFECTIVE DATE OF 1984 AMENDMENT
Section 475(b) of Pub. L. 98-369 provided that: "The amendments
made by subsections (j) and (r)(29) [amending this section and
sections 12, 164, 1441, 1442, 6049, and 7701 of this title and
repealing section 1451 of this title] shall not apply with respect
to obligations issued before January 1, 1984."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 874, 882, 1446, 6211,
6401 of this title.
-End-
-CITE-
26 USC Sec. 34 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
Sec. 34. Certain uses of gasoline and special fuels
-STATUTE-
(a) General rule
There shall be allowed as a credit against the tax imposed by
this subtitle for the taxable year an amount equal to the sum of
the amounts payable to the taxpayer -
(1) under section 6420 with respect to gasoline used during the
taxable year on a farm for farming purposes (determined without
regard to section 6420(g)),
(2) under section 6421 with respect to gasoline used during the
taxable year (A) otherwise than as a fuel in a highway vehicle or
(B) in vehicles while engaged in furnishing certain public
passenger land transportation service (determined without regard
to section 6421(i)),(!1) and
(3) under section 6427 with respect to fuels used for
nontaxable purposes or resold during the taxable year (determined
without regard to section 6427(k)).
(b) Exception
Credit shall not be allowed under subsection (a) for any amount
payable under section 6421 or 6427, if a claim for such amount is
timely filed and, under section 6421(i) or 6427(k), is payable
under such section.
-SOURCE-
(Added Pub. L. 89-44, title VIII, 809(c), June 21, 1965, 79 Stat.
167, Sec. 39; amended Pub. L. 91-258, title II, Sec. 207(c), May
21, 1970, 84 Stat. 248; Pub. L. 94-455, title XIX, Secs.
1901(a)(3), 1906(b)(8), (9), Oct. 4, 1976, 90 Stat. 1764, 1834;
Pub. L. 94-530, Sec. 1(c)(1), Oct. 17, 1976, 90 Stat. 2487; Pub. L.
95-599, title V, Sec. 505(c)(1), Nov. 6, 1978, 92 Stat. 2760; Pub.
L. 95-618, title II, Sec. 233(b)(2)(C), Nov. 9, 1978, 92 Stat.
3191; Pub. L. 96-223, title II, Sec. 232(d)(4)(A), Apr. 2, 1980, 94
Stat. 278; Pub. L. 97-424, title V, Sec. 515(b)(6)(A)-(C), Jan. 6,
1983, 96 Stat. 2181; renumbered Sec. 34 and amended Pub. L. 98-369,
div. A, title IV, Sec. 471(c), title IX, Sec. 911(d)(2)(A), July
18, 1984, 98 Stat. 826, 1006; Pub. L. 99-514, title XVII, Sec.
1703(e)(2)(F), title XVIII, Sec. 1877(a), Oct. 22, 1986, 100 Stat.
2778, 2902; Pub. L. 100-647, title I, Sec. 1017(c)(2), Nov. 10,
1988, 102 Stat. 3576; Pub. L. 104-188, title I, Sec. 1606(b)(1),
Aug. 20, 1996, 110 Stat. 1839; Pub. L. 105-206, title VI, Sec.
6023(24)(B), July 22, 1998, 112 Stat. 826.)
-REFTEXT-
REFERENCES IN TEXT
Section 6421(i), referred to in subsec. (a)(2), was repealed by
Pub. L. 103-66, title XIII, Sec. 13241(f)(7), Aug. 10, 1993, 107
Stat. 512.
-MISC1-
PRIOR PROVISIONS
A prior section 34, acts Aug. 16, 1954, ch. 736, 68A Stat. 13;
June 25, 1959, Pub. L. 86-69, Sec. 3(a)(1), 73 Stat. 139; Sept. 14,
1960, Pub. L. 86-779, Sec. 10(e), 74 Stat. 1009; Feb. 26, 1964,
Pub. L. 88-272, title II, Sec. 201(a), 78 Stat. 31, related to
dividends received by individuals, prior to repeal by Pub. L.
88-272, title II, Sec. 201(b), Feb. 26, 1964, 78 Stat. 31,
effective with respect to dividends received after Dec. 31, 1964.
AMENDMENTS
1998 - Subsec. (b). Pub. L. 105-206 substituted "section 6421(i)"
for "section 6421(j)".
1996 - Subsec. (a)(3). Pub. L. 104-188 amended par. (3)
generally. Prior to amendment, par. (3) read as follows: "under
section 6427 -
"(A) with respect to fuels used for nontaxable purposes or
resold, or
"(B) with respect to any qualified diesel-powered highway
vehicle purchased (or deemed purchased under section 6427(g)(6)),
during the taxable year (determined without regard to section
6427(k))."
1988 - Subsec. (b). Pub. L. 100-647 substituted "section 6421(j)
or 6427(k)" for "section 6421(i) or 6427(j)".
1986 - Subsec. (a)(3). Pub. L. 99-514, Sec. 1877(a), amended par.
(3) generally. Prior to amendment, par. (3) read as follows: "under
section 6427 with respect to fuels used for nontaxable purposes or
resold during the taxable year (determined without regard to
section 6427(j))."
Pub. L. 99-514, Sec. 1703(e)(2)(F), substituted "6427(k)" for
"6427(j)".
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 39 of this
title as this section.
Subsec. (a)(3). Pub. L. 98-369, Sec. 911(d)(2)(A), which directed
the amendment of par. (4) by substituting "6427(j)" for "6427(i)"
was executed to par. (3) to reflect the probable intent of Congress
and the redesignation of par. (4) as (3) by Pub. L. 97-424.
Subsec. (b). Pub. L. 98-369, Sec. 911(d)(2)(A), substituted
"6427(j)" for "6427(i)".
1983 - Pub. L. 97-424, Sec. 515(b)(6)(C), substituted "and
special fuels" for ", special fuels, and lubricating oil" after
"gasoline" in section catchline.
Subsec. (a)(2) to (4). Pub. L. 97-424, Sec. 515(b)(6)(A),
inserted "and" at end of par. (2), redesignated par. (4) as (3),
and struck out former (3) which referred to amounts payable to the
taxpayer under section 6424 with respect to lubricating oil used
during the taxable year for certain nontaxable purposes (determined
without regard to section 6424(f)).
Subsec. (b). Pub. L. 97-424, Sec. 515(b)(6)(B)(i), substituted
"6421 or 6427" for "6421, 6424, or 6427" after "amount payable
under".
Pub. L. 97-424, Sec. 515(b)(6)(B)(ii), substituted "6421(i) or
6427(i)" for "6421(i), 6424(f), or 6427(i)" after "and, under".
1980 - Subsec. (a)(4). Pub. L. 96-223 substituted "6427(i)" for
"6427(h)".
Subsec. (b). Pub. L. 96-223 substituted "6427(i)" for "6427(h)".
1978 - Subsec. (a)(3). Pub. L. 95-618 substituted "for certain
nontaxable purposes" for "otherwise than in a highway motor
vehicle".
Subsec. (a)(4). Pub. L. 95-599 substituted "6427(h)" for
"6427(g)".
Subsec. (b). Pub. L. 95-599 substituted "6427(h)" for "6427(g)".
1976 - Subsec. (a)(1). Pub. L. 94-455, Sec. 1906(b)(8),
substituted "6420(g)" for "6420(h)".
Subsec. (a)(3). Pub. L. 94-455, Sec. 1906(b)(9), substituted
"6424(f)" for "6424(g)".
Subsec. (a)(4). Pub. L. 94-530 substituted "6427(g)" for
"6427(f)".
Subsec. (b). Pub. L. 94-530, which directed the amendment of
subsec. (c) by substituting "6427(g)" for "6427(f)", was executed
to subsec. (b) to reflect the probable intent of Congress and the
redesignation of subsec. (c) as (b) by Pub. L. 94-455.
Pub. L. 94-455, Sec. 1901(a)(3), redesignated subsec. (c) as (b)
and substituted "section 6421(i), 6424(f), or 6427(f), is payable"
for "section 6421(i), 6424(g) or 6427(f) is payable". Former
subsec. (b), relating to determination of taxpayers first taxable
year with respect to tax credit for certain uses of gasoline and
lubricating oil, was struck out.
Subsec. (c). Pub. L. 94-455, Sec. 1901(a)(3), redesignated
subsec. (c) as (b).
1970 - Pub. L. 91-258, Sec. 207(c)(1), inserted reference to
special fuels in section catchline.
Subsec. (a)(4). Pub. L. 91-258, Sec. 207(c)(2), added par. (4).
Subsec. (c). Pub. L. 91-258, Sec. 207(c)(3), (4), inserted
references to sections 6427 and 6427(f), respectively.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-206, title VI, Sec. 6023(32), July 22, 1998, 112
Stat. 826, provided that: "The amendments made by this section
[amending this section and sections 45A, 59, 72, 142, 501, 512,
543, 871, 1017, 1250, 3121, 3401, 4092, 4221, 4222, 4973, 4975,
6039, 6050R, 6103, 6416, 6421, 6427, 6501, 7434, 7702B, 7872, and
9502 of this title] shall take effect on the date of the enactment
of this Act [July 22, 1998]."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1606(c) of Pub. L. 104-188 provided that: "The amendments
made by this section [amending this section and section 6427 of
this title] shall apply to vehicles purchased after the date of the
enactment of this Act [Aug. 20, 1996]."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 1703(e)(2)(F) of Pub. L. 99-514 applicable
to gasoline removed (as defined in section 4082 of this title as
amended by section 1703 of Pub. L. 99-514) after Dec. 31, 1987, see
section 1703(h) of Pub. L. 99-514 set out as a note under section
4081 of this title.
Amendment by section 1877(a) of Pub. L. 99-514 effective, except
as otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99-514, set out as a note
under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 911(d)(2)(A) of Pub. L. 98-369 effective
Aug. 1, 1984, see section 911(e) of Pub. L. 98-369, set out as a
note under section 6427 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Section 515(c) of Pub. L. 97-424 provided that: "The amendments
made by this section [amending sections 39 [now 34], 874, 882,
4101, 4102, 4221, 4222, 6201, 6206, 6416, 6421, 6504, 6675, 7210,
7603 to 7605, 7609, and 7610 of this title and repealing sections
4091 to 4094 and 6424 of this title] shall apply with respect to
articles sold after the date of the enactment of this Act [Jan. 6,
1983]."
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-223 effective on Jan. 1, 1979, see
section 232(h)(2) of Pub. L. 96-223, set out as a note under
section 6427 of this title.
EFFECTIVE DATE OF 1978 AMENDMENTS
Section 233(d) of Pub. L. 95-618 provided that: "The amendments
made by this section [amending sections 39 [now 34], 4041, 4221,
4483, 6416, 6421, 6424, 6427, 6504, and 6675 of this title and
amending a provision set out as a note under section 120 of Title
23, Highways] shall take effect on the first day of the first
calendar month which begins more than 10 days after the date of the
enactment of this Act [Nov. 9, 1978]."
Amendment by Pub. L. 95-599 effective Jan. 1, 1979, see section
505(d) of Pub. L. 95-599, set out as a note under section 6427 of
this title.
EFFECTIVE DATE OF 1976 AMENDMENTS
Amendment by Pub. L. 94-530 effective on Oct. 1, 1976, see
section 1(d) of Pub. L. 94-530, set out as a note under section
4041 of this title.
Amendment by section 1901(a)(3) of Pub. L. 94-455 applicable with
respect to taxable years beginning after Dec. 31, 1976, see section
1901(d) of Pub. L. 94-455, set out as a note under section 2 of
this title.
Amendment by section 1906(b)(8), (9) of Pub. L. 94-455, to take
effect on Feb. 1, 1977, see section 1906(d) of Pub. L. 94-455, set
out as a note under section 6013 of this title.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91-258 applicable with respect to taxable
years ending after June 30, 1970, see section 211(b) of Pub. L.
91-258, set out as a note under section 4041 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning on or after July 1,
1965, see section 809(f) of Pub. L. 89-44, set out as an Effective
Date of 1965 Amendment note under section 6420 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 774, 874, 882, 995, 1366,
1374, 1375, 1503, 4682, 6211, 6213, 6420, 6421, 6427, 9502, 9503,
9508 of this title.
-FOOTNOTE-
(!1) See References in Text note below.
-End-
-CITE-
26 USC Sec. 35 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
Sec. 35. Health insurance costs of eligible individuals
-STATUTE-
(a) In general
In the case of an individual, there shall be allowed as a credit
against the tax imposed by subtitle A an amount equal to 65 percent
of the amount paid by the taxpayer for coverage of the taxpayer and
qualifying family members under qualified health insurance for
eligible coverage months beginning in the taxable year.
(b) Eligible coverage month
For purposes of this section -
(1) In general
The term "eligible coverage month" means any month if -
(A) as of the first day of such month, the taxpayer -
(i) is an eligible individual,
(ii) is covered by qualified health insurance, the premium
for which is paid by the taxpayer,
(iii) does not have other specified coverage, and
(iv) is not imprisoned under Federal, State, or local
authority, and
(B) such month begins more than 90 days after the date of the
enactment of the Trade Act of 2002.
(2) Joint returns
In the case of a joint return, the requirements of paragraph
(1)(A) shall be treated as met with respect to any month if at
least 1 spouse satisfies such requirements.
(c) Eligible individual
For purposes of this section -
(1) In general
The term "eligible individual" means -
(A) an eligible TAA recipient,
(B) an eligible alternative TAA recipient, and
(C) an eligible PBGC pension recipient.
(2) Eligible TAA recipient
The term "eligible TAA recipient" means, with respect to any
month, any individual who is receiving for any day of such month
a trade readjustment allowance under chapter 2 of title II of the
Trade Act of 1974 or who would be eligible to receive such
allowance if section 231 of such Act were applied without regard
to subsection (a)(3)(B) of such section. An individual shall
continue to be treated as an eligible TAA recipient during the
first month that such individual would otherwise cease to be an
eligible TAA recipient by reason of the preceding sentence.
(3) Eligible alternative TAA recipient
The term "eligible alternative TAA recipient" means, with
respect to any month, any individual who -
(A) is a worker described in section 246(a)(3)(B) of the
Trade Act of 1974 who is participating in the program
established under section 246(a)(1) of such Act, and
(B) is receiving a benefit for such month under section
246(a)(2) of such Act.
An individual shall continue to be treated as an eligible
alternative TAA recipient during the first month that such
individual would otherwise cease to be an eligible alternative
TAA recipient by reason of the preceding sentence.
(4) Eligible PBGC pension recipient
The term "eligible PBGC pension recipient" means, with respect
to any month, any individual who -
(A) has attained age 55 as of the first day of such month,
and
(B) is receiving a benefit for such month any portion of
which is paid by the Pension Benefit Guaranty Corporation under
title IV of the Employee Retirement Income Security Act of
1974.
(d) Qualifying family member
For purposes of this section -
(1) In general
The term "qualifying family member" means -
(A) the taxpayer's spouse, and
(B) any dependent of the taxpayer with respect to whom the
taxpayer is entitled to a deduction under section 151(c).
Such term does not include any individual who has other specified
coverage.
(2) Special dependency test in case of divorced parents, etc.
If paragraph (2) or (4) of section 152(e) applies to any child
with respect to any calendar year, in the case of any taxable
year beginning in such calendar year, such child shall be treated
as described in paragraph (1)(B) with respect to the custodial
parent (within the meaning of section 152(e)(1)) and not with
respect to the noncustodial parent.
(e) Qualified health insurance
For purposes of this section -
(1) In general
The term "qualified health insurance" means any of the
following:
(A) Coverage under a COBRA continuation provision (as defined
in section 9832(d)(1)).
(B) State-based continuation coverage provided by the State
under a State law that requires such coverage.
(C) Coverage offered through a qualified State high risk pool
(as defined in section 2744(c)(2) of the Public Health Service
Act).
(D) Coverage under a health insurance program offered for
State employees.
(E) Coverage under a State-based health insurance program
that is comparable to the health insurance program offered for
State employees.
(F) Coverage through an arrangement entered into by a State
and -
(i) a group health plan (including such a plan which is a
multiemployer plan as defined in section 3(37) of the
Employee Retirement Income Security Act of 1974),
(ii) an issuer of health insurance coverage,
(iii) an administrator, or
(iv) an employer.
(G) Coverage offered through a State arrangement with a
private sector health care coverage purchasing pool.
(H) Coverage under a State-operated health plan that does not
receive any Federal financial participation.
(I) Coverage under a group health plan that is available
through the employment of the eligible individual's spouse.
(J) In the case of any eligible individual and such
individual's qualifying family members, coverage under
individual health insurance if the eligible individual was
covered under individual health insurance during the entire
30-day period that ends on the date that such individual became
separated from the employment which qualified such individual
for -
(i) in the case of an eligible TAA recipient, the allowance
described in subsection (c)(2),
(ii) in the case of an eligible alternative TAA recipient,
the benefit described in subsection (c)(3)(B), or
(iii) in the case of any eligible PBGC pension recipient,
the benefit described in subsection (c)(4)(B).
For purposes of this subparagraph, the term "individual health
insurance" means any insurance which constitutes medical care
offered to individuals other than in connection with a group
health plan and does not include Federal- or State-based health
insurance coverage.
(2) Requirements for state-based coverage
(A) In general
The term "qualified health insurance" does not include any
coverage described in subparagraphs (B) through (H) of
paragraph (1) unless the State involved has elected to have
such coverage treated as qualified health insurance under this
section and such coverage meets the following requirements:
(i) Guaranteed issue
Each qualifying individual is guaranteed enrollment if the
individual pays the premium for enrollment or provides a
qualified health insurance costs credit eligibility
certificate described in section 7527 and pays the remainder
of such premium.
(ii) No imposition of preexisting condition exclusion
No pre-existing condition limitations are imposed with
respect to any qualifying individual.
(iii) Nondiscriminatory premium
The total premium (as determined without regard to any
subsidies) with respect to a qualifying individual may not be
greater than the total premium (as so determined) for a
similarly situated individual who is not a qualifying
individual.
(iv) Same benefits
Benefits under the coverage are the same as (or
substantially similar to) the benefits provided to similarly
situated individuals who are not qualifying individuals.
(B) Qualifying individual
For purposes of this paragraph, the term "qualifying
individual" means -
(i) an eligible individual for whom, as of the date on
which the individual seeks to enroll in the coverage
described in subparagraphs (B) through (H) of paragraph (1),
the aggregate of the periods of creditable coverage (as
defined in section 9801(c)) is 3 months or longer and who,
with respect to any month, meets the requirements of clauses
(iii) and (iv) of subsection (b)(1)(A); and
(ii) the qualifying family members of such eligible
individual.
(3) Exception
The term "qualified health insurance" shall not include -
(A) a flexible spending or similar arrangement, and
(B) any insurance if substantially all of its coverage is of
excepted benefits described in section 9832(c).
(f) Other specified coverage
For purposes of this section, an individual has other specified
coverage for any month if, as of the first day of such month -
(1) Subsidized coverage
(A) In general
Such individual is covered under any insurance which
constitutes medical care (except insurance substantially all of
the coverage of which is of excepted benefits described in
section 9832(c)) under any health plan maintained by any
employer (or former employer) of the taxpayer or the taxpayer's
spouse and at least 50 percent of the cost of such coverage
(determined under section 4980B) is paid or incurred by the
employer.
(B) Eligible alternative TAA recipients
In the case of an eligible alternative TAA recipient, such
individual is either -
(i) eligible for coverage under any qualified health
insurance (other than insurance described in subparagraph
(A), (B), or (F) of subsection (e)(1)) under which at least
50 percent of the cost of coverage (determined under section
4980B(f)(4)) is paid or incurred by an employer (or former
employer) of the taxpayer or the taxpayer's spouse, or
(ii) covered under any such qualified health insurance
under which any portion of the cost of coverage (as so
determined) is paid or incurred by an employer (or former
employer) of the taxpayer or the taxpayer's spouse.
(C) Treatment of cafeteria plans
For purposes of subparagraphs (A) and (B), the cost of
coverage shall be treated as paid or incurred by an employer to
the extent the coverage is in lieu of a right to receive cash
or other qualified benefits under a cafeteria plan (as defined
in section 125(d)).
(2) Coverage under Medicare, Medicaid, or SCHIP
Such individual -
(A) is entitled to benefits under part A of title XVIII of
the Social Security Act or is enrolled under part B of such
title, or
(B) is enrolled in the program under title XIX or XXI of such
Act (other than under section 1928 of such Act).
(3) Certain other coverage
Such individual -
(A) is enrolled in a health benefits plan under chapter 89 of
title 5, United States Code, or
(B) is entitled to receive benefits under chapter 55 of title
10, United States Code.
(g) Special rules
(1) Coordination with advance payments of credit
With respect to any taxable year, the amount which would (but
for this subsection) be allowed as a credit to the taxpayer under
subsection (a) shall be reduced (but not below zero) by the
aggregate amount paid on behalf of such taxpayer under section
7527 for months beginning in such taxable year.
(2) Coordination with other deductions
Amounts taken into account under subsection (a) shall not be
taken into account in determining any deduction allowed under
section 162(l) or 213.
(3) MSA distributions
Amounts distributed from an Archer MSA (as defined in section
220(d)) shall not be taken into account under subsection (a).
(4) Denial of credit to dependents
No credit shall be allowed under this section to any individual
with respect to whom a deduction under section 151 is allowable
to another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
(5) Both spouses eligible individuals
The spouse of the taxpayer shall not be treated as a qualifying
family member for purposes of subsection (a), if -
(A) the taxpayer is married at the close of the taxable year,
(B) the taxpayer and the taxpayer's spouse are both eligible
individuals during the taxable year, and
(C) the taxpayer files a separate return for the taxable
year.
(6) Marital status; certain married individuals living apart
Rules similar to the rules of paragraphs (3) and (4) of section
21(e) shall apply for purposes of this section.
(7) Insurance which covers other individuals
For purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any contract for
qualified health insurance under which amounts are payable for
coverage of an individual other than the taxpayer and qualifying
family members.
(8) Treatment of payments
For purposes of this section -
(A) Payments by Secretary
Payments made by the Secretary on behalf of any individual
under section 7527 (relating to advance payment of credit for
health insurance costs of eligible individuals) shall be
treated as having been made by the taxpayer on the first day of
the month for which such payment was made.
(B) Payments by taxpayer
Payments made by the taxpayer for eligible coverage months
shall be treated as having been made by the taxpayer on the
first day of the month for which such payment was made.
(9) Regulations
The Secretary may prescribe such regulations and other guidance
as may be necessary or appropriate to carry out this section,
section 6050T, and section 7527.
-SOURCE-
(Added Pub. L. 107-210, div. A, title II, Sec. 201(a), Aug. 6,
2002, 116 Stat. 954.)
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of the Trade Act of 2002, referred to
in subsec. (b)(1)(B), is the date of enactment of Pub. L. 107-210,
which was approved Aug. 6, 2002.
The Trade Act of 1974, referred to in subsec. (c)(2), (3), is
Pub. L. 93-618, Jan. 3, 1975, 88 Stat. 1978, as amended. Chapter 2
of title II of the Act is classified generally to part 2 (Sec. 2271
et seq.) of subchapter II of chapter 12 of Title 19, Customs
Duties. Sections 231 and 246 of the Act are classified to sections
2291 and 2318 of Title 19, respectively. For complete
classification of this Act to the Code, see section 2101 of Title
19 and Tables.
The Employee Retirement Income Security Act of 1974, referred to
in subsecs. (c)(4)(B) and (e)(1)(F)(i), is Pub. L. 93-406, Sept. 2,
1974, 88 Stat. 829, as amended. Title IV of the Act is classified
principally to subchapter III (Sec. 1301 et seq.) of chapter 18 of
Title 29, Labor. Section 3(37) of the Act is classified to section
1002(37) of Title 29. For complete classification of this Act to
the Code, see Short Title note set out under section 1001 of Title
29 and Tables.
Section 2744(c)(2) of the Public Health Service Act, referred to
in subsec. (e)(1)(C), is classified to section 300gg-44(c)(2) of
Title 42, The Public Health and Welfare.
The Social Security Act, referred to in subsec. (f)(2), is act
Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Parts A and B of
title XVIII of the Act are classified generally to parts A (Sec.
1395c et seq.) and B (Sec. 1395j et seq.), respectively, of
subchapter XVIII of chapter 7 of Title 42, The Public Health and
Welfare. Titles XIX and XXI of the Act are classified generally to
subchapters XIX (Sec. 1396 et seq.) and XXI (Sec. 1397aa et seq.),
respectively, of chapter 7 of Title 42. Section 1928 of the Act is
classified to section 1396s of Title 42. For complete
classification of this Act to the Code, see section 1305 of Title
42 and Tables.
-MISC1-
PRIOR PROVISIONS
A prior section 35 was renumbered section 36 of this title.
Another prior section 35, acts Aug. 16, 1954, ch. 736, 68A Stat.
14; Sept. 2, 1958, Pub. L. 85-866, title I, Sec. 41(b), 72 Stat.
1639; Feb. 26, 1964, Pub. L. 88-272, title II, Sec. 201(d)(2), 78
Stat. 32, related to partially tax-exempt interest received by
individuals, prior to repeal by Pub. L. 94-455, title XIX, Sec.
1901(a)(2), Oct. 4, 1976, 90 Stat. 1764, effective with respect to
taxable years beginning after Dec. 31, 1976.
EFFECTIVE DATE
Pub. L. 107-210, div. A, title II, Sec. 201(d), Aug. 6, 2002, 116
Stat. 960, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting this section and section
300gg-45 of Title 42, The Public Health and Welfare, amending
section 1324 of Title 31, Money and Finance, and renumbering former
section 35 of this title as section 36 of this title] shall apply
to taxable years beginning after December 31, 2001.
"(2) State high risk pools. - The amendment made by subsection
(b) [enacting section 300gg-45 of Title 42] shall take effect on
the date of the enactment of this Act [Aug. 6, 2002]."
CONSTRUCTION
Nothing in title II of Pub. L. 107-210 or the amendments by that
title, other than provisions relating to COBRA continuation
coverage and reporting requirements, to be construed as creating a
new mandate on any party regarding health insurance coverage, see
section 203(f) of Pub. L. 107-210, set out as a Construction of
2002 Amendment note under section 2918 of Title 29, Labor.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 4980B, 7527 of this
title; title 19 section 2318; title 29 sections 1165, 2918; title
31 section 1324; title 42 section 300bb-5.
-End-
-CITE-
26 USC Sec. 36 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart C - Refundable Credits
-HEAD-
Sec. 36. Overpayments of tax
-STATUTE-
For credit against the tax imposed by this subtitle for
overpayments of tax, see section 6401.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 16, Sec. 38; renumbered Sec. 39,
Pub. L. 87-834, Sec. 2(a), Oct. 16, 1962, 76 Stat. 962; renumbered
Sec. 40, Pub. L. 89-44, title VIII, Sec. 809(c), June 21, 1965, 79
Stat. 167; renumbered Sec. 42, Pub. L. 92-178, title VI, Sec.
601(a), Dec. 10, 1971, 85 Stat. 553; renumbered Sec. 43, Pub. L.
94-12, title II, Sec. 203(a), Mar. 29, 1975, 89 Stat. 29;
renumbered Sec. 44, Pub. L. 94-12, title II, Sec. 204(a), Mar. 29,
1975, 89 Stat. 30; renumbered Sec. 45, Pub. L. 94-12, title II,
Sec. 208(a), Mar. 29, 1975, 89 Stat. 32; renumbered Sec. 35, Pub.
L. 98-369, div. A, title IV, Sec. 471(c), July 18, 1984, 98 Stat.
826; renumbered Sec. 36, Pub. L. 107-210, div. A, title II, Sec.
201(a), Aug. 6, 2002, 116 Stat. 954.)
-MISC1-
PRIOR PROVISIONS
A prior section 36, acts Aug. 16, 1954, ch. 736, 68A Stat. 15;
Oct. 4, 1976, Pub. L. 94-455, title V, Sec. 501(b)(2), title X,
Sec. 1011(c), title XIX, Sec. 1901(b)(1)(A), 90 Stat. 1558, 1611,
1790, directed that credits provided by section 32 not be allowed
if an individual elects under section 144 to take standard
deduction, prior to repeal by Pub. L. 95-30, title I, Secs.
101(d)(3), 106(a), May 23, 1977, 91 Stat. 133, 141, applicable to
taxable years beginning after Dec. 31, 1976.
-End-
-CITE-
26 USC Subpart D - Business Related Credits 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
SUBPART D - BUSINESS RELATED CREDITS
-MISC1-
Sec.
38. General business credit.
39. Carryback and carryforward of unused credits.
40. Alcohol used as fuel.
41. Credit for increasing research activities.
41.(!1) Employee stock ownership credit.
42. Low-income housing credit.
43. Enhanced oil recovery credit.
44. Expenditures to provide access to disabled
individuals.
45. Electricity produced from certain renewable resources.
45A. Indian employment credit.
45B. Credit for portion of employer social security taxes
paid with respect to employee cash tips.
45C. Clinical testing expenses for certain drugs for rare
diseases or conditions.
45D. New markets tax credit.
45E. Small employer pension plan startup costs.
45F. Employer-provided child care credit.
AMENDMENTS
2001 - Pub. L. 107-16, title VI, Sec. 619(c)(3), June 7, 2001,
115 Stat. 110, which directed the addition of item 45E at the end
of subpart D analysis, was executed by adding the item before item
45F, to reflect the probable intent of Congress.
Pub. L. 107-16, title II, Sec. 205(b)(2), June 7, 2001, 115 Stat.
53, added item 45F.
2000 - Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 121(d)], Dec.
21, 2000, 114 Stat. 2763, 2763A-610, added item 45D.
1996 - Pub. L. 104-188, title I, Sec. 1205(a)(3)(B), Aug. 20,
1996, 110 Stat. 1775, added item 45C.
1993 - Pub. L. 103-66, title XIII, Secs. 13322(e), 13443(c), Aug.
10, 1993, 107 Stat. 563, 569, added items 45A and 45B.
1992 - Pub. L. 102-486, title XIX, Sec. 1914(d), Oct. 24, 1992,
106 Stat. 3023, added item 45.
1990 - Pub. L. 101-508, title XI, Secs. 11511(c)(1), 11611(d),
Nov. 5, 1990, 104 Stat. 1388-485, 1388-503, added items 43 and 44.
1986 - Pub. L. 99-514, title II, Secs. 231(d)(3)(K), 252(d), Oct.
22, 1986, 100 Stat. 2180, 2205, added item 41 relating to credit
for increasing research activities and item 42.
1984 - Pub. L. 98-369, div. A, title IV, Sec. 471(b), July 18,
1984, 98 Stat. 826, added subpart D heading and analysis of
sections for subpart D, consisting of items 38 (new), 39 (new), 40
(formerly 44E), and 41 (formerly 44G). Former subpart D was
redesignated F.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 53, 469, 6401 of this
title.
-FOOTNOTE-
(!1) Section 41 repealed by Pub. L. 99-514 without corresponding
amendment of subpart analysis.
-End-
-CITE-
26 USC Sec. 38 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 38. General business credit
-STATUTE-
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the sum of -
(1) the business credit carryforwards carried to such taxable
year,
(2) the amount of the current year business credit, plus
(3) the business credit carrybacks carried to such taxable
year.
(b) Current year business credit
For purposes of this subpart, the amount of the current year
business credit is the sum of the following credits determined for
the taxable year:
(1) the investment credit determined under section 46,
(2) the work opportunity credit determined under section 51(a),
(3) the alcohol fuels credit determined under section 40(a),
(4) the research credit determined under section 41(a),
(5) the low-income housing credit determined under section
42(a),
(6) the enhanced oil recovery credit under section 43(a),
(7) in the case of an eligible small business (as defined in
section 44(b)), the disabled access credit determined under
section 44(a),
(8) the renewable electricity production credit under section
45(a),
(9) the empowerment zone employment credit determined under
section 1396(a),
(10) the Indian employment credit as determined under section
45A(a),
(11) the employer social security credit determined under
section 45B(a),
(12) the orphan drug credit determined under section 45C(a),
(13) the new markets tax credit determined under section
45D(a),
(14) in the case of an eligible employer (as defined in section
45E(c)), the small employer pension plan startup cost credit
determined under section 45E(a), plus
(15) the employer-provided child care credit determined under
section 45F(a).
(c) Limitation based on amount of tax
(1) In general
The credit allowed under subsection (a) for any taxable year
shall not exceed the excess (if any) of the taxpayer's net income
tax over the greater of -
(A) the tentative minimum tax for the taxable year, or
(B) 25 percent of so much of the taxpayer's net regular tax
liability as exceeds $25,000.
For purposes of the preceding sentence, the term "net income tax"
means the sum of the regular tax liability and the tax imposed by
section 55, reduced by the credits allowable under subparts A and
B of this part, and the term "net regular tax liability" means
the regular tax liability reduced by the sum of the credits
allowable under subparts A and B of this part.
(2) Empowerment zone employment credit may offset 25 percent of
minimum tax
(A) In general
In the case of the empowerment zone employment credit credit
-
(i) this section and section 39 shall be applied separately
with respect to such credit, and
(ii) for purposes of applying paragraph (1) to such credit
-
(I) 75 percent of the tentative minimum tax shall be
substituted for the tentative minimum tax under
subparagraph (A) thereof, and
(II) the limitation under paragraph (1) (as modified by
subclause (I)) shall be reduced by the credit allowed under
subsection (a) for the taxable year (other than the
empowerment zone employment credit or the New York Liberty
Zone business employee credit).
(B) Empowerment zone employment credit
For purposes of this paragraph, the term "empowerment zone
employment credit" means the portion of the credit under
subsection (a) which is attributable to the credit determined
under section 1396 (relating to empowerment zone employment
credit).
(3) Special rules for New York Liberty Zone business employee
credit
(A) In general
In the case of the New York Liberty Zone business employee
credit -
(i) this section and section 39 shall be applied separately
with respect to such credit, and
(ii) in applying paragraph (1) to such credit -
(I) the tentative minimum tax shall be treated as being
zero, and
(II) the limitation under paragraph (1) (as modified by
subclause (I)) shall be reduced by the credit allowed under
subsection (a) for the taxable year (other than the New
York Liberty Zone business employee credit).
(B) New York Liberty Zone business employee credit
For purposes of this subsection, the term "New York Liberty
Zone business employee credit" means the portion of work
opportunity credit under section 51 determined under section
1400L(a).
(4) Special rules
(A) Married individuals
In the case of a husband or wife who files a separate return,
the amount specified under subparagraph (B) of paragraph (1)
shall be $12,500 in lieu of $25,000. This subparagraph shall
not apply if the spouse of the taxpayer has no business credit
carryforward or carryback to, and has no current year business
credit for, the taxable year of such spouse which ends within
or with the taxpayer's taxable year.
(B) Controlled groups
In the case of a controlled group, the $25,000 amount
specified under subparagraph (B) of paragraph (1) shall be
reduced for each component member of such group by apportioning
$25,000 among the component members of such group in such
manner as the Secretary shall by regulations prescribe. For
purposes of the preceding sentence, the term "controlled group"
has the meaning given to such term by section 1563(a).
(C) Limitations with respect to certain persons
In the case of a person described in subparagraph (A) or (B)
of section 46(e)(1) (as in effect on the day before the date of
the enactment of the Revenue Reconciliation Act of 1990), the
$25,000 amount specified under subparagraph (B) of paragraph
(1) shall equal such person's ratable share (as determined
under section 46(e)(2) (as so in effect) of such amount.
(D) Estates and trusts
In the case of an estate or trust, the $25,000 amount
specified under subparagraph (B) of paragraph (1) shall be
reduced to an amount which bears the same ratio to $25,000 as
the portion of the income of the estate or trust which is not
allocated to beneficiaries bears to the total income of the
estate or trust.
(d) Ordering rules
For purposes of any provision of this title where it is necessary
to ascertain the extent to which the credits determined under any
section referred to in subsection (b) are used in a taxable year or
as a carryback or carryforward -
(1) In general
The order in which such credits are used shall be determined on
the basis of the order in which they are listed in subsection (b)
as of the close of the taxable year in which the credit is used.
(2) Components of investment credit
The order in which the credits listed in section 46 are used
shall be determined on the basis of the order in which such
credits are listed in section 46 as of the close of the taxable
year in which the credit is used.
(3) Credits no longer listed
For purposes of this subsection -
(A) the credit allowable by section 40, as in effect on the
day before the date of the enactment of the Tax Reform Act of
1984, (relating to expenses of work incentive programs) and the
credit allowable by section 41(a), as in effect on the day
before the date of the enactment of the Tax Reform Act of 1986,
(relating to employee stock ownership credit) shall be treated
as referred to in that order after the last paragraph of
subsection (b), and
(B) the credit determined under section 46 -
(i) to the extent attributable to the employee plan
percentage (as defined in section 46(a)(2)(E) as in effect on
the day before the date of the enactment of the Tax Reform
Act of 1984) shall be treated as a credit listed after
paragraph (1) of section 46, and
(ii) to the extent attributable to the regular percentage
(as defined in section 46(b)(1) as in effect on the day
before the date of the enactment of the Revenue
Reconciliation Act of 1990) shall be treated as the first
credit listed in section 46.
-SOURCE-
(Added and amended Pub. L. 98-369, div. A, title IV, Sec. 473,
title VI, Sec. 612(e)(1), July 18, 1984, 98 Stat. 827, 912; Pub. L.
99-514, title II, Secs. 221(a), 231(d)(1), (3)(B), 252(b), title
VII, Sec. 701(c)(4), title XI, Sec. 1171(b)(1), (2), Oct. 22, 1986,
100 Stat. 2173, 2178, 2179, 2205, 2341, 2513; Pub. L. 100-647,
title I, Secs. 1002(e)(8)(A), 1007(g)(2), (8), Nov. 10, 1988, 102
Stat. 3368, 3434, 3435; Pub. L. 101-508, title XI, Secs.
11511(b)(1), 11611(b)(1), 11813(b)(2), Nov. 5, 1990, 104 Stat.
1388-485, 1388-503, 1388-551; Pub. L. 102-486, title XIX, Sec.
1914(b), Oct. 24, 1992, 106 Stat. 3023; Pub. L. 103-66, title XIII,
Secs. 13302(a)(1), (c)(1), 13322(a), 13443(b)(1), Aug. 10, 1993,
107 Stat. 555, 559, 569; Pub. L. 104-188, title I, Secs.
1201(e)(1), 1205(a)(2), 1702(e)(4), Aug. 20, 1996, 110 Stat. 1772,
1775, 1870; Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
121(b)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-609; Pub. L.
107-16, title II, Sec. 205(b)(1), title VI, Sec. 619(b), June 7,
2001, 115 Stat. 53, 110; Pub. L. 107-147, title III, Sec.
301(b)(1), (2), title IV, Sec. 411(d)(2), Mar. 9, 2002, 116 Stat.
39, 46.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
For reference to section 51 of this title, referred to in subsec.
(b), treated as including reference to section 51A of this title,
see section 51A(d)(2) of this title.
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsecs. (c)(4)(C) and (d)(3)(B)(ii), is the
date of enactment of Pub. L. 101-508, which was approved Nov. 5,
1990.
The date of the enactment of the Tax Reform Act of 1984, referred
to in subsec. (d)(3)(A), (B)(i), is the date of enactment of Pub.
L. 98-369, which was approved July 18, 1984.
The date of the enactment of the Tax Reform Act of 1986, referred
to in subsec. (d)(3)(A), is the date of enactment of Pub. L.
99-514, which was approved Oct. 22, 1986.
-MISC1-
PRIOR PROVISIONS
A prior section 38, added Pub. L. 87-834, Sec. 2(a), Oct. 16,
1962, 76 Stat. 962; amended Pub. L. 94-455, title XIX, Sec.
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, related to investment
in certain depreciable property, prior to repeal by Pub. L. 98-369,
div. A, title IV, Sec. 474(m)(1), July 18, 1984, 98 Stat. 833.
Another prior section 38 was renumbered section 36 of this title.
AMENDMENTS
2002 - Subsec. (b)(15). Pub. L. 107-147, Sec. 411(d)(2),
substituted "45F(a)" for "45F".
Subsec. (c)(2)(A)(ii)(II). Pub. L. 107-147, Sec. 301(b)(2),
inserted "or the New York Liberty Zone business employee credit"
after "employment credit".
Subsec. (c)(3), (4). Pub. L. 107-147, Sec. 301(b)(1), added par.
(3) and redesignated former par. (3) as (4).
2001 - Subsec. (b)(12). Pub. L. 107-16, Secs. 619(b), 901,
temporarily struck out "plus" at end. See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (b)(13). Pub. L. 107-16, Secs. 619(b), 901, temporarily
substituted ", plus" for period at end. See Effective and
Termination Dates of 2001 Amendment note below.
Pub. L. 107-16, Secs. 205(b)(1), 901, temporarily struck out
"plus" at end. See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (b)(14). Pub. L. 107-16, Secs. 619(b), 901, temporarily
added par. (14). See Effective and Termination Dates of 2001
Amendment note below.
Pub. L. 107-16, Secs. 205(b)(1), 901, temporarily substituted ",
plus" for period at end. See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (b)(15). Pub. L. 107-16, Secs. 205(b)(1), 901,
temporarily added par. (15). See Effective and Termination Dates of
2001 Amendment note below.
2000 - Subsec. (b)(13). Pub. L. 106-554 added par. (13).
1996 - Subsec. (b)(2). Pub. L. 104-188, Sec. 1201(e)(1),
substituted "work opportunity credit" for "targeted jobs credit".
Subsec. (b)(12). Pub. L. 104-188, Sec. 1205(a)(2), added par.
(12).
Subsec. (c)(2)(C). Pub. L. 104-188, Sec. 1702(e)(4), amended
subpar. (C), as in effect on day before date of enactment of the
Revenue Reconciliation Act of 1990 (title XI of Pub. L. 101-508,
approved Nov. 5, 1990), by inserting before period at end of first
sentence "and without regard to the deduction under section 56(h)".
1993 - Subsec. (b)(7). Pub. L. 103-66, Sec. 13302(a)(1), struck
out "plus" at end.
Subsec. (b)(8). Pub. L. 103-66, Sec. 13322(a), which directed
amendment of par. (8) by striking "plus" at end, was executed by
striking "and" at end to reflect the probable intent of Congress.
Pub. L. 103-66, Sec. 13302(a)(1), substituted ", and" for period
at end.
Subsec. (b)(9). Pub. L. 103-66, Sec. 13443(b)(1), struck out
"plus" at end.
Pub. L. 103-66, Sec. 13322(a), substituted ", plus" for period at
end.
Pub. L. 103-66, Sec. 13302(a)(1), added par. (9).
Subsec. (b)(10). Pub. L. 103-66, Sec. 13443(b)(1), substituted ",
plus" for period at end.
Pub. L. 103-66, Sec. 13322(a), added par. (10).
Subsec. (b)(11). Pub. L. 103-66, Sec. 13443(b)(1), added par.
(11).
Subsec. (c)(2), (3). Pub. L. 103-66, Sec. 13302(c)(1), added par.
(2) and redesignated former par. (2) as (3).
1992 - Subsec. (b)(6) to (8). Pub. L. 102-486 struck out "plus"
at end of par. (6), substituted "; plus" for period at end of par.
(7), and added par. (8).
1990 - Subsec. (b)(1). Pub. L. 101-508, Sec. 11813(b)(2)(A),
substituted "section 46" for "section 46(a)".
Subsec. (b)(4). Pub. L. 101-508, Sec. 11511(b)(1), struck out
"plus" at end.
Subsec. (b)(5). Pub. L. 101-508, Sec. 11611(b)(1), struck out
"plus" at end.
Pub. L. 101-508, Sec. 11511(b)(1), substituted ", plus" for
period at end.
Subsec. (b)(6). Pub. L. 101-508, Sec. 11611(b)(1), substituted ",
plus" for period at end.
Pub. L. 101-508, Sec. 11511(b)(1), added par. (6).
Subsec. (b)(7). Pub. L. 101-508, Sec. 11611(b)(1), added par.
(7).
Subsec. (c)(2). Pub. L. 101-508, Sec. 11813(b)(2)(B),
redesignated par. (3) as (2) and struck out former par. (2) which
permitted an offset of regular investment tax credit against 25
percent of minimum tax.
Subsec. (c)(2)(C). Pub. L. 101-508, Sec. 11813(b)(2)(C), inserted
"(as in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990)" after "46(e)(1)" and "(as so
in effect)" after "46(e)(2)".
Subsec. (c)(3). Pub. L. 101-508, Sec. 11813(b)(2)(B),
redesignated par. (3) as (2).
Subsec. (d). Pub. L. 101-508, Sec. 11813(b)(2)(D)(i), substituted
"any provision" for "sections 46(f), 47(a), 196(a), and any other
provision" in introductory provisions.
Subsec. (d)(2). Pub. L. 101-508, Sec. 11813(b)(2)(D)(ii), amended
par. (2) generally. Prior to amendment, par. (2) read as follows:
"The order in which credits attributable to a percentage referred
to in section 46(a) are used shall be determined on the basis of
the order in which such percentages are listed in section 46(a) as
of the close of the taxable year in which the credit is used."
Subsec. (d)(3)(B). Pub. L. 101-508, Sec. 11813(b)(2)(D)(iii),
amended subpar. (B) generally. Prior to amendment, subpar. (B) read
as follows: "the employee plan percentage (as defined in section
46(a)(2)(E), as in effect on the day before the date of the
enactment of the Tax Reform Act of 1984) shall be treated as
referred to after section 46(a)(2)."
1988 - Subsec. (c). Pub. L. 100-647, Sec. 1007(g)(2), amended
pars. (1) to (3) generally, substituting pars. (1) and (2) for
former pars. (1) to (3), redesignating former par. (4) as (3), and
substituting "subparagraph (B) of paragraph (1)" for "subparagraphs
(A) and (B) of paragraph (1)" in subpars. (A), (B), (C), and (D).
Pub. L. 100-647, Sec. 1007(g)(8), made technical correction to
directory language of Pub. L. 99-514, Sec. 701(c)(4), see 1986
Amendment note below.
Subsec. (d). Pub. L. 100-647, Sec. 1002(e)(8)(A), substituted
"Ordering rules" for "Special rules for certain regulated
companies" in heading and amended text generally. Prior to
amendment, text read as follows: "In the case of any taxpayer to
which section 46(f) applies, for purposes of sections 46(f), 47(a),
and 196(a) and any other provision of this title where it is
necessary to ascertain the extent to which the credits determined
under section 40(a), 41(a), 42(a), 46(a), or 51(a) are used in a
taxable year or as a carryback or carryforward, the order in which
such credits are used shall be determined on the basis of the order
in which they are listed in subsection (b)."
1986 - Subsec. (b)(4). Pub. L. 99-514, Sec. 231(d)(1), added par.
(4).
Pub. L. 99-514, Sec. 1171(b)(1), struck out former par. (4) which
read as follows: "the employee stock ownership credit determined
under section 41(a)".
Subsec. (b)(5). Pub. L. 99-514, Sec. 252(b)(1), added par. (5).
Subsec. (c). Pub. L. 99-514, Sec. 701(c)(4), as amended by Pub.
L. 100-647, Sec. 1007(g)(8), added pars. (1) to (3), redesignated
former par. (3) as (4), and struck out former par. (1) "In general"
which provided: "The credit allowed under subsection (a) for any
taxable year shall not exceed the sum of -
"(A) so much of the taxpayer's net tax liability for the
taxable year as does not exceed $25,000, plus
"(B) 75 percent of so much of the taxpayer's net tax liability
for the taxable year as exceeds $25,000."
and former par. (2) "Net tax liability", which provided: "For
purposes of paragraph (1), the term 'net tax liability' means the
tax liability (as defined in section 26(b)), reduced by the sum of
the credits allowable under subparts A and B of this part."
Subsec. (c)(1)(B). Pub. L. 99-514, Sec. 221(a), substituted "75
percent" for "85 percent".
Subsec. (d). Pub. L. 99-514, Sec. 252(b)(2), inserted "42(a),".
Pub. L. 99-514, Sec. 1171(b)(2), substituted "and 196(a)" for
"196(a), and 404(i)" and struck out "41(a)," after "40(a)".
Pub. L. 99-514, Sec. 231(d)(3)(B), inserted "41(a)," after
"40(a),".
1984 - Subsec. (c)(2). Pub. L. 98-369, Sec. 612(e)(1),
substituted "section 26(b)" for "section 25(b)".
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title III, Sec. 301(b)(3), Mar. 9, 2002, 116
Stat. 40, provided that: "The amendments made by this subsection
[amending this section] shall apply to taxable years ending after
December 31, 2001."
Amendment by section 411(d)(2) of Pub. L. 107-147 effective as if
included in the provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001, Pub. L. 107-16, to which such amendment
relates, see section 411(x) of Pub. L. 107-147, set out as a note
under section 25B of this title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title II, Sec. 205(c), June 7, 2001, 115 Stat.
53, provided that: "The amendments made by this section [enacting
section 45F of this title and amending this section and section
1016 of this title] shall apply to taxable years beginning after
December 31, 2001."
Pub. L. 107-16, title VI, Sec. 619(d), June 7, 2001, 115 Stat.
110, as amended by Pub. L. 107-147, title IV, Sec. 411(n)(2), Mar.
9, 2002, 116 Stat. 48, provided that: "The amendments made by this
section [enacting section 45E of this title and amending this
section and sections 39 and 196 of this title] shall apply to costs
paid or incurred in taxable years beginning after December 31,
2001, with respect to qualified employer plans first effective
after such date."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 121(e)], Dec. 21,
2000, 114 Stat. 2763, 2763A-610, provided that: "The amendments
made by this section [enacting section 45D of this title, amending
this section and sections 39 and 196 of this title, and enacting
provisions set out as notes under section 45D of this title] shall
apply to investments made after December 31, 2000."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1201(g) of Pub. L. 104-188 provided that: "The amendments
made by this section [amending this section and sections 41, 45A,
51, 196, and 1396 of this title] shall apply to individuals who
begin work for the employer after September 30, 1996."
Amendment by section 1205(a)(2) of Pub. L. 104-188 applicable to
amounts paid or incurred in taxable years ending after June 30,
1996, see section 1205(e) of Pub. L. 104-188, set out as a note
under section 29 of this title.
Section 1702(i) of Pub. L. 104-188 provided that: "Except as
otherwise expressly provided, any amendment made by this section
[amending this section, sections 50, 56, 59, 143, 151, 168, 172,
179, 243, 280F, 341, 424, 460, 613A, 805, 832, 861, 897, 1248,
1250, 1367, 1504, 2701, 2702, 2704, 4093, 4975, 5041, 5061, 5354,
6038A, 6302, 6416, 6427, 6501, 6503, 6621, 6724, and 7012 of this
title, and provisions set out as a note under section 42 of this
title] shall take effect as if included in the provision of the
Revenue Reconciliation Act of 1990 [Pub. L. 101-508, title XI] to
which such amendment relates."
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13303 of Pub. L. 103-66 provided that: "The amendments
made by this part [part I (Secs. 13301-13303) of subchapter C of
chapter 1 of title XIII of Pub. L. 103-66, enacting sections 1391
to 1394 and 1396 to 1397D of this title and amending this section
and sections 39, 51, 196, 280C, and 381 of this title] shall take
effect on the date of the enactment of this Act [Aug. 10, 1993]."
Section 13322(f) of Pub. L. 103-66 provided that: "The amendments
made by this section [enacting section 45A of this title and
amending this section and sections 39, 196, and 280C of this title]
shall apply to wages paid or incurred after December 31, 1993."
Section 13443(d) of Pub. L. 103-66, as amended by Pub. L.
104-188, title I, Sec. 1112(a)(2), Aug. 20, 1996, 110 Stat. 1759,
provided that: "The amendments made by this section [enacting
section 45B of this title and amending this section and section 39
of this title] shall apply with respect to taxes paid after
December 31, 1993, with respect to services performed before, on,
or after such date."
EFFECTIVE DATE OF 1992 AMENDMENT
Section 1914(e) of Pub. L. 102-486 provided that: "The amendments
made by this section [enacting section 45 of this title and
amending this section and section 39 of this title] shall apply to
taxable years ending after December 31, 1992."
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11511(b)(1) of Pub. L. 101-508 applicable to
costs paid or incurred in taxable years beginning after Dec. 31,
1990, see section 11511(d)(1) of Pub. L. 101-508, set out as an
Effective Date note under section 43 of this title.
Section 11611(e) of Pub. L. 101-508 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting section 44 of this title
and amending this section and sections 39 and 190 of this title]
shall apply to expenditures paid or incurred after the date of the
enactment of this Act [Nov. 5, 1990].
"(2) Subsection (c). - The amendment made by subsection (c)
[amending section 190 of this title] shall apply to taxable years
beginning after the date of the enactment of this Act."
Amendment by section 11813(b)(2) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1002(e)(8)(C) of Pub. L. 100-647 provided that: "The
amendments made by this paragraph [amending this section and
section 49 of this title] shall apply to taxable years beginning
after December 31, 1983, and to carrybacks from such years."
Amendment by section 1007(g)(2), (8) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the
provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which
such amendment relates, see section 1019(a) of Pub. L. 100-647, set
out as a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 221(b) of Pub. L. 99-514 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1985."
Amendment by section 231(d)(1), (3)(B) of Pub. L. 99-514
applicable to taxable years beginning after Dec. 31, 1985, see
section 231(g) of Pub. L. 99-514, set out as a note under section
41 of this title.
Amendment by section 252(b) of Pub. L. 99-514 applicable to
buildings placed in service after Dec. 31, 1986, in taxable years
ending after such date, see section 252(e) of Pub. L. 99-514, set
out as an Effective Date note under section 42 of this title.
Amendment by section 701(c)(4) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
Section 1171(c) of Pub. L. 99-514 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
56, 108, 401, and 404 of this title and repealing sections 41 and
6699 of this title] shall apply to compensation paid or accrued
after December 31, 1986, in taxable years ending after such date.
"(2) Sections 404(i) and 6699 to continue to apply to pre-1987
credits. - The provisions of sections 404(i) and 6699 of the
Internal Revenue Code of 1986 shall continue to apply with respect
to credits under section 41 of such Code attributable to
compensation paid or accrued before January 1, 1987 (or under
section 38 of such Code with respect to qualified investment before
January 1, 1983)."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to interest paid or
accrued after December 31, 1984, on indebtedness incurred after
December 31, 1984, see section 612(g) of Pub. L. 98-369, set out as
an Effective Date note under section 25 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1983, and to carrybacks from such years, see section 475(a) of Pub.
L. 98-369, set out as an Effective Date of 1984 Amendment note
under section 21 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11813(b)(2)
of Pub. L. 101-508 be construed to affect treatment of certain
transactions occurring, property acquired, or items of income,
loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT
CORPORATIONS
Section 13311 of Pub. L. 103-66, as amended by Pub. L. 104-188,
title I, Sec. 1703(n)(13), Aug. 20, 1996, 110 Stat. 1877, provided
that:
"(a) In General. - For purposes of section 38 of the Internal
Revenue Code of 1986, the current year business credit shall
include the credit determined under this section.
"(b) Determination of Credit. - The credit determined under this
section for each taxable year in the credit period with respect to
any qualified CDC contribution made by the taxpayer is an amount
equal to 5 percent of such contribution.
"(c) Credit Period. - For purposes of this section, the credit
period with respect to any qualified CDC contribution is the period
of 10 taxable years beginning with the taxable year during which
such contribution was made.
"(d) Qualified CDC Contribution. - For purposes of this section -
"(1) In general. - The term 'qualified CDC contribution' means
any transfer of cash -
"(A) which is made to a selected community development
corporation during the 5-year period beginning on the date such
corporation was selected for purposes of this section,
"(B) the amount of which is available for use by such
corporation for at least 10 years,
"(C) which is to be used by such corporation for qualified
low-income assistance within its operational area, and
"(D) which is designated by such corporation for purposes of
this section.
"(2) Limitations on amount designated. - The aggregate amount
of contributions to a selected community development corporation
which may be designated by such corporation shall not exceed
$2,000,000.
"(e) Selected Community Development Corporations. -
"(1) In general. - For purposes of this section, the term
'selected community development corporation' means any
corporation -
"(A) which is described in section 501(c)(3) of such Code and
exempt from tax under section 501(a) of such Code,
"(B) the principal purposes of which include promoting
employment of, and business opportunities for, low-income
individuals who are residents of the operational area, and
"(C) which is selected by the Secretary of Housing and Urban
Development for purposes of this section.
"(2) Only 20 corporations may be selected. - The Secretary of
Housing and Urban Development may select 20 corporations for
purposes of this section, subject to the availability of eligible
corporations. Such selections may be made only before July 1,
1994. At least 8 of the operational areas of the corporations
selected must be rural areas (as defined by section 1393(a)(2) of
such Code).
"(3) Operational areas must have certain characteristics. - A
corporation may be selected for purposes of this section only if
its operational area meets the following criteria:
"(A) The area meets the size requirements under section
1392(a)(3).
"(B) The unemployment rate (as determined by the appropriate
available data) is not less than the national unemployment
rate.
"(C) The median family income of residents of such area does
not exceed 80 percent of the median gross income of residents
of the jurisdiction of the local government which includes such
area.
"(f) Qualified Low-Income Assistance. - For purposes of this
section, the term 'qualified low-income assistance' means
assistance -
"(1) which is designed to provide employment of, and business
opportunities for, low-income individuals who are residents of
the operational area of the community development corporation,
and
"(2) which is approved by the Secretary of Housing and Urban
Development."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN
RELATION TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(c)(4) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had
been included in the provision of Pub. L. 99-514 to which such
amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,
set out as a note under section 861 of this title.
EFFECTIVE 15-YEAR CARRYBACK OF EXISTING CARRYFORWARDS OF STEEL
COMPANIES
Section 212 of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1002(f), Nov. 10, 1988, 102 Stat. 3369, provided
that:
"(a) General Rule. - If a qualified corporation makes an election
under this section for its 1st taxable year beginning after
December 31, 1986, with respect to any portion of its existing
carryforwards, the amount determined under subsection (b) shall be
treated as a payment against the tax imposed by chapter 1 of the
Internal Revenue Code of 1986 made by such corporation on the last
day prescribed by law (without regard to extensions) for filing its
return of tax under chapter 1 of such Code for such 1st taxable
year.
"(b) Amount. - For purposes of subsection (a), the amount
determined under this subsection shall be the lesser of -
"(1) 50 percent of the portion of the corporation's existing
carryforwards to which the election under subsection (a) applies,
or
"(2) the corporation's net tax liability for the carryback
period.
"(c) Corporation Making Election May Not Use Same Amounts Under
Section 38. - In the case of a qualified corporation which makes an
election under subsection (a), the portion of such corporation's
existing carryforwards to which such an election applies shall not
be taken into account under section 38 of the Internal Revenue Code
of 1986 for any taxable year beginning after December 31, 1986.
"(d) Net Tax Liability for Carryback Period. - For purposes of
this section -
"(1) In general. - A corporation's net tax liability for the
carryback period is the aggregate of such corporation's net tax
liability for taxable years in the carryback period.
"(2) Net tax liability. - The term 'net tax liability' means,
with respect to any taxable year, the amount of the tax imposed
by chapter 1 of the Internal Revenue Code of 1954 [now 1986] for
such taxable year, reduced by the sum of the credits allowable
under part IV of subchapter A of such chapter 1 (other than
section 34 thereof). For purposes of the preceding sentence, any
tax treated as not imposed by chapter 1 of such Code under
section 26(b)(2) of such Code shall not be treated as tax imposed
by such chapter 1.
"(3) Carryback period. - The term 'carryback period' means the
period -
"(A) which begins with the corporation's 15th taxable year
preceding the 1st taxable year from which there is an unused
credit included in such corporation's existing carryforwards
(but in no event shall such period begin before the
corporation's 1st taxable year ending after December 31, 1961),
and
"(B) which ends with the corporation's last taxable year
beginning before January 1, 1986.
"(e) No Recomputation of Minimum Tax, Etc. - Nothing in this
section shall be construed to affect -
"(1) the amount of the tax imposed by section 56 of the
Internal Revenue Code of 1986, or
"(2) the amount of any credit allowable under such Code,
for any taxable year in the carryback period.
"(f) Reinvestment Requirement. -
"(1) In general. - Any amount determined under this section
must be committed to reinvestment in, and modernization of the
steel industry through investment in modern plant and equipment,
research and development, and other appropriate projects, such as
working capital for steel operations and programs for the
retraining of steel workers.
"(2) Special rule. - In the case of the LTV Corporation, in
lieu of the requirements of paragraph (1) -
"(A) such corporation shall place such refund in a separate
account; and
"(B) amounts in such separate account -
"(i) shall only be used by the corporation -
"(I) to purchase an insurance policy which provides that, in
the event the corporation becomes involved in a title 11 or
similar case (as defined in section 368(a)(3)(A) of the
Internal Revenue Code of 1954 [now 1986]), the insurer will
provide life and health insurance coverage during the 1-year
period beginning on the date when the corporation receives
the refund to any individual with respect to whom the
corporation would (but for such involvement) have been
obligated to provide such coverage the coverage provided by
the insurer will be identical to the coverage which the
corporation would (but for such involvement) have been
obligated to provide, and provides that the payment of
insurance premiums will not be required during such 1-year
period to keep such policy in force, or
"(II) directly in connection with the trade or business of the
corporation in the manufacturer or production of steel; and
"(ii) shall be used (or obligated) for purposes described
in clause (i) not later than 3 months after the corporation
receives the refund.
"(3) In the case of a qualified corporation, no offset to any
refund under this section may be made by reason of any tax
imposed by section 4971 of the Internal Revenue Code of 1986 (or
any interest or penalty attributable to any such tax), and the
date on which any such refund is to be paid shall be determined
without regard to such corporation's status under title 11,
United States Code.
"(g) Definitions. - For purposes of this section -
"(1) Qualified corporation. -
"(A) In general. - The term 'qualified corporation' means any
corporation which is described in section 806(b) of the Steel
Import Stabilization Act [19 U.S.C. 2253 note] and a company
which was incorporated on February 11, 1983, in Michigan.
"(B) Certain predecessors included. - In the case of any
qualified corporation which has carryforward attributable to a
predecessor corporation described in such section 806(b), the
qualified corporation and the predecessor corporation shall be
treated as 1 corporation for purposes of subsections (d) and
(e).
"(2) Existing carryforwards. - The term 'existing carryforward'
means the aggregate of the amounts which -
"(A) are unused business credit carryforwards to the
taxpayer's 1st taxable year beginning after December 31, 1986
(determined without regard to the limitations of section 38(c)
and any reduction under section 49 of the Internal Revenue Code
of 1986), and
"(B) are attributable to the amount of the regular investment
credit determined for periods before January 1, 1986, under
section 46(a)(1) of such Code (relating to regular percentage),
or any corresponding provision of prior law, determined on the
basis that the regular investment credit was used first.
"(3) Special rule for restructuring. - In the case of any
corporation, any restructuring shall not limit, increase, or
otherwise affect the benefits which would have been available
under this section but for such restructuring.
"(h) Tentative Refunds. - Rules similar to the rules of section
6425 of the Internal Revenue Code of 1986 shall apply to any
overpayment resulting from the application of this section."
EFFECTIVE 15-YEAR CARRYBACK OF EXISTING CARRYFORWARDS OF QUALIFIED
FARMERS
Section 213 of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1002(g), Nov. 10, 1988, 102 Stat. 3369, provided
that:
"(a) General Rule. - If a taxpayer who is a qualified farmer
makes an election under this section for its 1st taxable year
beginning after December 31, 1986, with respect to any portion of
its existing carryforwards, the amount determined under subsection
(b) shall be treated as a payment against the tax imposed by
chapter 1 of the Internal Revenue Code of 1986 made by such
taxpayer on the last day prescribed by law (without regard to
extensions) for filing its return of tax under chapter 1 of such
Code for such 1st taxable year.
"(b) Amount. - For purposes of subsection (a), the amount
determined under this subsection shall be equal to the smallest of
-
"(1) 50 percent of the portion of the taxpayer's existing
carryforwards to which the election under subsection (a) applies,
"(2) the taxpayer's net tax liability for the carryback period
(within the meaning of section 212(d) of this Act [set out as a
note above]), or
"(3) $750.
"(c) Taxpayer Making Election May Not Use Same Amounts Under
Section 38. - In the case of a qualified farmer who makes an
election under subsection (a), the portion of such farmer's
existing carryforwards to which such an election applies shall not
be taken into account under section 38 of the Internal Revenue Code
of 1986 for any taxable year beginning after December 31, 1986.
"(d) No Recomputation of Minimum Tax, Etc. - Nothing in this
section shall be construed to affect -
"(1) the amount of the tax imposed by section 56 of the
Internal Revenue Code of 1954 [now 1986], or
"(2) the amount of any credit allowable under such Code,
for any taxable year in the carryback period (within the meaning of
section 212(d)(3) of this Act [set out as a note above]).
"(e) Definitions and Special Rules. - For purposes of this
section -
"(1) Qualified farmer. - The term 'qualified farmer' means any
taxpayer who, during the 3-taxable year period preceding the
taxable year for which an election is made under subsection (a),
derived 50 percent or more of the taxpayer's gross income from
the trade or business of farming.
"(2) Existing carryforward. - The term 'existing carryforward'
means the aggregate of the amounts which -
"(A) are unused business credit carryforwards to the
taxpayer's 1st taxable year beginning after December 31, 1986
(determined without regard to the limitations of section 38(c)
of the Internal Revenue Code of 1986), and
"(B) are attributable to the amount of the investment credit
determined for periods before January 1, 1986, under section
46(a) of such Code (or any corresponding provision of prior
law) with respect to section 38 property which was used by the
taxpayer in the trade or business of farming, determined on the
basis that such credit was used first.
"(3) Farming. - The term 'farming' has the meaning given such
term by section 2032A(e)(4) and (5) of such Code."
TREATMENT OF INVESTMENT TAX CREDITS WITH RESPECT TO CERTAIN PUBLIC
UTILITIES
For provisions requiring different applications of subsec. (c) of
this section to certain public utilities by making substitutions in
the percentages of the tentative minimum tax referred to in subsec.
(c)(3)(A)(ii), (B), under certain circumstances, see section
701(f)(6) of Pub. L. 99-514, set out as an Effective Date note
under section 55 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
TRANSITION RULES
Section 1177 of subtitle C (Secs. 1171-1177) of title XI of Pub.
L. 99-514, as amended by Pub. L. 100-647, title I, Sec.
1011B(l)(1), (2), Nov. 10, 1988, 102 Stat. 3493, provided that:
"(a) Section 1171. - The amendments made by section 1171
[amending this section and sections 56, 108, 401, and 404 of this
title and repealing sections 41 and 6699 of this title] shall not
apply in the case of a tax credit employee stock ownership plan if
-
"(1) such plan was favorably approved on September 23, 1983, by
employees, and
"(2) not later than January 11, 1984, the employer of such
employees was 100 percent owned by such plan.
"(b) Subtitle Not To Apply to Certain Newspaper. - The amendments
made by section 1175 [amending section 401 of this title] shall not
apply to any daily newspaper -
"(1) which was first published on December 17, 1855, and which
began publication under its current name in 1954, and
"(2) which is published in a constitutional home rule city
(within the meaning of section 146(d)(3)(C) of the Internal
Revenue Code of 1986) which has a population of less than
2,500,000."
Section 1011B(l)(3) of Pub. L. 100-647 provided that: "If any
newspaper corporation described in section 1177(b) of the Reform
Act [section 1177(b) of Pub. L. 99-514, set out above], as amended
by this subsection, pays in cash a dividend within 60 days after
the date of the enactment of this Act [Nov. 10, 1988] to the
corporation's employee stock ownership plans and if a corporate
resolution declaring such dividend was adopted before November 30,
1987, and such resolution specifies that such dividend shall be
contingent upon passage by the Congress of technical corrections,
then such dividend (to the extent the aggregate amount so paid does
not exceed $3,500,000) shall be treated as if it had been declared
and paid in 1987 for all purposes of the Internal Revenue Code of
1986."
ACCOUNTING FOR INVESTMENT CREDIT IN CERTAIN FINANCIAL REPORTS AND
REPORTS TO FEDERAL AGENCIES
Pub. L. 92-178, title I, Sec. 101(c), Dec. 10, 1971, 85 Stat.
499, as amended by Pub. L. 98-369, div. A, title IV, Sec. 450(a),
July 18, 1984, 98 Stat. 818; Pub. L. 99-514, Sec. 2, Oct. 22, 1986,
100 Stat. 2095, provided that:
"(1) In general. - It was the intent of Congress in enacting,
in the Revenue Act of 1962 [see Short Title of 1962 Amendment
note set out under section 1 of this title], the investment
credit allowed by section 38 of the Internal Revenue Code of 1986
[formerly I.R.C. 1954], and it is the intent of the Congress in
restoring that credit in this Act [section 50 of this title], to
provide an incentive for modernization and growth of private
industry. Accordingly, notwithstanding any other provision of
law, on and after the date of the enactment of this Act [Dec. 10,
1971] -
"(A) no taxpayer shall be required to use, for purposes of
financial reports subject to the jurisdiction of any Federal
agency or reports made to any Federal agency, any particular
method of accounting for the credit allowed by such section 38
[this section], and
"(B) a taxpayer shall disclose, in any such report, the
method of accounting for such credit used by him for purposes
of such report.
"(2) Exceptions. - Paragraph (1) shall not apply to taxpayers
who are subject to the provisions of section 46(e) of the
Internal Revenue Code of 1986 (as added by section 105(c) of this
Act) or to section 203(e) of the Revenue Act of 1964 (as modified
by section 105(e) of this Act) [set out as note below]."
[Section 450(b) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending this note] shall take effect as if
included in the Revenue Act of 1971."]
TREATMENT OF INVESTMENT CREDIT BY FEDERAL REGULATORY AGENCIES
Pub. L. 88-272, title II, Sec. 203(e), Feb. 26, 1964, 78 Stat.
35, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat.
2095, provided that: "It was the intent of the Congress in
providing an investment credit under section 38 of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954] and it is the intent of
the Congress in repealing the reduction in basis required by
section 48(g) of such Code to provide an incentive for
modernization and growth of private industry (including that
portion thereof which is regulated). Accordingly, Congress does not
intend that any agency or instrumentality of the United States
having jurisdiction with respect to a taxpayer shall, without the
consent of the taxpayer, use -
"(1) in the case of public utility property (as defined in
section 46(c)(3)(B) of the Internal Revenue Code of 1986, more
than a proportionate part (determined with reference to the
average useful life of the property with respect to which the
credit was allowed) of the credit against tax allowed for any
taxable year by section 38 of such Code, or
"(2) in the case of any other property, any credit against tax
allowed by section 38 of such Code,
to reduce such taxpayer's Federal income taxes for the purpose of
establishing the cost of service of the taxpayer or to accomplish a
similar result by any other method."
Section 203(e) of Pub. L. 88-272, not applicable to public
utility property to which section 46(e) of this title applies, see
section 105(e) of Pub. L. 92-178, set out as a note under section
46 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 29, 39, 40, 41, 42, 43,
44, 45, 45A, 45B, 45C, 45D, 45E, 45F, 46, 49, 50, 51, 51A, 52, 55,
108, 179, 196, 280C, 381, 877, 1016, 1274A, 1351, 1396, 4612 of
this title.
-End-
-CITE-
26 USC Sec. 39 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 39. Carryback and carryforward of unused credits
-STATUTE-
(a) In general
(1) 1-year carryback and 20-year carryforward
If the sum of the business credit carryforwards to the taxable
year plus the amount of the current year business credit for the
taxable year exceeds the amount of the limitation imposed by
subsection (c) of section 38 for such taxable year (hereinafter
in this section referred to as the "unused credit year"), such
excess (to the extent attributable to the amount of the current
year business credit) shall be -
(A) a business credit carryback to each of the 1 taxable
years (!1) preceding the unused credit year, and
(B) a business credit carryforward to each of the 20 taxable
years following the unused credit year,
and, subject to the limitations imposed by subsections (b) and
(c), shall be taken into account under the provisions of section
38(a) in the manner provided in section 38(a).
(2) Amount carried to each year
(A) Entire amount carried to first year
The entire amount of the unused credit for an unused credit
year shall be carried to the earliest of the 21 taxable years
to which (by reason of paragraph (1)) such credit may be
carried.
(B) Amount carried to other 20 years
The amount of the unused credit for the unused credit year
shall be carried to each of the other 20 taxable years to the
extent that such unused credit may not be taken into account
under section 38(a) for a prior taxable year because of the
limitations of subsections (b) and (c).
(b) Limitation on carrybacks
The amount of the unused credit which may be taken into account
under section 38(a)(3) for any preceding taxable year shall not
exceed the amount by which the limitation imposed by section 38(c)
for such taxable year exceeds the sum of -
(1) the amounts determined under paragraphs (1) and (2) of
section 38(a) for such taxable year, plus
(2) the amounts which (by reason of this section) are carried
back to such taxable year and are attributable to taxable years
preceding the unused credit year.
(c) Limitation on carryforwards
The amount of the unused credit which may be taken into account
under section 38(a)(1) for any succeeding taxable year shall not
exceed the amount by which the limitation imposed by section 38(c)
for such taxable year exceeds the sum of the amounts which, by
reason of this section, are carried to such taxable year and are
attributable to taxable years preceding the unused credit year.
(d) Transitional rules
(1) No carryback of enhanced oil recovery credit before 1991
No portion of the unused business credit for any taxable year
which is attributable to the credit determined under section
43(a) (relating to enhanced oil recovery credit) may be carried
to a taxable year beginning before January 1, 1991.
(2) No carryback of section 44 credit before enactment
No portion of the unused business credit for any taxable year
which is attributable to the disabled access credit determined
under section 44 may be carried to a taxable year ending before
the date of the enactment of section 44.
(3) No carryback of renewable electricity production credit
before effective date
No portion of the unused business credit for any taxable year
which is attributable to the credit determined under section 45
(relating to electricity produced from certain renewable
resources) may be carried back to any taxable year ending before
January 1, 1993 (before January 1, 1994, to the extent such
credit is attributable to wind as a qualified energy resource).
(4) Empowerment zone employment credit
No portion of the unused business credit which is attributable
to the credit determined under section 1396 (relating to
empowerment zone employment credit) may be carried to any taxable
year ending before January 1, 1994.
(5) No carryback of section 45A credit before enactment
No portion of the unused business credit for any taxable year
which is attributable to the Indian employment credit determined
under section 45A may be carried to a taxable year ending before
the date of the enactment of section 45A.
(6) No carryback of section 45B credit before enactment
No portion of the unused business credit for any taxable year
which is attributable to the employer social security credit
determined under section 45B may be carried back to a taxable
year ending before the date of the enactment of section 45B.
(7) No carryback of section 45C credit before July 1, 1996
No portion of the unused business credit for any taxable year
which is attributable to the orphan drug credit determined under
section 45C may be carried back to a taxable year ending before
July 1, 1996.
(8) No carryback of DC Zone credits before effective date
No portion of the unused business credit for any taxable year
which is attributable to the credits allowable under subchapter U
by reason of section 1400 may be carried back to a taxable year
ending before the date of the enactment of section 1400.
(9) No carryback of new markets tax credit before January 1, 2001
No portion of the unused business credit for any taxable year
which is attributable to the credit under section 45D may be
carried back to a taxable year ending before January 1, 2001.
(10) No carryback of small employer pension plan startup cost
credit before January 1, 2002
No portion of the unused business credit for any taxable year
which is attributable to the small employer pension plan startup
cost credit determined under section 45E may be carried back to a
taxable year beginning before January 1, 2002.
-SOURCE-
(Added Pub. L. 98-369, div. A, title IV, Sec. 473, July 18, 1984,
98 Stat. 828; amended Pub. L. 99-514, title II, Sec.
231(d)(3)(C)(i), title XVIII, Sec. 1846, Oct. 22, 1986, 100 Stat.
2179, 2856; Pub. L. 100-647, title I, Sec. 1002(l)(26), Nov. 10,
1988, 102 Stat. 3381; Pub. L. 101-508, title XI, Secs. 11511(b)(2),
11611(b)(2), 11801(a)(2), Nov. 5, 1990, 104 Stat. 1388-485,
1388-503, 1388-520; Pub. L. 102-486, title XIX, Sec. 1914(c), Oct.
24, 1992, 106 Stat. 3023; Pub. L. 103-66, title XIII, Secs.
13302(a)(2), 13322(d), 13443(b)(2), Aug. 10, 1993, 107 Stat. 555,
563, 569; Pub. L. 104-188, title I, Secs. 1205(c), 1703(n)(1), Aug.
20, 1996, 110 Stat. 1775, 1877; Pub. L. 105-34, title VII, Sec.
701(b)(1), title X, Sec. 1083(a), Aug. 5, 1997, 111 Stat. 869, 951;
Pub. L. 105-206, title VI, Sec. 6010(n), July 22, 1998, 112 Stat.
816; Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 121(b)(2)], Dec.
21, 2000, 114 Stat. 2763, 2763A-610; Pub. L. 107-16, title VI, Sec.
619(c)(1), June 7, 2001, 115 Stat. 110.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of section 44, referred to in subsec.
(d)(2), means the date of the enactment of Pub. L. 101-508, which
was approved Nov. 5, 1990.
The date of the enactment of section 45A, referred to in subsec.
(d)(5), means the date of the enactment of Pub. L. 103-66, which
was approved Aug. 10, 1993.
The date of the enactment of section 45B, referred to in subsec.
(d)(6), means the date of the enactment of Pub. L. 103-66, which
was approved Aug. 10, 1993.
The date of the enactment of section 1400, referred to in subsec.
(d)(8), means the date of enactment of Pub. L. 105-34, which was
approved Aug. 5, 1997.
-MISC1-
PRIOR PROVISIONS
A prior section 39 was renumbered section 34 of this title.
Another prior section 39 was renumbered section 36 of this title.
AMENDMENTS
2001 - Subsec. (d)(10). Pub. L. 107-16, Secs. 619(c)(1), 901,
temporarily added par. (10). See Effective and Termination Dates of
2001 Amendment note below.
2000 - Subsec. (d)(9). Pub. L. 106-554 added par. (9).
1998 - Subsec. (a)(2). Pub. L. 105-206 amended Pub. L. 105-34,
Sec. 1083(a)(2). See 1997 Amendment note below.
1997 - Subsec. (a)(1). Pub. L. 105-34, Sec. 1083(a)(1),
substituted "1-year" for "3-year" and "20-year" for "15-year" in
heading, "1 taxable" for "3 taxable" in subpar. (A), and "20
taxable" for "15 taxable" in subpar. (B).
Subsec. (a)(2). Pub. L. 105-34, Sec. 1083(a)(2), as amended by
Pub. L. 105-206, Sec. 6010(n), in subpar. (A), substituted "21
taxable" for "18 taxable", and in subpar. (B), substituted "20
years" for "17 years" in heading and "20 taxable" for "17 taxable"
in text.
Subsec. (d)(8). Pub. L. 105-34, Sec. 701(b)(1), added par. (8).
1996 - Subsec. (d)(5). Pub. L. 104-188, Sec. 1703(n)(1)(A),
substituted "45A" for "45" in heading.
Subsec. (d)(6). Pub. L. 104-188, Sec. 1703(n)(1)(B), substituted
"45B" for "45" in heading.
Subsec. (d)(7). Pub. L. 104-188, Sec. 1205(c), added par. (7).
1993 - Subsec. (d)(4). Pub. L. 103-66, Sec. 13302(a)(2), added
par. (4).
Subsec. (d)(5). Pub. L. 103-66, Sec. 13322(d), added par. (5).
Subsec. (d)(6). Pub. L. 103-66, Sec. 13443(b)(2), added par. (6).
1992 - Subsec. (d). Pub. L. 102-486 redesignated par. (5),
relating to carryback of enhanced oil recovery credit, as (1),
redesignated par. (5), relating to carryback of section 44 credit,
as (2), and added par. (3).
1990 - Subsec. (d)(1) to (4). Pub. L. 101-508, Sec. 11801(a)(2),
struck out par. (1) which related to carryforwards from an unused
credit year which did not expire before first taxable year
beginning after Dec. 31, 1983, par. (2) which related to carrybacks
in determining amount allowable as credit including net tax
liability, par. (3) which related to similar rules for research
credit under section 30, and par. (4) which provided for no
carryback of low-income housing credit before 1987.
Subsec. (d)(5). Pub. L. 101-508, Sec. 11611(b)(2), added par. (5)
relating to carryback of section 44 credit.
Pub. L. 101-508, Sec. 11511(b)(2), added par. (5) relating to
carryback of enhanced oil recovery credit.
1988 - Subsec. (d)(4). Pub. L. 100-647 added par. (4).
1986 - Subsec. (d)(1)(A). Pub. L. 99-514, Sec. 1846(1), inserted
"(as in effect before the enactment of the Tax Reform Act of
1984)".
Subsec. (d)(2)(B). Pub. L. 99-514, Sec. 1846(2), substituted "as
defined in section 26(b)" for "as so defined in section 25(b)".
Subsec. (d)(3). Pub. L. 99-514, Sec. 231(d)(3)(C)(i), added par.
(3).
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to costs paid or incurred
in taxable years beginning after Dec. 31, 2001, with respect to
qualified employer plans first effective after such date, see
section 619(d) of Pub. L. 107-16, as amended, set out as a note
under section 38 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2000 AMENDMENT
Amendment by Pub. L. 106-554 applicable to investments made after
Dec. 31, 2000, see Sec. 1(a)(7) [title I, Sec. 121(e)] of Pub. L.
106-554, set out as a note under section 38 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 701(d) of Pub. L. 105-34 provided that: "Except as
provided in subsection (c) [amending table of subchapters for this
chapter], the amendments made by this section [enacting subchapter
W of this chapter and amending this section and section 1016 of
this title] shall take effect on the date of the enactment of this
Act [Aug. 5, 1997]."
Section 1083(b) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply to credits
arising in taxable years beginning after December 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1205(c) of Pub. L. 104-188 applicable to
amounts paid or incurred in taxable years ending after June 30,
1996, see section 1205(e) of Pub. L. 104-188, set out as a note
under section 29 of this title.
Section 1703(o) of Pub. L. 104-188 provided that: "Any amendment
made by this section [amending this section and sections 40, 59,
108, 117, 135, 143, 163, 904, 956A, 958, 1017, 1044, 1201, 1245,
1297, 1394, 1397B, 1561, 4001, 6033, 6427, 6501, 6655, and 9502 of
this title, renumbering section 6714 of this title as section 6715,
and amending provisions set out as notes under sections 38, 42,
197, and 1258 of this title and section 401 of Title 42, The Public
Health and Welfare] shall take effect as if included in the
provision of the Revenue Reconciliation Act of 1993 [Pub. L.
103-66, title XIII, ch. I, Secs. 13001-13444] to which such
amendment relates."
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by section 13322(d) of Pub. L. 103-66 applicable to
wages paid or incurred after Dec. 31, 1993, see section 13322(f) of
Pub. L. 103-66, set out as a note under section 38 of this title.
Amendment by section 13443(b)(2) of Pub. L. 103-66 applicable
with respect to taxes paid after Dec. 31, 1993, with respect to
services performed before, on, or after such date, see section
13443(d) of Pub. L. 103-66, as amended, set out as a note under
section 38 of this title.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to taxable years ending
after Dec. 31, 1992, see section 1914(e) of Pub. L. 102-486, set
out as a note under section 38 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11511(b)(2) of Pub. L. 101-508 applicable to
costs paid or incurred in taxable years beginning after Dec. 31,
1990, see section 11511(d)(1) of Pub. L. 101-508, set out as an
Effective Date note under section 43 of this title.
Amendment by section 11611(b)(2) of Pub. L. 101-508 applicable to
expenditures paid or incurred after Nov. 5, 1990, see section
11611(e)(1) of Pub. L. 101-508, set out as a note under section 38
of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 231(d)(3)(C)(i) of Pub. L. 99-514 applicable
to taxable years beginning after Dec. 31, 1985, see section 231(g)
of Pub. L. 99-514, set out as a note under section 41 of this
title.
Amendment by section 1846 of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99-514, set out as a note
under section 48 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1983, and to carrybacks from such years, see section 475(a) of Pub.
L. 98-369, set out as an Effective Date of 1984 Amendment note
under section 21 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801(a)(2)
of Pub. L. 101-508 be construed to affect treatment of certain
transactions occurring, property acquired, or items of income,
loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 40, 41, 42, 45A, 45D,
45F, 48, 50, 196, 383, 1374, 6411, 6511 of this title.
-FOOTNOTE-
(!1) So in original.
-End-
-CITE-
26 USC Sec. 40 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 40. Alcohol used as fuel
-STATUTE-
(a) General rule
For purposes of section 38, the alcohol fuels credit determined
under this section for the taxable year is an amount equal to the
sum of -
(1) the alcohol mixture credit, plus
(2) the alcohol credit, plus
(3) in the case of an eligible small ethanol producer, the
small ethanol producer credit.
(b) Definition of alcohol mixture credit, alcohol credit, and small
ethanol producer credit
For purposes of this section, and except as provided in
subsection (h) -
(1) Alcohol mixture credit
(A) In general
The alcohol mixture credit of any taxpayer for any taxable
year is 60 cents for each gallon of alcohol used by the
taxpayer in the production of a qualified mixture.
(B) Qualified mixture
The term "qualified mixture" means a mixture of alcohol and
gasoline or of alcohol and a special fuel which -
(i) is sold by the taxpayer producing such mixture to any
person for use as a fuel, or
(ii) is used as a fuel by the taxpayer producing such
mixture.
(C) Sale or use must be in trade or business, etc.
Alcohol used in the production of a qualified mixture shall
be taken into account -
(i) only if the sale or use described in subparagraph (B)
is in a trade or business of the taxpayer, and
(ii) for the taxable year in which such sale or use occurs.
(D) Casual off-farm production not eligible
No credit shall be allowed under this section with respect to
any casual off-farm production of a qualified mixture.
(2) Alcohol credit
(A) In general
The alcohol credit of any taxpayer for any taxable year is 60
cents for each gallon of alcohol which is not in a mixture with
gasoline or a special fuel (other than any denaturant) and
which during the taxable year -
(i) is used by the taxpayer as a fuel in a trade or
business, or
(ii) is sold by the taxpayer at retail to a person and
placed in the fuel tank of such person's vehicle.
(B) User credit not to apply to alcohol sold at retail
No credit shall be allowed under subparagraph (A)(i) with
respect to any alcohol which was sold in a retail sale
described in subparagraph (A)(ii).
(3) Smaller credit for lower proof alcohol
In the case of any alcohol with a proof which is at least 150
but less than 190, paragraphs (1)(A) and (2)(A) shall be applied
by substituting "45 cents" for "60 cents".
(4) Small ethanol producer credit
(A) In general
The small ethanol producer credit of any eligible small
ethanol producer for any taxable year is 10 cents for each
gallon of qualified ethanol fuel production of such producer.
(B) Qualified ethanol fuel production
For purposes of this paragraph, the term "qualified ethanol
fuel production" means any alcohol which is ethanol which is
produced by an eligible small ethanol producer, and which
during the taxable year -
(i) is sold by such producer to another person -
(I) for use by such other person in the production of a
qualified mixture in such other person's trade or business
(other than casual off-farm production),
(II) for use by such other person as a fuel in a trade or
business, or
(III) who sells such ethanol at retail to another person
and places such ethanol in the fuel tank of such other
person, or
(ii) is used or sold by such producer for any purpose
described in clause (i).
(C) Limitation
The qualified ethanol fuel production of any producer for any
taxable year shall not exceed 15,000,000 gallons.
(D) Additional distillation excluded
The qualified ethanol fuel production of any producer for any
taxable year shall not include any alcohol which is purchased
by the producer and with respect to which such producer
increases the proof of the alcohol by additional distillation.
(5) Adding of denaturants not treated as mixture
The adding of any denaturant to alcohol shall not be treated as
the production of a mixture.
(c) Coordination with exemption from excise tax
The amount of the credit determined under this section with
respect to any alcohol shall, under regulations prescribed by the
Secretary, be properly reduced to take into account any benefit
provided with respect to such alcohol solely by reason of the
application of subsection (b)(2), (k), or (m) of section 4041,
section 4081(c), or section 4091(c).
(d) Definitions and special rules
For purposes of this section -
(1) Alcohol defined
(A) In general
The term "alcohol" includes methanol and ethanol but does not
include -
(i) alcohol produced from petroleum, natural gas, or coal
(including peat), or
(ii) alcohol with a proof of less than 150.
(B) Determination of proof
The determination of the proof of any alcohol shall be made
without regard to any added denaturants.
(2) Special fuel defined
The term "special fuel" includes any liquid fuel (other than
gasoline) which is suitable for use in an internal combustion
engine.
(3) Mixture or alcohol not used as a fuel, etc.
(A) Mixtures
If -
(i) any credit was determined under this section with
respect to alcohol used in the production of any qualified
mixture, and
(ii) any person -
(I) separates the alcohol from the mixture, or
(II) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to 60
cents a gallon (45 cents in the case of alcohol with a proof
less than 190) for each gallon of alcohol in such mixture.
(B) Alcohol
If -
(i) any credit was determined under this section with
respect to the retail sale of any alcohol, and
(ii) any person mixes such alcohol or uses such alcohol
other than as a fuel,
then there is hereby imposed on such person a tax equal to 60
cents a gallon (45 cents in the case of alcohol with a proof
less than 190) for each gallon of such alcohol.
(C) Producer credit
If -
(i) any credit was determined under subsection (a)(3), and
(ii) any person does not use such fuel for a purpose
described in subsection (b)(4)(B),
then there is hereby imposed on such person a tax equal to 10
cents a gallon for each gallon of such alcohol.
(D) Applicable laws
All provisions of law, including penalties, shall, insofar as
applicable and not inconsistent with this section, apply in
respect of any tax imposed under subparagraph (A), (B), or (C)
as if such tax were imposed by section 4081 and not by this
chapter.
(4) Volume of alcohol
For purposes of determining -
(A) under subsection (a) the number of gallons of alcohol
with respect to which a credit is allowable under subsection
(a), or
(B) under section 4041(k) or 4081(c) the percentage of any
mixture which consists of alcohol,
the volume of alcohol shall include the volume of any denaturant
(including gasoline) which is added under any formulas approved
by the Secretary to the extent that such denaturants do not
exceed 5 percent of the volume of such alcohol (including
denaturants).
(5) Pass-thru in the case of estates and trusts
Under regulations prescribed by the Secretary, rules similar to
the rules of subsection (d) of section 52 shall apply.
(e) Termination
(1) In general
This section shall not apply to any sale or use -
(A) for any period after December 31, 2007, or
(B) for any period before January 1, 2008, during which the
rates of tax under section 4081(a)(2)(A) are 4.3 cents per
gallon.
(2) No carryovers to certain years after expiration
If this section ceases to apply for any period by reason of
paragraph (1), no amount attributable to any sale or use before
the first day of such period may be carried under section 39 by
reason of this section (treating the amount allowed by reason of
this section as the first amount allowed by this subpart) to any
taxable year beginning after the 3-taxable-year period beginning
with the taxable year in which such first day occurs.
(f) Election to have alcohol fuels credit not apply
(1) In general
A taxpayer may elect to have this section not apply for any
taxable year.
(2) Time for making election
An election under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration of the 3-year
period beginning on the last date prescribed by law for filing
the return for such taxable year (determined without regard to
extensions).
(3) Manner of making election
An election under paragraph (1) (or revocation thereof) shall
be made in such manner as the Secretary may by regulations
prescribe.
(g) Definitions and special rules for eligible small ethanol
producer credit
For purposes of this section -
(1) Eligible small ethanol producer
The term "eligible small ethanol producer" means a person who,
at all times during the taxable year, has a productive capacity
for alcohol (as defined in subsection (d)(1)(A) without regard to
clauses (i) and (ii)) not in excess of 30,000,000 gallons.
(2) Aggregration (!1) rule
For purposes of the 15,000,000 gallon limitation under
subsection (b)(4)(C) and the 30,000,000 gallon limitation under
paragraph (1), all members of the same controlled group of
corporations (within the meaning of section 267(f)) and all
persons under common control (within the meaning of section 52(b)
but determined by treating an interest of more than 50 percent as
a controlling interest) shall be treated as 1 person.
(3) Partnership, S corporations, and other pass-thru entities
In the case of a partnership, trust, S corporation, or other
pass-thru entity, the limitations contained in subsection
(b)(4)(C) and paragraph (1) shall be applied at the entity level
and at the partner or similar level.
(4) Allocation
For purposes of this subsection, in the case of a facility in
which more than 1 person has an interest, productive capacity
shall be allocated among such persons in such manner as the
Secretary may prescribe.
(5) Regulations
The Secretary may prescribe such regulations as may be
necessary -
(A) to prevent the credit provided for in subsection (a)(3)
from directly or indirectly benefiting any person with a direct
or indirect productive capacity of more than 30,000,000 gallons
of alcohol during the taxable year, or
(B) to prevent any person from directly or indirectly
benefiting with respect to more than 15,000,000 gallons during
the taxable year.
(h) Reduced credit for ethanol blenders
(1) In general
In the case of any alcohol mixture credit or alcohol credit
with respect to any sale or use of alcohol which is ethanol
during calendar years 2001 through 2007 -
(A) subsections (b)(1)(A) and (b)(2)(A) shall be applied by
substituting "the blender amount" for "60 cents",
(B) subsection (b)(3) shall be applied by substituting "the
low-proof blender amount" for "45 cents" and "the blender
amount" for "60 cents", and
(C) subparagraphs (A) and (B) of subsection (d)(3) shall be
applied by substituting "the blender amount" for "60 cents" and
"the low-proof blender amount" for "45 cents".
(2) Amounts
For purposes of paragraph (1), the blender amount and the
low-proof blender amount shall be determined in accordance with
the following table:
In the case of any sale The blender The low-proof
or use during calendar amount is: blender amount
year: is:
--------------------------------------------------------------------
2001 or 2002 53 cents 39.26 cents
2003 or 2004 52 cents 38.52 cents
2005, 2006, or 2007 51 cents 37.78 cents.
--------------------------------------------------------------------
-SOURCE-
(Added Pub. L. 96-223, title II, Sec. 232(b)(1), Apr. 2, 1980, 94
Stat. 273, Sec. 44E; amended Pub. L. 97-34, title II Sec.
207(c)(3), Aug. 13, 1981, 95 Stat. 225; Pub. L. 97-354, Sec.
5(a)(2), Oct. 19, 1982, 96 Stat. 1692; Pub. L. 97-424, title V,
Sec. 511(b)(2), (d)(3), Jan. 6, 1983, 96 Stat. 2170, 2171;
renumbered Sec. 40 and amended Pub. L. 98-369, div. A, title IV,
Secs. 471(c), 474(k), title IX, Secs. 912(c), (f), 913(b), July 18,
1984, 98 Stat. 826, 832, 1007, 1008; Pub. L. 100-203, title X, Sec.
10502(d)(1), Dec. 22, 1987, 101 Stat. 1330-444; Pub. L. 101-508,
title XI, Sec. 11502(a)-(f), Nov. 5, 1990, 104 Stat. 1388-480 to
1388-482; Pub. L. 104-188, title I, Sec. 1703(j), Aug. 20, 1996,
110 Stat. 1876; Pub. L. 105-178, title IX, Sec. 9003(a)(3), (b)(1),
June 9, 1998, 112 Stat. 502.)
-MISC1-
PRIOR PROVISIONS
A prior section 40, added Pub. L. 92-178, title VI, Sec. 601(a),
Dec. 10, 1971, 85 Stat. 553; amended Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, related to
allowance as a credit of expenses of work incentive programs, prior
to repeal by Pub. L. 98-369, div. A, title IV, Sec. 474(m)(1), July
18, 1984, 98 Stat. 833.
Another prior section 40 was renumbered section 36 of this title.
AMENDMENTS
1998 - Subsec. (e)(1). Pub. L. 105-178, Sec. 9003(a)(3),
substituted "December 31, 2007" for "December 31, 2000" in subpar.
(A) and "January 1, 2008" for "January 1, 2001" in subpar. (B).
Subsec. (h). Pub. L. 105-178, Sec. 9003(b)(1), reenacted heading
without change and amended text of subsec. (h) generally. Prior to
amendment, text read as follows: "In the case of any alcohol
mixture credit or alcohol credit with respect to any alcohol which
is ethanol -
"(1) subsections (b)(1)(A) and (b)(2)(A) shall be applied by
substituting '54 cents' for '60 cents';
"(2) subsection (b)(3) shall be applied by substituting '40
cents' for '45 cents' and '54 cents' for '60 cents'; and
"(3) subparagraphs (A) and (B) of subsection (d)(3) shall be
applied by substituting '54 cents' for '60 cents' and '40 cents'
for '45 cents'."
1996 - Subsec. (e)(1)(B). Pub. L. 104-188 amended subpar. (B)
generally. Prior to amendment, subpar. (B) read as follows: "for
any period before January 1, 2001, during which the Highway Trust
Fund financing rate under section 4081(a)(2) is not in effect."
1990 - Subsec. (a)(2). Pub. L. 101-508, Sec. 11502(a)(1),
substituted ", plus" for period at end.
Subsec. (a)(3). Pub. L. 101-508, Sec. 11502(a)(2), added par.
(3).
Subsec. (b). Pub. L. 101-508, Sec. 11502(e)(2), which directed
the insertion of ", and except as provided in subsection (h)" in
introductory provisions without specifying the location of such
insertion, was executed after "section" to reflect the probable
intent of Congress.
Pub. L. 101-508, Sec. 11502(b)(3), substituted ", alcohol credit,
and small ethanol producer credit" for "and alcohol credit" in
heading.
Subsec. (b)(4), (5). Pub. L. 101-508, Sec. 11502(b)(1), (2),
added par. (4) and redesignated former par. (4) as (5).
Subsec. (d)(3)(C), (D). Pub. L. 101-508, Sec. 11502(d)(1), (2),
added subpar. (C), redesignated former subpar. (C) as (D), and
substituted "subparagraph (A), (B), or (C)" for "subparagraph (A)
or (B)".
Subsec. (e). Pub. L. 101-508, Sec. 11502(f), amended subsec. (e)
generally, substituting present provisions for provisions
prohibiting the applicability of this section to any sale or use
after Dec. 31, 1992, and prohibiting carryovers to any taxable year
beginning after Dec. 31, 1994.
Subsec. (g). Pub. L. 101-508, Sec. 11502(c), added subsec. (g).
Subsec. (h). Pub. L. 101-508, Sec. 11502(e)(1), added subsec.
(h).
1987 - Subsec. (c). Pub. L. 100-203 substituted ", section
4081(c), or section 4091(c)" for "or section 4081(c)".
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44E of
this title as this section.
Subsec. (a). Pub. L. 98-369, Sec. 474(k)(1), substituted "For
purposes of section 38, the alcohol fuels credit determined under
this section for the taxable year is an amount equal to the sum of"
for "There shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the sum of" in
introductory provisions.
Subsec. (b)(1)(A), (2)(A). Pub. L. 98-369, Sec. 912(c)(1),
substituted "60 cents" for "50 cents".
Subsec. (b)(3). Pub. L. 98-369, Sec. 912(c), substituted "45
cents" for "37.5 cents" and "60 cents" for "50 cents".
Subsec. (c). Pub. L. 98-369, Sec. 913(b), substituted "(b)(2),
(k), or (m)" for "(b)(2) or (k)".
Pub. L. 98-369, Sec. 474(k)(2), substituted "the credit
determined under this section" for "the credit allowable under this
section".
Subsec. (d)(1)(A)(i). Pub. L. 98-369, Sec. 912(f), substituted
"coal (including peat)" for "coal".
Subsec. (d)(3)(A). Pub. L. 98-369, Sec. 912(c), substituted "60
cents" for "50 cents" and "45 cents" for "37.5 cents".
Subsec. (d)(3)(A)(i). Pub. L. 98-369, Sec. 474(k)(3), substituted
"credit was determined" for "credit was allowable".
Subsec. (d)(3)(B). Pub. L. 98-369, Sec. 912(c), substituted "60
cents" for "50 cents" and "45 cents" for "37.5 cents".
Subsec. (d)(3)(B)(i). Pub. L. 98-369, Sec. 474(k)(3), substituted
"credit was determined" for "credit was allowable".
Subsec. (e). Pub. L. 98-369, Sec. 474(k)(4), redesignated subsec.
(f) as (e). Former subsec. (e), which had placed a limitation based
on the amount of tax, was struck out.
Subsec. (e)(2). Pub. L. 98-369, Sec. 474(k)(5), substituted
"section 39 by reason of this section (treating the amount allowed
by reason of this section as the first amount allowed by this
subpart)" for "subsection (e)(2)".
Subsec. (f). Pub. L. 98-369, Sec. 474(k)(6), added subsec. (f).
Former subsec. (f) redesignated (e).
1983 - Subsec. (b)(1)(A), (2)(A). Pub. L. 97-424, Sec.
511(d)(3)(A), substituted "50 cents" for "40 cents".
Subsec. (b)(3). Pub. L. 97-424, Sec. 511(d)(3), substituted "50
cents" for "40 cents" and "37.5 cents" for "30 cents".
Subsec. (c). Pub. L. 97-424, Sec. 511(b)(2), substituted
"subsection (b)(2) or (k) of section 4041 or section 4081(c)" for
"section 4041(k) or 4081(c)" after "reason of the application of".
Subsec. (d)(3)(A), (B). Pub. L. 97-424, Sec. 511(d)(3),
substituted "50 cents" for "40 cents" and "37.5 cents" for "30
cents".
1982 - Subsec. (d)(5). Pub. L. 97-354 substituted "Pass-thru in
the case of estates and trusts" for "Pass-through in the case of
subchapter S corporations, etc." in par. heading, and substituted
provisions relating to the applicability of rules similar to rules
of subsec. (d) of section 52 for provisions relating to the
applicability of rules similar to rules of subsecs. (d) and (e) of
section 52.
1981 - Subsec. (e)(2)(A). Pub. L. 97-34 substituted "15" for "7"
in two places, and "14" for "6" in one place.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-178, title IX, Sec. 9003(b)(3), June 9, 1998, 112
Stat. 503, provided that: "The amendments made by this subsection
[amending this section and sections 4041, 4081, and 4091 of this
title] shall take effect on January 1, 2001."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 effective as if included in the
provision of the Revenue Reconciliation Act of 1993, Pub. L.
103-66, Secs. 13001-13444, to which such amendment relates, see
section 1703(o) of Pub. L. 104-188, set out as a note under section
39 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11502(h) of Pub. L. 101-508 provided that:
"(1) Except as provided in paragraph (2), the amendments made by
this section [amending this section] shall apply to alcohol
produced, and sold or used, in taxable years beginning after
December 31, 1990.
"(2) The amendments made by subsection (g) [amending provisions
not classified to the Code] shall apply to articles entered or
withdrawn from warehouse on or after January 1, 1991."
EFFECTIVE DATE OF 1987 AMENDMENT
Section 10502(e) of Pub. L. 100-203 provided that: "The
amendments made by this section [enacting sections 4091 to 4093 of
this title, amending this section and sections 4041, 4081, 4101,
4221, 6206, 6416, 6421, 6427, 6652, 9502, 9503, and 9508 of this
title, and enacting provisions set out as notes under sections 4091
and 9502 of this title] shall apply to sales after March 31, 1988."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(k) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Section 912(g) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending this section and sections 4041,
4081, and 6427 of this title] shall take effect on January 1,
1985."
Amendment by section 913(b) of Pub. L. 98-369 effective Aug. 1,
1984, see section 913(c) of Pub. L. 98-369, set out as a note under
section 4041 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendments by section 511(b)(2), (d)(3) of Pub. L. 97-424
effective Apr. 1, 1983, see section 511(h) of Pub. L. 97-424, set
out as a note under section 4041 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to unused credit years
ending after Sept. 30, 1980, see section 209(c)(2)(C) of Pub. L.
97-34, set out as an Effective Date note under section 168 of this
title.
EFFECTIVE DATE
Section 232(h)(1), (4) of Pub. L. 96-223, as amended by Pub. L.
97-448, title II, Sec. 202(e), Jan. 12, 1983, 96 Stat. 2396,
provided that:
"(1) The amendments made by subsections (b) and (c) [enacting
sections 44E [now 40] and 86 of this title and amending sections
55, 381, 383, 4081, and 6096 of this title] shall apply to sales or
uses after September 30, 1980, in taxable years ending after such
date.
"(4) Notwithstanding paragraph (1), the provisions of section
44E(d)(4)(B) [now 40(d)(4)(B)] of such Code, as added by this
section, shall take effect on April 2, 1980."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 87, 196, 4041, 6501
of this title.
-FOOTNOTE-
(!1) So in original. Probably should be "Aggregation".
-End-
-CITE-
26 USC Sec. 41 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 41. Credit for increasing research activities
-STATUTE-
(a) General rule
For purposes of section 38, the research credit determined under
this section for the taxable year shall be an amount equal to the
sum of -
(1) 20 percent of the excess (if any) of -
(A) the qualified research expenses for the taxable year,
over
(B) the base amount, and
(2) 20 percent of the basic research payments determined under
subsection (e)(1)(A).
(b) Qualified research expenses
For purposes of this section -
(1) Qualified research expenses
The term "qualified research expenses" means the sum of the
following amounts which are paid or incurred by the taxpayer
during the taxable year in carrying on any trade or business of
the taxpayer -
(A) in-house research expenses, and
(B) contract research expenses.
(2) In-house research expenses
(A) In general
The term "in-house research expenses" means -
(i) any wages paid or incurred to an employee for qualified
services performed by such employee,
(ii) any amount paid or incurred for supplies used in the
conduct of qualified research, and
(iii) under regulations prescribed by the Secretary, any
amount paid or incurred to another person for the right to
use computers in the conduct of qualified research.
Clause (iii) shall not apply to any amount to the extent that
the taxpayer (or any person with whom the taxpayer must
aggregate expenditures under subsection (f)(1)) receives or
accrues any amount from any other person for the right to use
substantially identical personal property.
(B) Qualified services
The term "qualified services" means services consisting of -
(i) engaging in qualified research, or
(ii) engaging in the direct supervision or direct support
of research activities which constitute qualified research.
If substantially all of the services performed by an individual
for the taxpayer during the taxable year consists of services
meeting the requirements of clause (i) or (ii), the term
"qualified services" means all of the services performed by
such individual for the taxpayer during the taxable year.
(C) Supplies
The term "supplies" means any tangible property other than -
(i) land or improvements to land, and
(ii) property of a character subject to the allowance for
depreciation.
(D) Wages
(i) In general
The term "wages" has the meaning given such term by section
3401(a).
(ii) Self-employed individuals and owner-employees
In the case of an employee (within the meaning of section
401(c)(1)), the term "wages" includes the earned income (as
defined in section 401(c)(2)) of such employee.
(iii) Exclusion for wages to which work opportunity credit
applies
The term "wages" shall not include any amount taken into
account in determining the work opportunity credit under
section 51(a).
(3) Contract research expenses
(A) In general
The term "contract research expenses" means 65 percent of any
amount paid or incurred by the taxpayer to any person (other
than an employee of the taxpayer) for qualified research.
(B) Prepaid amounts
If any contract research expenses paid or incurred during any
taxable year are attributable to qualified research to be
conducted after the close of such taxable year, such amount
shall be treated as paid or incurred during the period during
which the qualified research is conducted.
(C) Amounts paid to certain research consortia
(i) In general
Subparagraph (A) shall be applied by substituting "75
percent" for "65 percent" with respect to amounts paid or
incurred by the taxpayer to a qualified research consortium
for qualified research on behalf of the taxpayer and 1 or
more unrelated taxpayers. For purposes of the preceding
sentence, all persons treated as a single employer under
subsection (a) or (b) of section 52 shall be treated as
related taxpayers.
(ii) Qualified research consortium
The term "qualified research consortium" means any
organization which -
(I) is described in section 501(c)(3) or 501(c)(6) and is
exempt from tax under section 501(a),
(II) is organized and operated primarily to conduct
scientific research, and
(III) is not a private foundation.
(4) Trade or business requirement disregarded for in-house
research expenses of certain startup ventures
In the case of in-house research expenses, a taxpayer shall be
treated as meeting the trade or business requirement of paragraph
(1) if, at the time such in-house research expenses are paid or
incurred, the principal purpose of the taxpayer in making such
expenditures is to use the results of the research in the active
conduct of a future trade or business -
(A) of the taxpayer, or
(B) of 1 or more other persons who with the taxpayer are
treated as a single taxpayer under subsection (f)(1).
(c) Base amount
(1) In general
The term "base amount" means the product of -
(A) the fixed-base percentage, and
(B) the average annual gross receipts of the taxpayer for the
4 taxable years preceding the taxable year for which the credit
is being determined (hereinafter in this subsection referred to
as the "credit year").
(2) Minimum base amount
In no event shall the base amount be less than 50 percent of
the qualified research expenses for the credit year.
(3) Fixed-base percentage
(A) In general
Except as otherwise provided in this paragraph, the
fixed-base percentage is the percentage which the aggregate
qualified research expenses of the taxpayer for taxable years
beginning after December 31, 1983, and before January 1, 1989,
is of the aggregate gross receipts of the taxpayer for such
taxable years.
(B) Start-up companies
(i) Taxpayers to which subparagraph applies
The fixed-base percentage shall be determined under this
subparagraph if -
(I) the first taxable year in which a taxpayer had both
gross receipts and qualified research expenses begins after
December 31, 1983, or
(II) there are fewer than 3 taxable years beginning after
December 31, 1983, and before January 1, 1989, in which the
taxpayer had both gross receipts and qualified research
expenses.
(ii) Fixed-base percentage
In a case to which this subparagraph applies, the
fixed-base percentage is -
(I) 3 percent for each of the taxpayer's 1st 5 taxable
years beginning after December 31, 1993, for which the
taxpayer has qualified research expenses,
(II) in the case of the taxpayer's 6th such taxable year,
1/6 of the percentage which the aggregate qualified
research expenses of the taxpayer for the 4th and 5th such
taxable years is of the aggregate gross receipts of the
taxpayer for such years,
(III) in the case of the taxpayer's 7th such taxable
year, 1/3 of the percentage which the aggregate qualified
research expenses of the taxpayer for the 5th and 6th such
taxable years is of the aggregate gross receipts of the
taxpayer for such years,
(IV) in the case of the taxpayer's 8th such taxable year,
1/2 of the percentage which the aggregate qualified
research expenses of the taxpayer for the 5th, 6th, and 7th
such taxable years is of the aggregate gross receipts of
the taxpayer for such years,
(V) in the case of the taxpayer's 9th such taxable year,
2/3 of the percentage which the aggregate qualified
research expenses of the taxpayer for the 5th, 6th, 7th,
and 8th such taxable years is of the aggregate gross
receipts of the taxpayer for such years,
(VI) in the case of the taxpayer's 10th such taxable
year, 5/6 of the percentage which the aggregate qualified
research expenses of the taxpayer for the 5th, 6th, 7th,
8th, and 9th such taxable years is of the aggregate gross
receipts of the taxpayer for such years, and
(VII) for taxable years thereafter, the percentage which
the aggregate qualified research expenses for any 5 taxable
years selected by the taxpayer from among the 5th through
the 10th such taxable years is of the aggregate gross
receipts of the taxpayer for such selected years.
(iii) Treatment of de minimis amounts of gross receipts and
qualified research expenses
The Secretary may prescribe regulations providing that de
minimis amounts of gross receipts and qualified research
expenses shall be disregarded under clauses (i) and (ii).
(C) Maximum fixed-base percentage
In no event shall the fixed-base percentage exceed 16
percent.
(D) Rounding
The percentages determined under subparagraphs (A) and
(B)(ii) shall be rounded to the nearest 1/100th of 1 percent.
(4) Election of alternative incremental credit
(A) In general
At the election of the taxpayer, the credit determined under
subsection (a)(1) shall be equal to the sum of -
(i) 2.65 percent of so much of the qualified research
expenses for the taxable year as exceeds 1 percent of the
average described in subsection (c)(1)(B) but does not exceed
1.5 percent of such average,
(ii) 3.2 percent of so much of such expenses as exceeds 1.5
percent of such average but does not exceed 2 percent of such
average, and
(iii) 3.75 percent of so much of such expenses as exceeds 2
percent of such average.
(B) Election
An election under this paragraph shall apply to the taxable
year for which made and all succeeding taxable years unless
revoked with the consent of the Secretary.
(5) Consistent treatment of expenses required
(A) In general
Notwithstanding whether the period for filing a claim for
credit or refund has expired for any taxable year taken into
account in determining the fixed-base percentage, the qualified
research expenses taken into account in computing such
percentage shall be determined on a basis consistent with the
determination of qualified research expenses for the credit
year.
(B) Prevention of distortions
The Secretary may prescribe regulations to prevent
distortions in calculating a taxpayer's qualified research
expenses or gross receipts caused by a change in accounting
methods used by such taxpayer between the current year and a
year taken into account in computing such taxpayer's fixed-base
percentage.
(6) Gross receipts
For purposes of this subsection, gross receipts for any taxable
year shall be reduced by returns and allowances made during the
taxable year. In the case of a foreign corporation, there shall
be taken into account only gross receipts which are effectively
connected with the conduct of a trade or business within the
United States, the Commonwealth of Puerto Rico, or any possession
of the United States.
(d) Qualified research defined
For purposes of this section -
(1) In general
The term "qualified research" means research -
(A) with respect to which expenditures may be treated as
expenses under section 174,
(B) which is undertaken for the purpose of discovering
information -
(i) which is technological in nature, and
(ii) the application of which is intended to be useful in
the development of a new or improved business component of
the taxpayer, and
(C) substantially all of the activities of which constitute
elements of a process of experimentation for a purpose
described in paragraph (3).
Such term does not include any activity described in paragraph
(4).
(2) Tests to be applied separately to each business component
For purposes of this subsection -
(A) In general
Paragraph (1) shall be applied separately with respect to
each business component of the taxpayer.
(B) Business component defined
The term "business component" means any product, process,
computer software, technique, formula, or invention which is to
be -
(i) held for sale, lease, or license, or
(ii) used by the taxpayer in a trade or business of the
taxpayer.
(C) Special rule for production processes
Any plant process, machinery, or technique for commercial
production of a business component shall be treated as a
separate business component (and not as part of the business
component being produced).
(3) Purposes for which research may qualify for credit
For purposes of paragraph (1)(C) -
(A) In general
Research shall be treated as conducted for a purpose
described in this paragraph if it relates to -
(i) a new or improved function,
(ii) performance, or
(iii) reliability or quality.
(B) Certain purposes not qualified
Research shall in no event be treated as conducted for a
purpose described in this paragraph if it relates to style,
taste, cosmetic, or seasonal design factors.
(4) Activities for which credit not allowed
The term "qualified research" shall not include any of the
following:
(A) Research after commercial production
Any research conducted after the beginning of commercial
production of the business component.
(B) Adaptation of existing business components
Any research related to the adaptation of an existing
business component to a particular customer's requirement or
need.
(C) Duplication of existing business component
Any research related to the reproduction of an existing
business component (in whole or in part) from a physical
examination of the business component itself or from plans,
blueprints, detailed specifications, or publicly available
information with respect to such business component.
(D) Surveys, studies, etc.
Any -
(i) efficiency survey,
(ii) activity relating to management function or technique,
(iii) market research, testing, or development (including
advertising or promotions),
(iv) routine data collection, or
(v) routine or ordinary testing or inspection for quality
control.
(E) Computer software
Except to the extent provided in regulations, any research
with respect to computer software which is developed by (or for
the benefit of) the taxpayer primarily for internal use by the
taxpayer, other than for use in -
(i) an activity which constitutes qualified research
(determined with regard to this subparagraph), or
(ii) a production process with respect to which the
requirements of paragraph (1) are met.
(F) Foreign research
Any research conducted outside the United States, the
Commonwealth of Puerto Rico, or any possession of the United
States.
(G) Social sciences, etc.
Any research in the social sciences, arts, or humanities.
(H) Funded research
Any research to the extent funded by any grant, contract, or
otherwise by another person (or governmental entity).
(e) Credit allowable with respect to certain payments to qualified
organizations for basic research
For purposes of this section -
(1) In general
In the case of any taxpayer who makes basic research payments
for any taxable year -
(A) the amount of basic research payments taken into account
under subsection (a)(2) shall be equal to the excess of -
(i) such basic research payments, over
(ii) the qualified organization base period amount, and
(B) that portion of such basic research payments which does
not exceed the qualified organization base period amount shall
be treated as contract research expenses for purposes of
subsection (a)(1).
(2) Basic research payments defined
For purposes of this subsection -
(A) In general
The term "basic research payment" means, with respect to any
taxable year, any amount paid in cash during such taxable year
by a corporation to any qualified organization for basic
research but only if -
(i) such payment is pursuant to a written agreement between
such corporation and such qualified organization, and
(ii) such basic research is to be performed by such
qualified organization.
(B) Exception to requirement that research be performed by the
organization
In the case of a qualified organization described in
subparagraph (C) or (D) of paragraph (6), clause (ii) of
subparagraph (A) shall not apply.
(3) Qualified organization base period amount
For purposes of this subsection, the term "qualified
organization base period amount" means an amount equal to the sum
of -
(A) the minimum basic research amount, plus
(B) the maintenance-of-effort amount.
(4) Minimum basic research amount
For purposes of this subsection -
(A) In general
The term "minimum basic research amount" means an amount
equal to the greater of -
(i) 1 percent of the average of the sum of amounts paid or
incurred during the base period for -
(I) any in-house research expenses, and
(II) any contract research expenses, or
(ii) the amounts treated as contract research expenses
during the base period by reason of this subsection (as in
effect during the base period).
(B) Floor amount
Except in the case of a taxpayer which was in existence
during a taxable year (other than a short taxable year) in the
base period, the minimum basic research amount for any base
period shall not be less than 50 percent of the basic research
payments for the taxable year for which a determination is
being made under this subsection.
(5) Maintenance-of-effort amount
For purposes of this subsection -
(A) In general
The term "maintenance-of-effort amount" means, with respect
to any taxable year, an amount equal to the excess (if any) of
-
(i) an amount equal to -
(I) the average of the nondesignated university
contributions paid by the taxpayer during the base period,
multiplied by
(II) the cost-of-living adjustment for the calendar year
in which such taxable year begins, over
(ii) the amount of nondesignated university contributions
paid by the taxpayer during such taxable year.
(B) Nondesignated university contributions
For purposes of this paragraph, the term "nondesignated
university contribution" means any amount paid by a taxpayer to
any qualified organization described in paragraph (6)(A) -
(i) for which a deduction was allowable under section 170,
and
(ii) which was not taken into account -
(I) in computing the amount of the credit under this
section (as in effect during the base period) during any
taxable year in the base period, or
(II) as a basic research payment for purposes of this
section.
(C) Cost-of-living adjustment defined
(i) In general
The cost-of-living adjustment for any calendar year is the
cost-of-living adjustment for such calendar year determined
under section 1(f)(3), by substituting "calendar year 1987"
for "calendar year 1992" in subparagraph (B) thereof.
(ii) Special rule where base period ends in a calendar year
other than 1983 or 1984
If the base period of any taxpayer does not end in 1983 or
1984, section 1(f)(3)(B) shall, for purposes of this
paragraph, be applied by substituting the calendar year in
which such base period ends for 1992. Such substitution shall
be in lieu of the substitution under clause (i).
(6) Qualified organization
For purposes of this subsection, the term "qualified
organization" means any of the following organizations:
(A) Educational institutions
Any educational organization which -
(i) is an institution of higher education (within the
meaning of section 3304(f)), and
(ii) is described in section 170(b)(1)(A)(ii).
(B) Certain scientific research organizations
Any organization not described in subparagraph (A) which -
(i) is described in section 501(c)(3) and is exempt from
tax under section 501(a),
(ii) is organized and operated primarily to conduct
scientific research, and
(iii) is not a private foundation.
(C) Scientific tax-exempt organizations
Any organization which -
(i) is described in -
(I) section 501(c)(3) (other than a private foundation),
or
(II) section 501(c)(6),
(ii) is exempt from tax under section 501(a),
(iii) is organized and operated primarily to promote
scientific research by qualified organizations described in
subparagraph (A) pursuant to written research agreements, and
(iv) currently expends -
(I) substantially all of its funds, or
(II) substantially all of the basic research payments
received by it,
for grants to, or contracts for basic research with, an
organization described in subparagraph (A).
(D) Certain grant organizations
Any organization not described in subparagraph (B) or (C)
which -
(i) is described in section 501(c)(3) and is exempt from
tax under section 501(a) (other than a private foundation),
(ii) is established and maintained by an organization
established before July 10, 1981, which meets the
requirements of clause (i),
(iii) is organized and operated exclusively for the purpose
of making grants to organizations described in subparagraph
(A) pursuant to written research agreements for purposes of
basic research, and
(iv) makes an election, revocable only with the consent of
the Secretary, to be treated as a private foundation for
purposes of this title (other than section 4940, relating to
excise tax based on investment income).
(7) Definitions and special rules
For purposes of this subsection -
(A) Basic research
The term "basic research" means any original investigation
for the advancement of scientific knowledge not having a
specific commercial objective, except that such term shall not
include -
(i) basic research conducted outside of the United States,
and
(ii) basic research in the social sciences, arts, or
humanities.
(B) Base period
The term "base period" means the 3-taxable-year period ending
with the taxable year immediately preceding the 1st taxable
year of the taxpayer beginning after December 31, 1983.
(C) Exclusion from incremental credit calculation
For purposes of determining the amount of credit allowable
under subsection (a)(1) for any taxable year, the amount of the
basic research payments taken into account under subsection
(a)(2) -
(i) shall not be treated as qualified research expenses
under subsection (a)(1)(A), and
(ii) shall not be included in the computation of base
amount under subsection (a)(1)(B).
(D) Trade or business qualification
For purposes of applying subsection (b)(1) to this
subsection, any basic research payments shall be treated as an
amount paid in carrying on a trade or business of the taxpayer
in the taxable year in which it is paid (without regard to the
provisions of subsection (b)(3)(B)).
(E) Certain corporations not eligible
The term "corporation" shall not include -
(i) an S corporation,
(ii) a personal holding company (as defined in section
542), or
(iii) a service organization (as defined in section
414(m)(3)).
(f) Special rules
For purposes of this section -
(1) Aggregation of expenditures
(A) Controlled group of corporations
In determining the amount of the credit under this section -
(i) all members of the same controlled group of
corporations shall be treated as a single taxpayer, and
(ii) the credit (if any) allowable by this section to each
such member shall be its proportionate shares of the
qualified research expenses and basic research payments
giving rise to the credit.
(B) Common control
Under regulations prescribed by the Secretary, in determining
the amount of the credit under this section -
(i) all trades or businesses (whether or not incorporated)
which are under common control shall be treated as a single
taxpayer, and
(ii) the credit (if any) allowable by this section to each
such person shall be its proportionate shares of the
qualified research expenses and basic research payments
giving rise to the credit.
The regulations prescribed under this subparagraph shall be
based on principles similar to the principles which apply in
the case of subparagraph (A).
(2) Allocations
(A) Pass-thru in the case of estates and trusts
Under regulations prescribed by the Secretary, rules similar
to the rules of subsection (d) of section 52 shall apply.
(B) Allocation in the case of partnerships
In the case of partnerships, the credit shall be allocated
among partners under regulations prescribed by the Secretary.
(3) Adjustments for certain acquisitions, etc.
Under regulations prescribed by the Secretary -
(A) Acquisitions
If, after December 31, 1983, a taxpayer acquires the major
portion of a trade or business of another person (hereinafter
in this paragraph referred to as the "predecessor") or the
major portion of a separate unit of a trade or business of a
predecessor, then, for purposes of applying this section for
any taxable year ending after such acquisition, the amount of
qualified research expenses paid or incurred by the taxpayer
during periods before such acquisition shall be increased by so
much of such expenses paid or incurred by the predecessor with
respect to the acquired trade or business as is attributable to
the portion of such trade or business or separate unit acquired
by the taxpayer, and the gross receipts of the taxpayer for
such periods shall be increased by so much of the gross
receipts of such predecessor with respect to the acquired trade
or business as is attributable to such portion.
(B) Dispositions
If, after December 31, 1983 -
(i) a taxpayer disposes of the major portion of any trade
or business or the major portion of a separate unit of a
trade or business in a transaction to which subparagraph (A)
applies, and
(ii) the taxpayer furnished the acquiring person such
information as is necessary for the application of
subparagraph (A),
then, for purposes of applying this section for any taxable
year ending after such disposition, the amount of qualified
research expenses paid or incurred by the taxpayer during
periods before such disposition shall be decreased by so much
of such expenses as is attributable to the portion of such
trade or business or separate unit disposed of by the taxpayer,
and the gross receipts of the taxpayer for such periods shall
be decreased by so much of the gross receipts as is
attributable to such portion.
(C) Certain reimbursements taken into account in determining
fixed-base percentage
If during any of the 3 taxable years following the taxable
year in which a disposition to which subparagraph (B) applies
occurs, the disposing taxpayer (or a person with whom the
taxpayer is required to aggregate expenditures under paragraph
(1)) reimburses the acquiring person (or a person required to
so aggregate expenditures with such person) for research on
behalf of the taxpayer, then the amount of qualified research
expenses of the taxpayer for the taxable years taken into
account in computing the fixed-base percentage shall be
increased by the lesser of -
(i) the amount of the decrease under subparagraph (B) which
is allocable to taxable years so taken into account, or
(ii) the product of the number of taxable years so taken
into account, multiplied by the amount of the reimbursement
described in this subparagraph.
(4) Short taxable years
In the case of any short taxable year, qualified research
expenses and gross receipts shall be annualized in such
circumstances and under such methods as the Secretary may
prescribe by regulation.
(5) Controlled group of corporations
The term "controlled group of corporations" has the same
meaning given to such term by section 1563(a), except that -
(A) "more than 50 percent" shall be substituted for "at least
80 percent" each place it appears in section 1563(a)(1), and
(B) the determination shall be made without regard to
subsections (a)(4) and (e)(3)(C) of section 1563.
(g) Special rule for pass-thru of credit
In the case of an individual who -
(1) owns an interest in an unincorporated trade or business,
(2) is a partner in a partnership,
(3) is a beneficiary of an estate or trust, or
(4) is a shareholder in an S corporation,
the amount determined under subsection (a) for any taxable year
shall not exceed an amount (separately computed with respect to
such person's interest in such trade or business or entity) equal
to the amount of tax attributable to that portion of a person's
taxable income which is allocable or apportionable to the person's
interest in such trade or business or entity. If the amount
determined under subsection (a) for any taxable year exceeds the
limitation of the preceding sentence, such amount may be carried to
other taxable years under the rules of section 39; except that the
limitation of the preceding sentence shall be taken into account in
lieu of the limitation of section 38(c) in applying section 39.
(h) Termination
(1) In general
This section shall not apply to any amount paid or incurred -
(A) after June 30, 1995, and before July 1, 1996, or
(B) after June 30, 2004.
(2) Computation of base amount
In the case of any taxable year with respect to which this
section applies to a number of days which is less than the total
number of days in such taxable year, the base amount with respect
to such taxable year shall be the amount which bears the same
ratio to the base amount for such year (determined without regard
to this paragraph) as the number of days in such taxable year to
which this section applies bears to the total number of days in
such taxable year.
-SOURCE-
(Added Pub. L. 97-34, title II, Sec. 221(a), Aug. 13, 1981, 95
Stat. 241, Sec. 44F; amended Pub. L. 97-354, Sec. 5(a)(3), Oct. 19,
1982, 96 Stat. 1692; Pub. L. 97-448, title I, Sec. 102(b)(2), Jan.
12, 1983, 96 Stat. 2372; renumbered Sec. 30 and amended Pub. L.
98-369, div. A, title IV, Secs. 471(c), 474(i)(1), title VI, Sec.
612(e)(1), July 18, 1984, 98 Stat. 826, 831, 912; renumbered Sec.
41 and amended Pub. L. 99-514, title II, Sec. 231(a)(1), (b), (c),
(d)(2), (3)(C)(ii), (e), title XVIII, Sec. 1847(b)(1), Oct. 22,
1986, 100 Stat. 2173, 2175, 2178-2180, 2856; Pub. L. 100-647, title
I, Sec. 1002(h)(1), title IV, Secs. 4007(a), 4008(b)(1), Nov. 10,
1988, 102 Stat. 3370, 3652; Pub. L. 101-239, title VII, Secs.
7110(a)(1), (b), (b)[(c)], 7814(e)(2)(C), Dec. 19, 1989, 103 Stat.
2322, 2323, 2325, 2414; Pub. L. 101-508, title XI, Secs.
11101(d)(1)(C), 11402(a), Nov. 5, 1990, 104 Stat. 1388-405,
1388-473; Pub. L. 102-227, title I, Sec. 102(a), Dec. 11, 1991, 105
Stat. 1686; Pub. L. 103-66, title XIII, Secs. 13111(a)(1),
13112(a), (b), 13201(b)(3)(C), Aug. 10, 1993, 107 Stat. 420, 421,
459; Pub. L. 104-188, title I, Secs. 1201(e)(1), (4), 1204(a)-(d),
Aug. 20, 1996, 110 Stat. 1772-1774; Pub. L. 105-34, title VI, Sec.
601(a), (b)(1), Aug. 5, 1997, 111 Stat. 861; Pub. L. 105-277, div.
J, title I, Sec. 1001(a), Oct. 21, 1998, 112 Stat. 2681-888; Pub.
L. 106-170, title V, Sec. 502(a)(1), (b)(1), (c)(1), Dec. 17, 1999,
113 Stat. 1919.)
-MISC1-
PRIOR PROVISIONS
A prior section 41, added Pub. L. 97-34, title III, Sec. 331(a),
Aug. 13, 1981, 95 Stat. 289, Sec. 44G; amended Pub. L. 97-448,
title I, Sec. 103(g)(1), Jan. 12, 1983, 96 Stat. 2379; renumbered
Sec. 41 and amended Pub. L. 98-369, div. A, title I, Sec. 14, title
IV, Secs. 471(c), 474(l), 491(e)(2), (3), July 18, 1984, 98 Stat.
505, 826, 833, 852, 853, related to employee stock ownership
credit, prior to repeal by Pub. L. 99-514, title XI, Sec. 1171(a),
Oct. 22, 1986, 100 Stat. 2513, applicable to compensation paid or
accrued after Dec. 31, 1986, in taxable years ending after such
date, except as otherwise provided, see section 1171(c) of Pub. L.
99-514, set out as an Effective Date of 1986 Amendment note under
section 38 of this title. For transition rules relating to such
repeal, see section 1177 of Pub. L. 99-514, set out as a Transition
Rules note under section 38 of this title.
Another prior section 41 was renumbered section 24 of this title.
AMENDMENTS
1999 - Subsec. (c)(4)(A)(i). Pub. L. 106-170, Sec. 502(b)(1)(A),
substituted "2.65 percent" for "1.65 percent".
Subsec. (c)(4)(A)(ii). Pub. L. 106-170, Sec. 502(b)(1)(B),
substituted "3.2 percent" for "2.2 percent".
Subsec. (c)(4)(A)(iii). Pub. L. 106-170, Sec. 502(b)(1)(C),
substituted "3.75 percent" for "2.75 percent".
Subsecs. (c)(6), (d)(4)(F). Pub. L. 106-170, Sec. 502(c)(1),
inserted ", the Commonwealth of Puerto Rico, or any possession of
the United States" before period at end.
Subsec. (h)(1). Pub. L. 106-170, Sec. 502(a)(1)(B), struck out
concluding provisions which read as follows: "Notwithstanding the
preceding sentence, in the case of a taxpayer making an election
under subsection (c)(4) for its first taxable year beginning after
June 30, 1996, and before July 1, 1997, this section shall apply to
amounts paid or incurred during the 36-month period beginning with
the first month of such year. The 36 months referred to in the
preceding sentence shall be reduced by the number of full months
after June 1996 (and before the first month of such first taxable
year) during which the taxpayer paid or incurred any amount which
is taken into account in determining the credit under this
section."
Subsec. (h)(1)(B). Pub. L. 106-170, Sec. 502(a)(1)(A),
substituted "June 30, 2004" for "June 30, 1999".
1998 - Subsec. (h)(1). Pub. L. 105-277 substituted "June 30,
1999" for "June 30, 1998" in subpar. (B) and substituted "36-month"
for "24-month" and "36 months" for "24 months" in concluding
provisions.
1997 - Subsec. (c)(4)(B). Pub. L. 105-34, Sec. 601(b)(1), amended
heading and text of subpar. (B) generally. Prior to amendment, text
read as follows: "An election under this paragraph may be made only
for the first taxable year of the taxpayer beginning after June 30,
1996. Such an election shall apply to the taxable year for which
made and all succeeding taxable years unless revoked with the
consent of the Secretary."
Subsec. (h)(1). Pub. L. 105-34, Sec. 601(a), substituted "June
30, 1998" for "May 31, 1997" in subpar. (B) and "during the
24-month period beginning with the first month of such year. The 24
months referred to in the preceding sentence shall be reduced by
the number of full months after June 1996 (and before the first
month of such first taxable year) during which the taxpayer paid or
incurred any amount which is taken into account in determining the
credit under this section." for "during the first 11 months of such
taxable year." in concluding provisions.
1996 - Subsec. (b)(2)(D)(iii). Pub. L. 104-188, Sec. 1201(e)(1),
(4), substituted "work opportunity credit" for "targeted jobs
credit" in heading and text.
Subsec. (b)(3)(C). Pub. L. 104-188, Sec. 1204(d), added subpar.
(C).
Subsec. (c)(3)(B)(i). Pub. L. 104-188, Sec. 1204(b), reenacted
heading without change and amended text generally. Prior to
amendment, text read as follows: "The fixed-base percentage shall
be determined under this subparagraph if there are fewer than 3
taxable years beginning after December 31, 1983, and before January
1, 1989, in which the taxpayer had both gross receipts and
qualified research expenses."
Subsec. (c)(4) to (6). Pub. L. 104-188, Sec. 1204(c), added par.
(4) and redesignated former pars. (4) and (5) as (5) and (6),
respectively.
Subsec. (h). Pub. L. 104-188, Sec. 1204(a), reenacted heading
without change and amended text generally. Prior to amendment, text
read as follows:
"(1) In general. - This section shall not apply to any amount
paid or incurred after June 30, 1995.
"(2) Computation of base amount. - In the case of any taxable
year which begins before July 1, 1995, and ends after June 30,
1995, the base amount with respect to such taxable year shall be
the amount which bears the same ratio to the base amount for such
year (determined without regard to this paragraph) as the number of
days in such taxable year before July 1, 1995, bears to the total
number of days in such taxable year."
1993 - Subsec. (c)(3)(B)(ii). Pub. L. 103-66, Sec. 13112(a),
amended heading and text of cl. (ii) generally. Prior to amendment,
text read as follows: "In a case to which this subparagraph
applies, the fixed-base percentage is 3 percent."
Subsec. (c)(3)(B)(iii). Pub. L. 103-66, Sec. 13112(b)(1),
substituted "clauses (i) and (ii)" for "clause (i)".
Subsec. (c)(3)(D). Pub. L. 103-66, Sec. 13112(b)(2), substituted
"subparagraphs (A) and (B)(ii)" for "subparagraph (A)".
Subsec. (e)(5)(C). Pub. L. 103-66, Sec. 13201(b)(3)(C),
substituted "1992" for "1989" in cls. (i) and (ii).
Subsec. (h). Pub. L. 103-66, Sec. 13111(a)(1), substituted "June
30, 1995" for "June 30, 1992" in pars. (1) and (2) and "July 1,
1995" for "July 1, 1992" in two places in par. (2).
1991 - Subsec. (h). Pub. L. 102-227 substituted "June 30, 1992"
for "December 31, 1991" in pars. (1) and (2), and "July 1, 1992"
for "January 1, 1992" in two places in par. (2).
1990 - Subsec. (e)(5)(C)(i). Pub. L. 101-508, Sec.
11101(d)(1)(C)(i), inserted before period at end ", by substituting
'calendar year 1987' for 'calendar year 1989' in subparagraph (B)
thereof".
Subsec. (e)(5)(C)(ii). Pub. L. 101-508, Sec. 11101(d)(1)(C)(ii),
(iii), substituted "1989" for "1987" and inserted at end "Such
substitution shall be in lieu of the substitution under clause
(i)."
Subsec. (h). Pub. L. 101-508, Sec. 11402(a), substituted
"December 31, 1991" for "December 31, 1990" wherever appearing and
"January 1, 1992" for "January 1, 1991" wherever appearing.
1989 - Subsec. (a)(1)(B). Pub. L. 101-239, Sec. 7110(b)(2)(A),
amended subpar. (B) generally. Prior to amendment, subpar. (B) read
as follows: "the base period research expenses, and".
Subsec. (b)(4). Pub. L. 101-239, Sec. 7110(b)[(c)], added par.
(4).
Subsec. (c). Pub. L. 101-239, Sec. 7110(b)(1), substituted "Base
amount" for "Base period research expenses" in heading and amended
text generally, substituting pars. (1) to (5) for former pars. (1)
to (3) which defined "base period research expenses" and "base
period" and prescribed minimum base period research expenses.
Subsec. (e)(7)(C)(ii). Pub. L. 101-239, Sec. 7110(b)(2)(B),
substituted "base amount" for "base period research expenses".
Subsec. (f)(1). Pub. L. 101-239, Sec. 7110(b)(2)(C), substituted
"proportionate shares of the qualified research expenses and basic
research payments" for "proportionate share of the increase in
qualified research expenses" in subpars. (A)(ii) and (B)(ii).
Subsec. (f)(3)(A). Pub. L. 101-239, Sec. 7110(b)(2)(D),
substituted "December 31, 1983" for "June 30, 1980" and inserted
before period at end ", and the gross receipts of the taxpayer for
such periods shall be increased by so much of the gross receipts of
such predecessor with respect to the acquired trade or business as
is attributable to such portion".
Subsec. (f)(3)(B). Pub. L. 101-239, Sec. 7110(b)(2)(E),
substituted "December 31, 1983" for "June 30, 1980" in introductory
provisions and inserted before period at end ", and the gross
receipts of the taxpayer for such periods shall be decreased by so
much of the gross receipts as is attributable to such portion".
Subsec. (f)(3)(C). Pub. L. 101-239, Sec. 7110(b)(2)(F),
substituted "Certain reimbursements taken into account in
determining fixed-base percentage" for "Increase in base period" in
heading, "for the taxable years taken into account in computing the
fixed-base percentage shall be increased by the lesser of" for "for
the base period for such taxable year shall be increased by the
lesser of" in introductory provisions, and new cls. (i) and (ii)
for former cls. (i) and (ii) which read as follows:
"(i) the amount of the decrease under subparagraph (B) which is
allocable to such base period, or
"(ii) the product of the number of years in the base period,
multiplied by the amount of the reimbursement described in this
subparagraph."
Subsec. (f)(4). Pub. L. 101-239, Sec. 7110(b)(2)(G), inserted
"and gross receipts" after "qualified research expenses".
Subsec. (h). Pub. L. 101-239, Sec. 7814(e)(2)(C), redesignated
subsec. (i) as (h) and struck out former subsec. (h) which related
to election, time for election, and manner of election by taxpayer
to have research credit not apply for a taxable year.
Subsec. (h)(1). Pub. L. 101-239, Sec. 7110(a)(1)(A), substituted
"December 31, 1990" for "December 31, 1989".
Subsec. (h)(2). Pub. L. 101-239, Sec. 7110(a)(1), substituted
"January 1, 1991" for "January 1, 1990" in two places and
substituted "December 31, 1990" for "December 31, 1989".
Pub. L. 101-239, Sec. 7110(b)(2)(H), substituted "base amount"
for "base period expenses" in heading and "the base amount with
respect to such taxable year shall be the amount which bears the
same ratio to the base amount for such year (determined without
regard to this paragraph)" for "any amount for any base period with
respect to such taxable year shall be the amount which bears the
same ratio to such amount for such base period" in text.
Subsec. (i). Pub. L. 101-239, Sec. 7814(e)(2)(C), redesignated
subsec. (i) as (h).
1988 - Subsec. (g). Pub. L. 100-647, Sec. 1002(h)(1), inserted at
end "If the amount determined under subsection (a) for any taxable
year exceeds the limitation of the preceding sentence, such amount
may be carried to other taxable years under the rules of section
39; except that the limitation of the preceding sentence shall be
taken into account in lieu of the limitation of section 38(c) in
applying section 39."
Subsec. (h). Pub. L. 100-647, Sec. 4008(b)(1), added subsec. (h).
Former subsec. (h) redesignated (i).
Subsec. (i). Pub. L. 100-647, Sec. 4008(b)(1), redesignated
former subsec. (h) as (i).
Pub. L. 100-647, Sec. 4007(a), substituted "1989" and "1990" for
"1988" and "1989", respectively, wherever appearing in subsec. (h),
prior to redesignation as subsec. (i) by Pub. L. 100-647, Sec.
4008(b)(1).
1986 - Pub. L. 99-514, Sec. 231(d)(2), renumbered section 30 of
this title as this section.
Subsec. (a). Pub. L. 99-514, Sec. 231(c)(1), amended subsec. (a)
generally. Prior to amendment, subsec. (a) read as follows: "There
shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to 25 percent of the
excess (if any) of -
"(1) the qualified research expenses for the taxable year, over
"(2) the base period research expenses."
Subsec. (b)(2)(A)(iii). Pub. L. 99-514, Sec. 231(e), amended cl.
(iii) generally. Prior to amendment, cl. (iii) read as follows:
"any amount paid or incurred to another person for the right to use
personal property in the conduct of qualified research."
Subsec. (b)(2)(D)(iii). Pub. L. 99-514, Sec. 1847(b)(1),
substituted "targeted jobs credit" for "new jobs or WIN credit" in
heading.
Subsec. (d). Pub. L. 99-514, Sec. 231(b), inserted "defined" in
heading and amended text generally. Prior to amendment, text read
as follows: "For purposes of this section the term 'qualified
research' has the same meaning as the term research or experimental
has under section 174, except that such term shall not include -
"(1) qualified research conducted outside the United States,
"(2) qualified research in the social sciences or humanities,
and
"(3) qualified research to the extent funded by any grant,
contract, or otherwise by another person (or any governmental
entity)."
Subsec. (e). Pub. L. 99-514, Sec. 231(c)(2), amended subsec. (e)
generally, substituting "Credit allowable with respect to certain
payments to qualified organizations for basic research" for "Credit
available with respect to certain basic research by colleges,
universities, and certain research organizations" in heading, and
restating and expanding provisions of former pars. (1) to (4) into
new pars. (1) to (7).
Subsec. (g). Pub. L. 99-514, Sec. 231(d)(3)(C)(ii), amended
subsec. (g) generally, substituting provisions relating to special
rule for pass-thru of credit for provisions relating to limitation
on amount of credit for research based on amount of tax liability.
Subsec. (h). Pub. L. 99-514, Sec. 231(a)(1), added subsec. (h).
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44F of
this title as this section.
Subsec. (b)(2)(D)(iii). Pub. L. 98-369, Sec. 474(i)(1)(A),
substituted "in determining the targeted jobs credit under section
51(a)" for "in computing the credit under section 40 or 44B".
Subsec. (g)(1)(A). Pub. L. 98-369, Sec. 612(e)(1), substituted
"section 26(b)" for "section 25(b)".
Pub. L. 98-369, Sec. 474(i)(1)(B), amended subpar. (A) generally,
substituting "shall not exceed the taxpayer's tax liability for the
taxable year (as defined in section 25(b)), reduced by the sum of
the credits allowable under subpart A and sections 27, 28, and 29"
for "shall not exceed the amount of the tax imposed by this chapter
reduced by the sum of the credits allowable under a section of this
part having a lower number or letter designation than this section,
other than the credits allowable by sections 31, 39, and 43. For
purposes of the preceding sentence, the term 'tax imposed by this
chapter' shall not include any tax treated as not imposed by this
chapter under the last sentence of section 53(a)".
1983 - Subsec. (b)(2)(A). Pub. L. 97-448 inserted provision that
cl. (iii) would not apply to any amount to the extent that the
taxpayer (or any person with whom the taxpayer must aggregate
expenditures under subsection (f)(1)) received or accrued any
amount from any other person for the right to use substantially
identical personal property.
1982 - Subsec. (f)(2)(A). Pub. L. 97-354, Sec. 5(a)(3)(A),
substituted "Pass-thru in the case of estates and trusts" for
"Pass-through in the case of subchapter S corporations, etc." in
subpar. heading, and substituted provisions relating to the
applicability of rules similar to rules of subsec. (d) of section
52 for provisions relating to the applicability of rules similar to
rules of subsecs. (d) and (e) of section 52.
Subsec. (g)(1)(B)(iv). Pub. L. 97-354, Sec. 5(a)(3)(B),
substituted "an S corporation" for "an electing small business
corporation (within the meaning of section 1371(b))".
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106-170, title V, Sec. 502(a)(3), Dec. 17, 1999, 113
Stat. 1919, provided that: "The amendments made by this subsection
[amending this section and section 45C of this title] shall apply
to amounts paid or incurred after June 30, 1999."
Pub. L. 106-170, title V, Sec. 502(b)(2), Dec. 17, 1999, 113
Stat. 1919, provided that: "The amendments made by this subsection
[amending this section] shall apply to taxable years beginning
after June 30, 1999."
Pub. L. 106-170, title V, Sec. 502(c)(3), Dec. 17, 1999, 113
Stat. 1920, provided that: "The amendments made by this subsection
[amending this section and section 280C of this title] shall apply
to amounts paid or incurred after June 30, 1999."
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-277, div. J, title I, Sec. 1001(c), Oct. 21, 1998,
112 Stat. 2681-888, provided that: "The amendments made by this
section [amending this section and section 45C of this title] shall
apply to amounts paid or incurred after June 30, 1998."
EFFECTIVE DATE OF 1997 AMENDMENT
Section 601(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section and section 45C of this
title] shall apply to amounts paid or incurred after May 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1201(e)(1), (4) of Pub. L. 104-188
applicable to individuals who begin work for the employer after
Sept. 30, 1996, see section 1201(g) of Pub. L. 104-188, set out as
a note under section 38 of this title.
Section 1204(f) of Pub. L. 104-188 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and section
28 [now 45C] of this title] shall apply to taxable years ending
after June 30, 1996.
"(2) Subsections (c) and (d). - The amendments made by
subsections (c) and (d) [amending this section] shall apply to
taxable years beginning after June 30, 1996.
"(3) Estimated tax. - The amendments made by this section shall
not be taken into account under section 6654 or 6655 of the
Internal Revenue Code of 1986 (relating to failure to pay estimated
tax) in determining the amount of any installment required to be
paid for a taxable year beginning in 1997."
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by section 13111(a)(1) of Pub. L. 103-66 applicable to
taxable years ending after June 30, 1992, see section 13111(c) of
Pub. L. 103-66, set out as a note under section 45C of this title.
Section 13112(c) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1993."
Amendment by section 13201(b)(3)(C) of Pub. L. 103-66 applicable
to taxable years beginning after Dec. 31, 1992, see section
13201(c) of Pub. L. 103-66, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1991 AMENDMENT
Amendment by Pub. L. 102-227 applicable to taxable years ending
after Dec. 31, 1991, see section 102(c) of Pub. L. 102-227, set out
as a note under section 45C of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(1)(C) of Pub. L. 101-508 applicable
to taxable years beginning after Dec. 31, 1990, see section
11101(e) of Pub. L. 101-508, set out as a note under section 1 of
this title.
Amendment by section 11402(a) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1989, see section 11402(c)
of Pub. L. 101-508, set out as a note under section 45C of this
title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7110(e) of Pub. L. 101-239 provided that: "The amendments
made by this section [amending this section and sections 28, 174,
196, and 280C of this title] (other than subsection (a) [amending
this section and section 28 of this title]) shall apply to taxable
years beginning after December 31, 1989."
Amendment by section 7814(e)(2)(C) of Pub. L. 101-239 effective,
except as otherwise provided, as if included in the provision of
the Technical and Miscellaneous Revenue Act of 1988, Pub. L.
100-647, to which such amendment relates, see section 7817 of Pub.
L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1002(h)(1) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 4008(d) of Pub. L. 100-647 provided that: "The amendments
made by this section [amending this section and sections 28, 196,
280C, and 6501 of this title] shall apply to taxable years
beginning after December 31, 1988."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 231(g) of Pub. L. 99-514 provided that:
"(1) In general. - Except as provided in this subsection (2), the
amendments made by this section [amending this section and sections
28, 38, 39, 108, 170, 280C, 381, 936, 6411, and 6511 of this title,
renumbering former section 30 of this title as this section, and
enacting and amending provisions set out as notes under this
section] shall apply to taxable years beginning after December 31,
1985.
"(2) Subsection (a). - The amendments made by subsection (a)
[amending this section and provisions set out as a note under this
section] shall apply to taxable years ending after December 31,
1985.
"(3) Basic research. - Section 41(a)(2) of the Internal Revenue
Code of 1986 (as added by this section), and the amendments made by
subsection (c)(2) [amending this section], shall apply to taxable
years beginning after December 31, 1986."
Amendment by section 1847(b)(1) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(i)(1) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Amendment by section 612(e)(1) of Pub. L. 98-369 applicable to
interest paid or accrued after Dec. 31, 1984, on indebtedness
incurred after Dec. 31, 1984, see section 612(g) of Pub. L. 98-369,
set out as an Effective Date note under section 25 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Section 102(h)(2) of Pub. L. 97-448 provided that the amendment
made by that section is effective only with respect to amounts paid
or incurred after March 31, 1982.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
EFFECTIVE DATE
Section 221(d) of Pub. L. 97-34, as amended by Pub. L. 99-514,
Sec. 2, title II, Sec. 231(a)(2), Oct. 22, 1986, 100 Stat. 2095,
2173, provided that:
"(1) In general. - The amendments made by this section [enacting
this section of amending sections 55, 381, 383, 6096, 6411, and
6511 of this title] shall apply to amounts paid or incurred after
June 30, 1981.
"(2) Transitional rule. -
"(A) In general. - If, with respect to the first taxable year
to which the amendments made by this section apply and which ends
in 1981 or 1982, the taxpayer may only take into account
qualified research expenses paid or incurred during a portion of
such taxable year, the amount of the qualified research expenses
taken into account for the base period of such taxable year shall
be the amount which bears the same ratio to the total qualified
research expenses for such base period as the number of months in
such portion of such taxable year bears to the total number of
months in such taxable year.
"(B) Definitions. - For purposes of the preceding sentence, the
terms 'qualified research expenses' and 'base period' have the
meanings given to such terms by section 44F [now 41] of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by
this section)."
SPECIAL RULE FOR CREDIT ATTRIBUTABLE TO SUSPENSION PERIODS
Pub. L. 106-170, title V, Sec. 502(d), Dec. 17, 1999, 113 Stat.
1920, provided that:
"(1) In general. - For purposes of the Internal Revenue Code of
1986, the credit determined under section 41 of such Code which is
otherwise allowable under such Code -
"(A) shall not be taken into account prior to October 1, 2000,
to the extent such credit is attributable to the first suspension
period; and
"(B) shall not be taken into account prior to October 1, 2001,
to the extent such credit is attributable to the second
suspension period.
On or after the earliest date that an amount of credit may be taken
into account, such amount may be taken into account through the
filing of an amended return, an application for expedited refund,
an adjustment of estimated taxes, or other means allowed by such
Code.
"(2) Suspension periods. - For purposes of this subsection -
"(A) the first suspension period is the period beginning on
July 1, 1999, and ending on September 30, 2000; and
"(B) the second suspension period is the period beginning on
October 1, 2000, and ending on September 30, 2001.
"(3) Expedited refunds. -
"(A) In general. - If there is an overpayment of tax with
respect to a taxable year by reason of paragraph (1), the
taxpayer may file an application for a tentative refund of such
overpayment. Such application shall be in such manner and form,
and contain such information, as the Secretary may prescribe.
"(B) Deadline for applications. - Subparagraph (A) shall apply
only to an application filed before the date which is 1 year
after the close of the suspension period to which the application
relates.
"(C) Allowance of adjustments. - Not later than 90 days after
the date on which an application is filed under this paragraph,
the Secretary shall -
"(i) review the application;
"(ii) determine the amount of the overpayment; and
"(iii) apply, credit, or refund such overpayment,
in a manner similar to the manner provided in section 6411(b) of
such Code.
"(D) Consolidated returns. - The provisions of section 6411(c)
of such Code shall apply to an adjustment under this paragraph in
such manner as the Secretary may provide.
"(4) Credit attributable to suspension period. -
"(A) In general. - For purposes of this subsection, in the case
of a taxable year which includes a portion of the suspension
period, the amount of credit determined under section 41 of such
Code for such taxable year which is attributable to such period
is the amount which bears the same ratio to the amount of credit
determined under such section 41 for such taxable year as the
number of months in the suspension period which are during such
taxable year bears to the number of months in such taxable year.
"(B) Waiver of estimated tax penalties. - No addition to tax
shall be made under section 6654 or 6655 of such Code for any
period before July 1, 1999, with respect to any underpayment of
tax imposed by such Code to the extent such underpayment was
created or increased by reason of subparagraph (A).
"(5) Secretary. - For purposes of this subsection, the term
'Secretary' means the Secretary of the Treasury (or such
Secretary's delegate)."
SPECIAL RULES FOR TAXABLE YEARS BEGINNING BEFORE OCT. 1, 1990, AND
ENDING AFTER SEPT. 30, 1990
Section 7110(a)(2) of Pub. L. 101-239, which set forth the method
of determining the amount treated as qualified research expenses
for taxable years beginning before Oct. 1, 1990, and ending after
Sept. 30, 1990, was repealed by Pub. L. 101-508, title XI, Sec.
11402(b)(1), Nov. 5, 1990, 104 Stat. 1388-473.
[Section 1702(d)(1) of Pub. L. 104-188 provided that:
"Notwithstanding section 11402(c) of the Revenue Reconciliation Act
of 1990 [Pub. L. 101-508, set out as a note under section 45C of
this title], the amendment made by section 11402(b)(1) of such Act
[repealing section 7110(a)(2) of Pub. L. 101-239, formerly set out
as a note above] shall apply to taxable years ending after December
31, 1989."]
STUDY AND REPORT ON CREDIT PROVIDED BY THIS SECTION
Section 4007(b) of Pub. L. 100-647 directed Comptroller General
of United States to conduct a study of credit provided by 26 U.S.C.
41 and submit a report of the study not later than Dec. 31, 1989,
to Committee on Ways and Means of House of Representatives and
Committee on Finance of Senate.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
NEW SECTION 41 TREATED AS CONTINUATION OF OLD SECTION 44F
Section 474(i)(2) of Pub. L. 98-369 provided that: "For purposes
of determining -
"(A) whether any excess credit under old section 44F [now 41]
for a taxable year beginning before January 1, 1984, is allowable
as a carryover under new section 30 [now 41], and
"(B) the period during which new section 30 [now 41] is in
effect,
new section 30 [now 41] shall be treated as a continuation of old
section 44F (and shall apply only to the extent old section 44F
would have applied)."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 30A, 38, 45C, 144, 170,
196, 197, 280C, 409, 936, 1202 of this title.
-End-
-CITE-
26 USC Sec. 42 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 42. Low-income housing credit
-STATUTE-
(a) In general
For purposes of section 38, the amount of the low-income housing
credit determined under this section for any taxable year in the
credit period shall be an amount equal to -
(1) the applicable percentage of
(2) the qualified basis of each qualified low-income building.
(b) Applicable percentage: 70 percent present value credit for
certain new buildings; 30 percent present value credit for
certain other buildings
For purposes of this section -
(1) Building placed in service during 1987
In the case of any qualified low-income building placed in
service by the taxpayer during 1987, the term "applicable
percentage" means -
(A) 9 percent for new buildings which are not federally
subsidized for the taxable year, or
(B) 4 percent for -
(i) new buildings which are federally subsidized for the
taxable year, and
(ii) existing buildings.
(2) Buildings placed in service after 1987
(A) In general
In the case of any qualified low-income building placed in
service by the taxpayer after 1987, the term "applicable
percentage" means the appropriate percentage prescribed by the
Secretary for the earlier of -
(i) the month in which such building is placed in service,
or
(ii) at the election of the taxpayer -
(I) the month in which the taxpayer and the housing
credit agency enter into an agreement with respect to such
building (which is binding on such agency, the taxpayer,
and all successors in interest) as to the housing credit
dollar amount to be allocated to such building, or
(II) in the case of any building to which subsection
(h)(4)(B) applies, the month in which the tax-exempt
obligations are issued.
A month may be elected under clause (ii) only if the election
is made not later than the 5th day after the close of such
month. Such an election, once made, shall be irrevocable.
(B) Method of prescribing percentages
The percentages prescribed by the Secretary for any month
shall be percentages which will yield over a 10-year period
amounts of credit under subsection (a) which have a present
value equal to -
(i) 70 percent of the qualified basis of a building
described in paragraph (1)(A), and
(ii) 30 percent of the qualified basis of a building
described in paragraph (1)(B).
(C) Method of discounting
The present value under subparagraph (B) shall be determined
-
(i) as of the last day of the 1st year of the 10-year
period referred to in subparagraph (B),
(ii) by using a discount rate equal to 72 percent of the
average of the annual Federal mid-term rate and the annual
Federal long-term rate applicable under section 1274(d)(1) to
the month applicable under clause (i) or (ii) of subparagraph
(A) and compounded annually, and
(iii) by assuming that the credit allowable under this
section for any year is received on the last day of such
year.
(3) Cross references
(A) For treatment of certain rehabilitation expenditures as
separate new buildings, see subsection (e).
(B) For determination of applicable percentage for increases
in qualified basis after the 1st year of the credit period, see
subsection (f)(3).
(C) For authority of housing credit agency to limit
applicable percentage and qualified basis which may be taken
into account under this section with respect to any building,
see subsection (h)(7).
(c) Qualified basis; qualified low-income building
For purposes of this section -
(1) Qualified basis
(A) Determination
The qualified basis of any qualified low-income building for
any taxable year is an amount equal to -
(i) the applicable fraction (determined as of the close of
such taxable year) of
(ii) the eligible basis of such building (determined under
subsection (d)(5)).
(B) Applicable fraction
For purposes of subparagraph (A), the term "applicable
fraction" means the smaller of the unit fraction or the floor
space fraction.
(C) Unit fraction
For purposes of subparagraph (B), the term "unit fraction"
means the fraction -
(i) the numerator of which is the number of low-income
units in the building, and
(ii) the denominator of which is the number of residential
rental units (whether or not occupied) in such building.
(D) Floor space fraction
For purposes of subparagraph (B), the term "floor space
fraction" means the fraction -
(i) the numerator of which is the total floor space of the
low-income units in such building, and
(ii) the denominator of which is the total floor space of
the residential rental units (whether or not occupied) in
such building.
(E) Qualified basis to include portion of building used to
provide supportive services for homeless
In the case of a qualified low-income building described in
subsection (i)(3)(B)(iii), the qualified basis of such building
for any taxable year shall be increased by the lesser of -
(i) so much of the eligible basis of such building as is
used throughout the year to provide supportive services
designed to assist tenants in locating and retaining
permanent housing, or
(ii) 20 percent of the qualified basis of such building
(determined without regard to this subparagraph).
(2) Qualified low-income building
The term "qualified low-income building" means any building -
(A) which is part of a qualified low-income housing project
at all times during the period -
(i) beginning on the 1st day in the compliance period on
which such building is part of such a project, and
(ii) ending on the last day of the compliance period with
respect to such building, and
(B) to which the amendments made by section 201(a) of the Tax
Reform Act of 1986 apply.
Such term does not include any building with respect to which
moderate rehabilitation assistance is provided, at any time
during the compliance period, under section 8(e)(2) (!1) of the
United States Housing Act of 1937 (other than assistance under
the McKinney-Vento Homeless Assistance Act (as in effect on the
date of the enactment of this sentence)).
(d) Eligible basis
For purposes of this section -
(1) New buildings
The eligible basis of a new building is its adjusted basis as
of the close of the 1st taxable year of the credit period.
(2) Existing buildings
(A) In general
The eligible basis of an existing building is -
(i) in the case of a building which meets the requirements
of subparagraph (B), its adjusted basis as of the close of
the 1st taxable year of the credit period, and
(ii) zero in any other case.
(B) Requirements
A building meets the requirements of this subparagraph if -
(i) the building is acquired by purchase (as defined in
section 179(d)(2)),
(ii) there is a period of at least 10 years between the
date of its acquisition by the taxpayer and the later of -
(I) the date the building was last placed in service, or
(II) the date of the most recent nonqualified substantial
improvement of the building,
(iii) the building was not previously placed in service by
the taxpayer or by any person who was a related person with
respect to the taxpayer as of the time previously placed in
service, and
(iv) except as provided in subsection (f)(5), a credit is
allowable under subsection (a) by reason of subsection (e)
with respect to the building.
(C) Adjusted basis
For purposes of subparagraph (A), the adjusted basis of any
building shall not include so much of the basis of such
building as is determined by reference to the basis of other
property held at any time by the person acquiring the building.
(D) Special rules for subparagraph (B)
(i) Nonqualified substantial improvement
For purposes of subparagraph (B)(ii) -
(I) In general
The term "nonqualified substantial improvement" means any
substantial improvement if section 167(k) (as in effect on
the day before the date of the enactment of the Revenue
Reconciliation Act of 1990) was elected with respect to
such improvement or section 168 (as in effect on the day
before the date of the enactment of the Tax Reform Act of
1986) applied to such improvement.
(II) Date of substantial improvement
The date of a substantial improvement is the last day of
the 24-month period referred to in subclause (III).
(III) Substantial improvement
The term "substantial improvement" means the improvements
added to capital account with respect to the building
during any 24-month period, but only if the sum of the
amounts added to such account during such period equals or
exceeds 25 percent of the adjusted basis of the building
(determined without regard to paragraphs (2) and (3) of
section 1016(a)) as of the 1st day of such period.
(ii) Special rules for certain transfers
For purposes of determining under subparagraph (B)(ii) when
a building was last placed in service, there shall not be
taken into account any placement in service -
(I) in connection with the acquisition of the building in
a transaction in which the basis of the building in the
hands of the person acquiring it is determined in whole or
in part by reference to the adjusted basis of such building
in the hands of the person from whom acquired,
(II) by a person whose basis in such building is
determined under section 1014(a) (relating to property
acquired from a decedent),
(III) by any governmental unit or qualified nonprofit
organization (as defined in subsection (h)(5)) if the
requirements of subparagraph (B)(ii) are met with respect
to the placement in service by such unit or organization
and all the income from such property is exempt from
Federal income taxation,
(IV) by any person who acquired such building by
foreclosure (or by instrument in lieu of foreclosure) of
any purchase-money security interest held by such person if
the requirements of subparagraph (B)(ii) are met with
respect to the placement in service by such person and such
building is resold within 12 months after the date such
building is placed in service by such person after such
foreclosure, or
(V) of a single-family residence by any individual who
owned and used such residence for no other purpose than as
his principal residence.
(iii) Related person, etc.
(I) Application of section 179
For purposes of subparagraph (B)(i), section 179(d) shall
be applied by substituting "10 percent" for "50 percent" in
section (!2) 267(b) and 707(b) and in section 179(b)(7).
(II) Related person
For purposes of subparagraph (B)(iii), a person
(hereinafter in this subclause referred to as the "related
person") is related to any person if the related person
bears a relationship to such person specified in section
267(b) or 707(b)(1), or the related person and such person
are engaged in trades or businesses under common control
(within the meaning of subsections (a) and (b) of section
52). For purposes of the preceding sentence, in applying
section 267(b) or 707(b)(1), "10 percent" shall be
substituted for "50 percent".
(3) Eligible basis reduced where disproportionate standards for
units
(A) In general
Except as provided in subparagraph (B), the eligible basis of
any building shall be reduced by an amount equal to the portion
of the adjusted basis of the building which is attributable to
residential rental units in the building which are not
low-income units and which are above the average quality
standard of the low-income units in the building.
(B) Exception where taxpayer elects to exclude excess costs
(i) In general
Subparagraph (A) shall not apply with respect to a
residential rental unit in a building which is not a
low-income unit if -
(I) the excess described in clause (ii) with respect to
such unit is not greater than 15 percent of the cost
described in clause (ii)(II), and
(II) the taxpayer elects to exclude from the eligible
basis of such building the excess described in clause (ii)
with respect to such unit.
(ii) Excess
The excess described in this clause with respect to any
unit is the excess of -
(I) the cost of such unit, over
(II) the amount which would be the cost of such unit if
the average cost per square foot of low-income units in the
building were substituted for the cost per square foot of
such unit.
The Secretary may by regulation provide for the determination
of the excess under this clause on a basis other than square
foot costs.
(4) Special rules relating to determination of adjusted basis
For purposes of this subsection -
(A) In general
Except as provided in subparagraphs (B) and (C), the adjusted
basis of any building shall be determined without regard to the
adjusted basis of any property which is not residential rental
property.
(B) Basis of property in common areas, etc., included
The adjusted basis of any building shall be determined by
taking into account the adjusted basis of property (of a
character subject to the allowance for depreciation) used in
common areas or provided as comparable amenities to all
residential rental units in such building.
(C) Inclusion of basis of property used to provide services for
certain nontenants
(i) In general
The adjusted basis of any building located in a qualified
census tract (as defined in paragraph (5)(C)) shall be
determined by taking into account the adjusted basis of
property (of a character subject to the allowance for
depreciation and not otherwise taken into account) used
throughout the taxable year in providing any community
service facility.
(ii) Limitation
The increase in the adjusted basis of any building which is
taken into account by reason of clause (i) shall not exceed
10 percent of the eligible basis of the qualified low-income
housing project of which it is a part. For purposes of the
preceding sentence, all community service facilities which
are part of the same qualified low-income housing project
shall be treated as one facility.
(iii) Community service facility
For purposes of this subparagraph, the term "community
service facility" means any facility designed to serve
primarily individuals whose income is 60 percent or less of
area median income (within the meaning of subsection
(g)(1)(B)).
(D) No reduction for depreciation
The adjusted basis of any building shall be determined
without regard to paragraphs (2) and (3) of section 1016(a).
(5) Special rules for determining eligible basis
(A) Eligible basis reduced by Federal grants
If, during any taxable year of the compliance period, a grant
is made with respect to any building or the operation thereof
and any portion of such grant is funded with Federal funds
(whether or not includible in gross income), the eligible basis
of such building for such taxable year and all succeeding
taxable years shall be reduced by the portion of such grant
which is so funded.
(B) Eligible basis not to include expenditures where section
167(k) elected
The eligible basis of any building shall not include any
portion of its adjusted basis which is attributable to amounts
with respect to which an election is made under section 167(k)
(as in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990).
(C) Increase in credit for buildings in high cost areas
(i) In general
In the case of any building located in a qualified census
tract or difficult development area which is designated for
purposes of this subparagraph -
(I) in the case of a new building, the eligible basis of
such building shall be 130 percent of such basis determined
without regard to this subparagraph, and
(II) in the case of an existing building, the
rehabilitation expenditures taken into account under
subsection (e) shall be 130 percent of such expenditures
determined without regard to this subparagraph.
(ii) Qualified census tract
(I) In general
The term "qualified census tract" means any census tract
which is designated by the Secretary of Housing and Urban
Development and, for the most recent year for which census
data are available on household income in such tract,
either in which 50 percent or more of the households have
an income which is less than 60 percent of the area median
gross income for such year or which has a poverty rate of
at least 25 percent. If the Secretary of Housing and Urban
Development determines that sufficient data for any period
are not available to apply this clause on the basis of
census tracts, such Secretary shall apply this clause for
such period on the basis of enumeration districts.
(II) Limit on MSA's designated
The portion of a metropolitan statistical area which may
be designated for purposes of this subparagraph shall not
exceed an area having 20 percent of the population of such
metropolitan statistical area.
(III) Determination of areas
For purposes of this clause, each metropolitan
statistical area shall be treated as a separate area and
all nonmetropolitan areas in a State shall be treated as 1
area.
(iii) Difficult development areas
(I) In general
The term "difficult development areas" means any area
designated by the Secretary of Housing and Urban
Development as an area which has high construction, land,
and utility costs relative to area median gross income.
(II) Limit on areas designated
The portions of metropolitan statistical areas which may
be designated for purposes of this subparagraph shall not
exceed an aggregate area having 20 percent of the
population of such metropolitan statistical areas. A
comparable rule shall apply to nonmetropolitan areas.
(iv) Special rules and definitions
For purposes of this subparagraph -
(I) population shall be determined on the basis of the
most recent decennial census for which data are available,
(II) area median gross income shall be determined in
accordance with subsection (g)(4),
(III) the term "metropolitan statistical area" has the
same meaning as when used in section 143(k)(2)(B), and
(IV) the term "nonmetropolitan area" means any county (or
portion thereof) which is not within a metropolitan
statistical area.
(6) Credit allowable for certain federally-assisted buildings
acquired during 10-year period described in paragraph
(2)(B)(ii)
(A) In general
On application by the taxpayer, the Secretary (after
consultation with the appropriate Federal official) may waive
paragraph (2)(B)(ii) with respect to any federally-assisted
building if the Secretary determines that such waiver is
necessary -
(i) to avert an assignment of the mortgage secured by
property in the project (of which such building is a part) to
the Department of Housing and Urban Development or the
Farmers Home Administration, or
(ii) to avert a claim against a Federal mortgage insurance
fund (or such Department or Administration) with respect to a
mortgage which is so secured.
The preceding sentence shall not apply to any building
described in paragraph (7)(B).
(B) Federally-assisted building
For purposes of subparagraph (A), the term
"federally-assisted building" means any building which is
substantially assisted, financed, or operated under -
(i) section 8 of the United States Housing Act of 1937,
(ii) section 221(d)(3) or 236 of the National Housing Act,
or
(iii) section 515 of the Housing Act of 1949,
as such Acts are in effect on the date of the enactment of the
Tax Reform Act of 1986.
(C) Low-income buildings where mortgage may be prepaid
A waiver may be granted under subparagraph (A) (without
regard to any clause thereof) with respect to a
federally-assisted building described in clause (ii) or (iii)
of subparagraph (B) if -
(i) the mortgage on such building is eligible for
prepayment under subtitle B of the Emergency Low Income
Housing Preservation Act of 1987 or under section 502(c) of
the Housing Act of 1949 at any time within 1 year after the
date of the application for such a waiver,
(ii) the appropriate Federal official certifies to the
Secretary that it is reasonable to expect that, if the waiver
is not granted, such building will cease complying with its
low-income occupancy requirements, and
(iii) the eligibility to prepay such mortgage without the
approval of the appropriate Federal official is waived by all
persons who are so eligible and such waiver is binding on all
successors of such persons.
(D) Buildings acquired from insured depository institutions in
default
A waiver may be granted under subparagraph (A) (without
regard to any clause thereof) with respect to any building
acquired from an insured depository institution in default (as
defined in section 3 of the Federal Deposit Insurance Act) or
from a receiver or conservator of such an institution.
(E) Appropriate Federal official
For purposes of subparagraph (A), the term "appropriate
Federal official" means -
(i) the Secretary of Housing and Urban Development in the
case of any building described in subparagraph (B) by reason
of clause (i) or (ii) thereof, and
(ii) the Secretary of Agriculture in the case of any
building described in subparagraph (B) by reason of clause
(iii) thereof.
(7) Acquisition of building before end of prior compliance period
(A) In general
Under regulations prescribed by the Secretary, in the case of
a building described in subparagraph (B) (or interest therein)
which is acquired by the taxpayer -
(i) paragraph (2)(B) shall not apply, but
(ii) the credit allowable by reason of subsection (a) to
the taxpayer for any period after such acquisition shall be
equal to the amount of credit which would have been allowable
under subsection (a) for such period to the prior owner
referred to in subparagraph (B) had such owner not disposed
of the building.
(B) Description of building
A building is described in this subparagraph if -
(i) a credit was allowed by reason of subsection (a) to any
prior owner of such building, and
(ii) the taxpayer acquired such building before the end of
the compliance period for such building with respect to such
prior owner (determined without regard to any disposition by
such prior owner).
(e) Rehabilitation expenditures treated as separate new building
(1) In general
Rehabilitation expenditures paid or incurred by the taxpayer
with respect to any building shall be treated for purposes of
this section as a separate new building.
(2) Rehabilitation expenditures
For purposes of paragraph (1) -
(A) In general
The term "rehabilitation expenditures" means amounts
chargeable to capital account and incurred for property (or
additions or improvements to property) of a character subject
to the allowance for depreciation in connection with the
rehabilitation of a building.
(B) Cost of acquisition, etc,(!3) not included
Such term does not include the cost of acquiring any building
(or interest therein) or any amount not permitted to be taken
into account under paragraph (3) or (4) of subsection (d).
(3) Minimum expenditures to qualify
(A) In general
Paragraph (1) shall apply to rehabilitation expenditures with
respect to any building only if -
(i) the expenditures are allocable to 1 or more low-income
units or substantially benefit such units, and
(ii) the amount of such expenditures during any 24-month
period meets the requirements of whichever of the following
subclauses requires the greater amount of such expenditures:
(I) The requirement of this subclause is met if such
amount is not less than 10 percent of the adjusted basis of
the building (determined as of the 1st day of such period
and without regard to paragraphs (2) and (3) of section
1016(a)).
(II) The requirement of this subclause is met if the
qualified basis attributable to such amount, when divided
by the number of low-income units in the building, is
$3,000 or more.
(B) Exception from 10 percent rehabilitation
In the case of a building acquired by the taxpayer from a
governmental unit, at the election of the taxpayer,
subparagraph (A)(ii)(I) shall not apply and the credit under
this section for such rehabilitation expenditures shall be
determined using the percentage applicable under subsection
(b)(2)(B)(ii).
(C) Date of determination
The determination under subparagraph (A) shall be made as of
the close of the 1st taxable year in the credit period with
respect to such expenditures.
(4) Special rules
For purposes of applying this section with respect to
expenditures which are treated as a separate building by reason
of this subsection -
(A) such expenditures shall be treated as placed in service
at the close of the 24-month period referred to in paragraph
(3)(A), and
(B) the applicable fraction under subsection (c)(1) shall be
the applicable fraction for the building (without regard to
paragraph (1)) with respect to which the expenditures were
incurred.
Nothing in subsection (d)(2) shall prevent a credit from being
allowed by reason of this subsection.
(5) No double counting
Rehabilitation expenditures may, at the election of the
taxpayer, be taken into account under this subsection or
subsection (d)(2)(A)(i) but not under both such subsections.
(6) Regulations to apply subsection with respect to group of
units in building
The Secretary may prescribe regulations, consistent with the
purposes of this subsection, treating a group of units with
respect to which rehabilitation expenditures are incurred as a
separate new building.
(f) Definition and special rules relating to credit period
(1) Credit period defined
For purposes of this section, the term "credit period" means,
with respect to any building, the period of 10 taxable years
beginning with -
(A) the taxable year in which the building is placed in
service, or
(B) at the election of the taxpayer, the succeeding taxable
year,
but only if the building is a qualified low-income building as of
the close of the 1st year of such period. The election under
subparagraph (B), once made, shall be irrevocable.
(2) Special rule for 1st year of credit period
(A) In general
The credit allowable under subsection (a) with respect to any
building for the 1st taxable year of the credit period shall be
determined by substituting for the applicable fraction under
subsection (c)(1) the fraction -
(i) the numerator of which is the sum of the applicable
fractions determined under subsection (c)(1) as of the close
of each full month of such year during which such building
was in service, and
(ii) the denominator of which is 12.
(B) Disallowed 1st year credit allowed in 11th year
Any reduction by reason of subparagraph (A) in the credit
allowable (without regard to subparagraph (A)) for the 1st
taxable year of the credit period shall be allowable under
subsection (a) for the 1st taxable year following the credit
period.
(3) Determination of applicable percentage with respect to
increases in qualified basis after 1st year of credit period
(A) In general
In the case of any building which was a qualified low-income
building as of the close of the 1st year of the credit period,
if -
(i) as of the close of any taxable year in the compliance
period (after the 1st year of the credit period) the
qualified basis of such building exceeds
(ii) the qualified basis of such building as of the close
of the 1st year of the credit period,
the applicable percentage which shall apply under subsection
(a) for the taxable year to such excess shall be the percentage
equal to 2/3 of the applicable percentage which (after the
application of subsection (h)) would but for this paragraph
apply to such basis.
(B) 1st year computation applies
A rule similar to the rule of paragraph (2)(A) shall apply to
any increase in qualified basis to which subparagraph (A)
applies for the 1st year of such increase.
(4) Dispositions of property
If a building (or an interest therein) is disposed of during
any year for which credit is allowable under subsection (a), such
credit shall be allocated between the parties on the basis of the
number of days during such year the building (or interest) was
held by each. In any such case, proper adjustments shall be made
in the application of subsection (j).
(5) Credit period for existing buildings not to begin before
rehabilitation credit allowed
(A) In general
The credit period for an existing building shall not begin
before the 1st taxable year of the credit period for
rehabilitation expenditures with respect to the building.
(B) Acquisition credit allowed for certain buildings not
allowed a rehabilitation credit
(i) In general
In the case of a building described in clause (ii) -
(I) subsection (d)(2)(B)(iv) shall not apply, and
(II) the credit period for such building shall not begin
before the taxable year which would be the 1st taxable year
of the credit period for rehabilitation expenditures with
respect to the building under the modifications described
in clause (ii)(II).
(ii) Building described
A building is described in this clause if -
(I) a waiver is granted under subsection (d)(6)(C) with
respect to the acquisition of the building, and
(II) a credit would be allowed for rehabilitation
expenditures with respect to such building if subsection
(e)(3)(A)(ii)(I) did not apply and if subsection
(e)(3)(A)(ii)(II) were applied by substituting "$2,000" for
"$3,000".
(g) Qualified low-income housing project
For purposes of this section -
(1) In general
The term "qualified low-income housing project" means any
project for residential rental property if the project meets the
requirements of subparagraph (A) or (B) whichever is elected by
the taxpayer:
(A) 20-50 test
The project meets the requirements of this subparagraph if 20
percent or more of the residential units in such project are
both rent-restricted and occupied by individuals whose income
is 50 percent or less of area median gross income.
(B) 40-60 test
The project meets the requirements of this subparagraph if 40
percent or more of the residential units in such project are
both rent-restricted and occupied by individuals whose income
is 60 percent or less of area median gross income.
Any election under this paragraph, once made, shall be
irrevocable. For purposes of this paragraph, any property shall
not be treated as failing to be residential rental property
merely because part of the building in which such property is
located is used for purposes other than residential rental
purposes.
(2) Rent-restricted units
(A) In general
For purposes of paragraph (1), a residential unit is
rent-restricted if the gross rent with respect to such unit
does not exceed 30 percent of the imputed income limitation
applicable to such unit. For purposes of the preceding
sentence, the amount of the income limitation under paragraph
(1) applicable for any period shall not be less than such
limitation applicable for the earliest period the building
(which contains the unit) was included in the determination of
whether the project is a qualified low-income housing project.
(B) Gross rent
For purposes of subparagraph (A), gross rent -
(i) does not include any payment under section 8 of the
United States Housing Act of 1937 or any comparable rental
assistance program (with respect to such unit or occupants
thereof),
(ii) includes any utility allowance determined by the
Secretary after taking into account such determinations under
section 8 of the United States Housing Act of 1937,
(iii) does not include any fee for a supportive service
which is paid to the owner of the unit (on the basis of the
low-income status of the tenant of the unit) by any
governmental program of assistance (or by an organization
described in section 501(c)(3) and exempt from tax under
section 501(a)) if such program (or organization) provides
assistance for rent and the amount of assistance provided for
rent is not separable from the amount of assistance provided
for supportive services, and
(iv) does not include any rental payment to the owner of
the unit to the extent such owner pays an equivalent amount
to the Farmers' Home Administration under section 515 of the
Housing Act of 1949.
For purposes of clause (iii), the term "supportive service"
means any service provided under a planned program of services
designed to enable residents of a residential rental property
to remain independent and avoid placement in a hospital,
nursing home, or intermediate care facility for the mentally or
physically handicapped. In the case of a single-room occupancy
unit or a building described in subsection (i)(3)(B)(iii), such
term includes any service provided to assist tenants in
locating and retaining permanent housing.
(C) Imputed income limitation applicable to unit
For purposes of this paragraph, the imputed income limitation
applicable to a unit is the income limitation which would apply
under paragraph (1) to individuals occupying the unit if the
number of individuals occupying the unit were as follows:
(i) In the case of a unit which does not have a separate
bedroom, 1 individual.
(ii) In the case of a unit which has 1 or more separate
bedrooms, 1.5 individuals for each separate bedroom.
In the case of a project with respect to which a credit is
allowable by reason of this section and for which financing is
provided by a bond described in section 142(a)(7), the imputed
income limitation shall apply in lieu of the otherwise
applicable income limitation for purposes of applying section
142(d)(4)(B)(ii).
(D) Treatment of units occupied by individuals whose incomes
rise above limit
(i) In general
Except as provided in clause (ii), notwithstanding an
increase in the income of the occupants of a low-income unit
above the income limitation applicable under paragraph (1),
such unit shall continue to be treated as a low-income unit
if the income of such occupants initially met such income
limitation and such unit continues to be rent-restricted.
(ii) Next available unit must be rented to low-income tenant
if income rises above 140 percent of income limit
If the income of the occupants of the unit increases above
140 percent of the income limitation applicable under
paragraph (1), clause (i) shall cease to apply to such unit
if any residential rental unit in the building (of a size
comparable to, or smaller than, such unit) is occupied by a
new resident whose income exceeds such income limitation. In
the case of a project described in section 142(d)(4)(B), the
preceding sentence shall be applied by substituting "170
percent" for "140 percent" and by substituting "any
low-income unit in the building is occupied by a new resident
whose income exceeds 40 percent of area median gross income"
for "any residential unit in the building (of a size
comparable to, or smaller than, such unit) is occupied by a
new resident whose income exceeds such income limitation".
(E) Units where Federal rental assistance is reduced as
tenant's income increases
If the gross rent with respect to a residential unit exceeds
the limitation under subparagraph (A) by reason of the fact
that the income of the occupants thereof exceeds the income
limitation applicable under paragraph (1), such unit shall,
nevertheless, be treated as a rent-restricted unit for purposes
of paragraph (1) if -
(i) a Federal rental assistance payment described in
subparagraph (B)(i) is made with respect to such unit or its
occupants, and
(ii) the sum of such payment and the gross rent with
respect to such unit does not exceed the sum of the amount of
such payment which would be made and the gross rent which
would be payable with respect to such unit if -
(I) the income of the occupants thereof did not exceed
the income limitation applicable under paragraph (1), and
(II) such units were rent-restricted within the meaning
of subparagraph (A).
The preceding sentence shall apply to any unit only if the
result described in clause (ii) is required by Federal statute
as of the date of the enactment of this subparagraph and as of
the date the Federal rental assistance payment is made.
(3) Date for meeting requirements
(A) In general
Except as otherwise provided in this paragraph, a building
shall be treated as a qualified low-income building only if the
project (of which such building is a part) meets the
requirements of paragraph (1) not later than the close of the
1st year of the credit period for such building.
(B) Buildings which rely on later buildings for qualification
(i) In general
In determining whether a building (hereinafter in this
subparagraph referred to as the "prior building") is a
qualified low-income building, the taxpayer may take into
account 1 or more additional buildings placed in service
during the 12-month period described in subparagraph (A) with
respect to the prior building only if the taxpayer elects to
apply clause (ii) with respect to each additional building
taken into account.
(ii) Treatment of elected buildings
In the case of a building which the taxpayer elects to take
into account under clause (i), the period under subparagraph
(A) for such building shall end at the close of the 12-month
period applicable to the prior building.
(iii) Date prior building is treated as placed in service
For purposes of determining the credit period and the
compliance period for the prior building, the prior building
shall be treated for purposes of this section as placed in
service on the most recent date any additional building
elected by the taxpayer (with respect to such prior building)
was placed in service.
(C) Special rule
A building -
(i) other than the 1st building placed in service as part
of a project, and
(ii) other than a building which is placed in service
during the 12-month period described in subparagraph (A) with
respect to a prior building which becomes a qualified
low-income building,
shall in no event be treated as a qualified low-income building
unless the project is a qualified low-income housing project
(without regard to such building) on the date such building is
placed in service.
(D) Projects with more than 1 building must be identified
For purposes of this section, a project shall be treated as
consisting of only 1 building unless, before the close of the
1st calendar year in the project period (as defined in
subsection (h)(1)(F)(ii)), each building which is (or will be)
part of such project is identified in such form and manner as
the Secretary may provide.
(4) Certain rules made applicable
Paragraphs (2) (other than subparagraph (A) thereof), (3), (4),
(5), (6), and (7) of section 142(d), and section 6652(j), shall
apply for purposes of determining whether any project is a
qualified low-income housing project and whether any unit is a
low-income unit; except that, in applying such provisions for
such purposes, the term "gross rent" shall have the meaning given
such term by paragraph (2)(B) of this subsection.
(5) Election to treat building after compliance period as not
part of a project
For purposes of this section, the taxpayer may elect to treat
any building as not part of a qualified low-income housing
project for any period beginning after the compliance period for
such building.
(6) Special rule where de minimis equity contribution
Property shall not be treated as failing to be residential
rental property for purposes of this section merely because the
occupant of a residential unit in the project pays (on a
voluntary basis) to the lessor a de minimis amount to be held
toward the purchase by such occupant of a residential unit in
such project if -
(A) all amounts so paid are refunded to the occupant on the
cessation of his occupancy of a unit in the project, and
(B) the purchase of the unit is not permitted until after the
close of the compliance period with respect to the building in
which the unit is located.
Any amount paid to the lessor as described in the preceding
sentence shall be included in gross rent under paragraph (2) for
purposes of determining whether the unit is rent- restricted.
(7) Scattered site projects
Buildings which would (but for their lack of proximity) be
treated as a project for purposes of this section shall be so
treated if all of the dwelling units in each of the buildings are
rent-restricted (within the meaning of paragraph (2)) residential
rental units.
(8) Waiver of certain de minimis errors and recertifications
On application by the taxpayer, the Secretary may waive -
(A) any recapture under subsection (j) in the case of any de
minimis error in complying with paragraph (1), or
(B) any annual recertification of tenant income for purposes
of this subsection, if the entire building is occupied by
low-income tenants.
(h) Limitation on aggregate credit allowable with respect to
projects located in a State
(1) Credit may not exceed credit amount allocated to building
(A) In general
The amount of the credit determined under this section for
any taxable year with respect to any building shall not exceed
the housing credit dollar amount allocated to such building
under this subsection.
(B) Time for making allocation
Except in the case of an allocation which meets the
requirements of subparagraph (C), (D), (E), or (F), an
allocation shall be taken into account under subparagraph (A)
only if it is made not later than the close of the calendar
year in which the building is placed in service.
(C) Exception where binding commitment
An allocation meets the requirements of this subparagraph if
there is a binding commitment (not later than the close of the
calendar year in which the building is placed in service) by
the housing credit agency to allocate a specified housing
credit dollar amount to such building beginning in a specified
later taxable year.
(D) Exception where increase in qualified basis
(i) In general
An allocation meets the requirements of this subparagraph
if such allocation is made not later than the close of the
calendar year in which ends the taxable year to which it will
1st apply but only to the extent the amount of such
allocation does not exceed the limitation under clause (ii).
(ii) Limitation
The limitation under this clause is the amount of credit
allowable under this section (without regard to this
subsection) for a taxable year with respect to an increase in
the qualified basis of the building equal to the excess of -
(I) the qualified basis of such building as of the close
of the 1st taxable year to which such allocation will
apply, over
(II) the qualified basis of such building as of the close
of the 1st taxable year to which the most recent prior
housing credit allocation with respect to such building
applied.
(iii) Housing credit dollar amount reduced by full allocation
Notwithstanding clause (i), the full amount of the
allocation shall be taken into account under paragraph (2).
(E) Exception where 10 percent of cost incurred
(i) In general
An allocation meets the requirements of this subparagraph
if such allocation is made with respect to a qualified
building which is placed in service not later than the close
of the second calendar year following the calendar year in
which the allocation is made.
(ii) Qualified building
For purposes of clause (i), the term "qualified building"
means any building which is part of a project if the
taxpayer's basis in such project (as of the later of the date
which is 6 months after the date that the allocation was made
or the close of the calendar year in which the allocation is
made) is more than 10 percent of the taxpayer's reasonably
expected basis in such project (as of the close of the second
calendar year referred to in clause (i)). Such term does not
include any existing building unless a credit is allowable
under subsection (e) for rehabilitation expenditures paid or
incurred by the taxpayer with respect to such building for a
taxable year ending during the second calendar year referred
to in clause (i) or the prior taxable year.
(F) Allocation of credit on a project basis
(i) In general
In the case of a project which includes (or will include)
more than 1 building, an allocation meets the requirements of
this subparagraph if -
(I) the allocation is made to the project for a calendar
year during the project period,
(II) the allocation only applies to buildings placed in
service during or after the calendar year for which the
allocation is made, and
(III) the portion of such allocation which is allocated
to any building in such project is specified not later than
the close of the calendar year in which the building is
placed in service.
(ii) Project period
For purposes of clause (i), the term "project period" means
the period -
(I) beginning with the 1st calendar year for which an
allocation may be made for the 1st building placed in
service as part of such project, and
(II) ending with the calendar year the last building is
placed in service as part of such project.
(2) Allocated credit amount to apply to all taxable years ending
during or after credit allocation year
Any housing credit dollar amount allocated to any building for
any calendar year -
(A) shall apply to such building for all taxable years in the
compliance period ending during or after such calendar year,
and
(B) shall reduce the aggregate housing credit dollar amount
of the allocating agency only for such calendar year.
(3) Housing credit dollar amount for agencies
(A) In general
The aggregate housing credit dollar amount which a housing
credit agency may allocate for any calendar year is the portion
of the State housing credit ceiling allocated under this
paragraph for such calendar year to such agency.
(B) State ceiling initially allocated to State housing credit
agencies
Except as provided in subparagraphs (D) and (E), the State
housing credit ceiling for each calendar year shall be
allocated to the housing credit agency of such State. If there
is more than 1 housing credit agency of a State, all such
agencies shall be treated as a single agency.
(C) State housing credit ceiling
The State housing credit ceiling applicable to any State for
any calendar year shall be an amount equal to the sum of -
(i) the unused State housing credit ceiling (if any) of
such State for the preceding calendar year,
(ii) the greater of -
(I) $1.75 ($1.50 for 2001) multiplied by the State
population, or
(II) $2,000,000,
(iii) the amount of State housing credit ceiling returned
in the calendar year, plus
(iv) the amount (if any) allocated under subparagraph (D)
to such State by the Secretary.
For purposes of clause (i), the unused State housing credit
ceiling for any calendar year is the excess (if any) of the sum
of the amounts described in clauses (ii) through (iv) over the
aggregate housing credit dollar amount allocated for such year.
For purposes of clause (iii), the amount of State housing
credit ceiling returned in the calendar year equals the housing
credit dollar amount previously allocated within the State to
any project which fails to meet the 10 percent test under
paragraph (1)(E)(ii) on a date after the close of the calendar
year in which the allocation was made or which does not become
a qualified low-income housing project within the period
required by this section or the terms of the allocation or to
any project with respect to which an allocation is cancelled by
mutual consent of the housing credit agency and the allocation
recipient.
(D) Unused housing credit carryovers allocated among certain
States
(i) In general
The unused housing credit carryover of a State for any
calendar year shall be assigned to the Secretary for
allocation among qualified States for the succeeding calendar
year.
(ii) Unused housing credit carryover
For purposes of this subparagraph, the unused housing
credit carryover of a State for any calendar year is the
excess (if any) of -
(I) the unused State housing credit ceiling for the year
preceding such year, over
(II) the aggregate housing credit dollar amount allocated
for such year.
(iii) Formula for allocation of unused housing credit
carryovers among qualified States
The amount allocated under this subparagraph to a qualified
State for any calendar year shall be the amount determined by
the Secretary to bear the same ratio to the aggregate unused
housing credit carryovers of all States for the preceding
calendar year as such State's population for the calendar
year bears to the population of all qualified States for the
calendar year. For purposes of the preceding sentence,
population shall be determined in accordance with section
146(j).
(iv) Qualified State
For purposes of this subparagraph, the term "qualified
State" means, with respect to a calendar year, any State -
(I) which allocated its entire State housing credit
ceiling for the preceding calendar year, and
(II) for which a request is made (not later than May 1 of
the calendar year) to receive an allocation under clause
(iii).
(E) Special rule for States with constitutional home rule
cities
For purposes of this subsection -
(i) In general
The aggregate housing credit dollar amount for any
constitutional home rule city for any calendar year shall be
an amount which bears the same ratio to the State housing
credit ceiling for such calendar year as -
(I) the population of such city, bears to
(II) the population of the entire State.
(ii) Coordination with other allocations
In the case of any State which contains 1 or more
constitutional home rule cities, for purposes of applying
this paragraph with respect to housing credit agencies in
such State other than constitutional home rule cities, the
State housing credit ceiling for any calendar year shall be
reduced by the aggregate housing credit dollar amounts
determined for such year for all constitutional home rule
cities in such State.
(iii) Constitutional home rule city
For purposes of this paragraph, the term "constitutional
home rule city" has the meaning given such term by section
146(d)(3)(C).
(F) State may provide for different allocation
Rules similar to the rules of section 146(e) (other than
paragraph (2)(B) thereof) shall apply for purposes of this
paragraph.
(G) Population
For purposes of this paragraph, population shall be
determined in accordance with section 146(j).
(H) Cost-of-living adjustment
(i) In general
In the case of a calendar year after 2002, the $2,000,000
and $1.75 amounts in subparagraph (C) shall each be increased
by an amount equal to -
(I) such dollar amount, multiplied by
(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
"calendar year 2001" for "calendar year 1992" in
subparagraph (B) thereof.
(ii) Rounding
(I) In the case of the $2,000,000 amount, any increase
under clause (i) which is not a multiple of $5,000 shall be
rounded to the next lowest multiple of $5,000.
(II) In the case of the $1.75 amount, any increase under
clause (i) which is not a multiple of 5 cents shall be
rounded to the next lowest multiple of 5 cents.
(4) Credit for buildings financed by tax-exempt bonds subject to
volume cap not taken into account
(A) In general
Paragraph (1) shall not apply to the portion of any credit
allowable under subsection (a) which is attributable to
eligible basis financed by any obligation the interest on which
is exempt from tax under section 103 if -
(i) such obligation is taken into account under section
146, and
(ii) principal payments on such financing are applied
within a reasonable period to redeem obligations the proceeds
of which were used to provide such financing.
(B) Special rule where 50 percent or more of building is
financed with tax-exempt bonds subject to volume cap
For purposes of subparagraph (A), if 50 percent or more of
the aggregate basis of any building and the land on which the
building is located is financed by any obligation described in
subparagraph (A), paragraph (1) shall not apply to any portion
of the credit allowable under subsection (a) with respect to
such building.
(5) Portion of State ceiling set-aside for certain projects
involving qualified nonprofit organizations
(A) In general
Not more than 90 percent of the State housing credit ceiling
for any State for any calendar year shall be allocated to
projects other than qualified low-income housing projects
described in subparagraph (B).
(B) Projects involving qualified nonprofit organizations
For purposes of subparagraph (A), a qualified low-income
housing project is described in this subparagraph if a
qualified nonprofit organization is to own an interest in the
project (directly or through a partnership) and materially
participate (within the meaning of section 469(h)) in the
development and operation of the project throughout the
compliance period.
(C) Qualified nonprofit organization
For purposes of this paragraph, the term "qualified nonprofit
organization" means any organization if -
(i) such organization is described in paragraph (3) or (4)
of section 501(c) and is exempt from tax under section
501(a),
(ii) such organization is determined by the State housing
credit agency not to be affiliated with or controlled by a
for-profit organization; (!4) and
(iii) 1 of the exempt purposes of such organization
includes the fostering of low-income housing.
(D) Treatment of certain subsidiaries
(i) In general
For purposes of this paragraph, a qualified nonprofit
organization shall be treated as satisfying the ownership and
material participation test of subparagraph (B) if any
qualified corporation in which such organization holds stock
satisfies such test.
(ii) Qualified corporation
For purposes of clause (i), the term "qualified
corporation" means any corporation if 100 percent of the
stock of such corporation is held by 1 or more qualified
nonprofit organizations at all times during the period such
corporation is in existence.
(E) State may not override set-aside
Nothing in subparagraph (F) of paragraph (3) shall be
construed to permit a State not to comply with subparagraph (A)
of this paragraph.
(6) Buildings eligible for credit only if minimum long-term
commitment to low-income housing
(A) In general
No credit shall be allowed by reason of this section with
respect to any building for the taxable year unless an extended
low-income housing commitment is in effect as of the end of
such taxable year.
(B) Extended low-income housing commitment
For purposes of this paragraph, the term "extended low-income
housing commitment" means any agreement between the taxpayer
and the housing credit agency -
(i) which requires that the applicable fraction (as defined
in subsection (c)(1)) for the building for each taxable year
in the extended use period will not be less than the
applicable fraction specified in such agreement and which
prohibits the actions described in subclauses (I) and (II) of
subparagraph (E)(ii),
(ii) which allows individuals who meet the income
limitation applicable to the building under subsection (g)
(whether prospective, present, or former occupants of the
building) the right to enforce in any State court the
requirement and prohibitions of clause (i),
(iii) which prohibits the disposition to any person of any
portion of the building to which such agreement applies
unless all of the building to which such agreement applies is
disposed of to such person,
(iv) which prohibits the refusal to lease to a holder of a
voucher or certificate of eligibility under section 8 of the
United States Housing Act of 1937 because of the status of
the prospective tenant as such a holder,
(v) which is binding on all successors of the taxpayer, and
(vi) which, with respect to the property, is recorded
pursuant to State law as a restrictive covenant.
(C) Allocation of credit may not exceed amount necessary to
support commitment
(i) In general
The housing credit dollar amount allocated to any building
may not exceed the amount necessary to support the applicable
fraction specified in the extended low-income housing
commitment for such building, including any increase in such
fraction pursuant to the application of subsection (f)(3) if
such increase is reflected in an amended low-income housing
commitment.
(ii) Buildings financed by tax-exempt bonds
If paragraph (4) applies to any building the amount of
credit allowed in any taxable year may not exceed the amount
necessary to support the applicable fraction specified in the
extended low-income housing commitment for such building.
Such commitment may be amended to increase such fraction.
(D) Extended use period
For purposes of this paragraph, the term "extended use
period" means the period -
(i) beginning on the 1st day in the compliance period on
which such building is part of a qualified low-income housing
project, and
(ii) ending on the later of -
(I) the date specified by such agency in such agreement,
or
(II) the date which is 15 years after the close of the
compliance period.
(E) Exceptions if foreclosure or if no buyer willing to
maintain low-income status
(i) In general
The extended use period for any building shall terminate -
(I) on the date the building is acquired by foreclosure
(or instrument in lieu of foreclosure) unless the Secretary
determines that such acquisition is part of an arrangement
with the taxpayer a purpose of which is to terminate such
period, or
(II) on the last day of the period specified in
subparagraph (I) if the housing credit agency is unable to
present during such period a qualified contract for the
acquisition of the low-income portion of the building by
any person who will continue to operate such portion as a
qualified low-income building.
Subclause (II) shall not apply to the extent more stringent
requirements are provided in the agreement or in State law.
(ii) Eviction, etc. of existing low-income tenants not
permitted
The termination of an extended use period under clause (i)
shall not be construed to permit before the close of the
3-year period following such termination -
(I) the eviction or the termination of tenancy (other
than for good cause) of an existing tenant of any
low-income unit, or
(II) any increase in the gross rent with respect to such
unit not otherwise permitted under this section.
(F) Qualified contract
For purposes of subparagraph (E), the term "qualified
contract" means a bona fide contract to acquire (within a
reasonable period after the contract is entered into) the
nonlow-income portion of the building for fair market value and
the low-income portion of the building for an amount not less
than the applicable fraction (specified in the extended
low-income housing commitment) of -
(i) the sum of -
(I) the outstanding indebtedness secured by, or with
respect to, the building,
(II) the adjusted investor equity in the building, plus
(III) other capital contributions not reflected in the
amounts described in subclause (I) or (II), reduced by
(ii) cash distributions from (or available for distribution
from) the project.
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out this paragraph, including
regulations to prevent the manipulation of the amount
determined under the preceding sentence.
(G) Adjusted investor equity
(i) In general
For purposes of subparagraph (E), the term "adjusted
investor equity" means, with respect to any calendar year,
the aggregate amount of cash taxpayers invested with respect
to the project increased by the amount equal to -
(I) such amount, multiplied by
(II) the cost-of-living adjustment for such calendar
year, determined under section 1(f)(3) by substituting the
base calendar year for "calendar year 1987".
An amount shall be taken into account as an investment in the
project only to the extent there was an obligation to invest
such amount as of the beginning of the credit period and to
the extent such amount is reflected in the adjusted basis of
the project.
(ii) Cost-of-living increases in excess of 5 percent not
taken into account
Under regulations prescribed by the Secretary, if the CPI
for any calendar year (as defined in section 1(f)(4)) exceeds
the CPI for the preceding calendar year by more than 5
percent, the CPI for the base calendar year shall be
increased such that such excess shall never be taken into
account under clause (i).
(iii) Base calendar year
For purposes of this subparagraph, the term "base calendar
year" means the calendar year with or within which the 1st
taxable year of the credit period ends.
(H) Low-income portion
For purposes of this paragraph, the low-income portion of a
building is the portion of such building equal to the
applicable fraction specified in the extended low-income
housing commitment for the building.
(I) Period for finding buyer
The period referred to in this subparagraph is the 1-year
period beginning on the date (after the 14th year of the
compliance period) the taxpayer submits a written request to
the housing credit agency to find a person to acquire the
taxpayer's interest in the low-income portion of the building.
(J) Effect of noncompliance
If, during a taxable year, there is a determination that an
extended low-income housing agreement was not in effect as of
the beginning of such year, such determination shall not apply
to any period before such year and subparagraph (A) shall be
applied without regard to such determination if the failure is
corrected within 1 year from the date of the determination.
(K) Projects which consist of more than 1 building
The application of this paragraph to projects which consist
of more than 1 building shall be made under regulations
prescribed by the Secretary.
(7) Special rules
(A) Building must be located within jurisdiction of credit
agency
A housing credit agency may allocate its aggregate housing
credit dollar amount only to buildings located in the
jurisdiction of the governmental unit of which such agency is a
part.
(B) Agency allocations in excess of limit
If the aggregate housing credit dollar amounts allocated by a
housing credit agency for any calendar year exceed the portion
of the State housing credit ceiling allocated to such agency
for such calendar year, the housing credit dollar amounts so
allocated shall be reduced (to the extent of such excess) for
buildings in the reverse of the order in which the allocations
of such amounts were made.
(C) Credit reduced if allocated credit dollar amount is less
than credit which would be allowable without regard to placed
in service convention, etc.
(i) In general
The amount of the credit determined under this section with
respect to any building shall not exceed the clause (ii)
percentage of the amount of the credit which would (but for
this subparagraph) be determined under this section with
respect to such building.
(ii) Determination of percentage
For purposes of clause (i), the clause (ii) percentage with
respect to any building is the percentage which -
(I) the housing credit dollar amount allocated to such
building bears to
(II) the credit amount determined in accordance with
clause (iii).
(iii) Determination of credit amount
The credit amount determined in accordance with this clause
is the amount of the credit which would (but for this
subparagraph) be determined under this section with respect
to the building if -
(I) this section were applied without regard to
paragraphs (2)(A) and (3)(B) of subsection (f), and
(II) subsection (f)(3)(A) were applied without regard to
"the percentage equal to 2/3 of".
(D) Housing credit agency to specify applicable percentage and
maximum qualified basis
In allocating a housing credit dollar amount to any building,
the housing credit agency shall specify the applicable
percentage and the maximum qualified basis which may be taken
into account under this section with respect to such building.
The applicable percentage and maximum qualified basis so
specified shall not exceed the applicable percentage and
qualified basis determined under this section without regard to
this subsection.
(8) Other definitions
For purposes of this subsection -
(A) Housing credit agency
The term "housing credit agency" means any agency authorized
to carry out this subsection.
(B) Possessions treated as States
The term "State" includes a possession of the United States.
(i) Definitions and special rules
For purposes of this section -
(1) Compliance period
The term "compliance period" means, with respect to any
building, the period of 15 taxable years beginning with the 1st
taxable year of the credit period with respect thereto.
(2) Determination of whether building is federally subsidized
(A) In general
Except as otherwise provided in this paragraph, for purposes
of subsection (b)(1), a new building shall be treated as
federally subsidized for any taxable year if, at any time
during such taxable year or any prior taxable year, there is or
was outstanding any obligation the interest on which is exempt
from tax under section 103, or any below market Federal loan,
the proceeds of which are or were used (directly or indirectly)
with respect to such building or the operation thereof.
(B) Election to reduce eligible basis by balance of loan or
proceeds of obligations
A loan or tax-exempt obligation shall not be taken into
account under subparagraph (A) if the taxpayer elects to
exclude from the eligible basis of the building for purposes of
subsection (d) -
(i) in the case of a loan, the principal amount of such
loan, and
(ii) in the case of a tax-exempt obligation, the proceeds
of such obligation.
(C) Special rule for subsidized construction financing
Subparagraph (A) shall not apply to any tax-exempt obligation
or below market Federal loan used to provide construction
financing for any building if -
(i) such obligation or loan (when issued or made)
identified the building for which the proceeds of such
obligation or loan would be used, and
(ii) such obligation is redeemed, and such loan is repaid,
before such building is placed in service.
(D) Below market Federal loan
For purposes of this paragraph, the term "below market
Federal loan" means any loan funded in whole or in part with
Federal funds if the interest rate payable on such loan is less
than the applicable Federal rate in effect under section
1274(d)(1) (as of the date on which the loan was made). Such
term shall not include any loan which would be a below market
Federal loan solely by reason of assistance provided under
section 106, 107, or 108 of the Housing and Community
Development Act of 1974 (as in effect on the date of the
enactment of this sentence).
(E) Buildings receiving HOME assistance or Native American
housing assistance
(i) In general
Assistance provided under the HOME Investment Partnerships
Act (as in effect on the date of the enactment of this
subparagraph) or the Native American Housing Assistance and
Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.) (as
in effect on October 1, 1997) with respect to any building
shall not be taken into account under subparagraph (D) if 40
percent or more of the residential units in the building are
occupied by individuals whose income is 50 percent or less of
area median gross income. Subsection (d)(5)(C) shall not
apply to any building to which the preceding sentence
applies.
(ii) Special rule for certain high-cost housing areas
In the case of a building located in a city described in
section 142(d)(6), clause (i) shall be applied by
substituting "25 percent" for "40 percent".
(3) Low-income unit
(A) In general
The term "low-income unit" means any unit in a building if -
(i) such unit is rent-restricted (as defined in subsection
(g)(2)), and
(ii) the individuals occupying such unit meet the income
limitation applicable under subsection (g)(1) to the project
of which such building is a part.
(B) Exceptions
(i) In general
A unit shall not be treated as a low-income unit unless the
unit is suitable for occupancy and used other than on a
transient basis.
(ii) Suitability for occupancy
For purposes of clause (i), the suitability of a unit for
occupancy shall be determined under regulations prescribed by
the Secretary taking into account local health, safety, and
building codes.
(iii) Transitional housing for homeless
For purposes of clause (i), a unit shall be considered to
be used other than on a transient basis if the unit contains
sleeping accommodations and kitchen and bathroom facilities
and is located in a building -
(I) which is used exclusively to facilitate the
transition of homeless individuals (within the meaning of
section 103 of the McKinney-Vento Homeless Assistance Act
(42 U.S.C. 11302), as in effect on the date of the
enactment of this clause) to independent living within 24
months, and
(II) in which a governmental entity or qualified
nonprofit organization (as defined in subsection (h)(5))
provides such individuals with temporary housing and
supportive services designed to assist such individuals in
locating and retaining permanent housing.
(iv) Single-room occupancy units
For purposes of clause (i), a single-room occupancy unit
shall not be treated as used on a transient basis merely
because it is rented on a month-by-month basis.
(C) Special rule for buildings having 4 or fewer units
In the case of any building which has 4 or fewer residential
rental units, no unit in such building shall be treated as a
low-income unit if the units in such building are owned by -
(i) any individual who occupies a residential unit in such
building, or
(ii) any person who is related (as defined in subsection
(d)(2)(D)(iii)) to such individual.
(D) Certain students not to disqualify unit
A unit shall not fail to be treated as a low-income unit
merely because it is occupied -
(i) by an individual who is -
(I) a student and receiving assistance under title IV of
the Social Security Act, or
(II) enrolled in a job training program receiving
assistance under the Job Training Partnership Act or under
other similar Federal, State, or local laws, or
(ii) entirely by full-time students if such students are -
(I) single parents and their children and such parents
and children are not dependents (as defined in section 152)
of another individual, or
(II) married and file a joint return.
(E) Owner-occupied buildings having 4 or fewer units eligible
for credit where development plan
(i) In general
Subparagraph (C) shall not apply to the acquisition or
rehabilitation of a building pursuant to a development plan
of action sponsored by a State or local government or a
qualified nonprofit organization (as defined in subsection
(h)(5)(C)).
(ii) Limitation on credit
In the case of a building to which clause (i) applies, the
applicable fraction shall not exceed 80 percent of the unit
fraction.
(iii) Certain unrented units treated as owner-occupied
In the case of a building to which clause (i) applies, any
unit which is not rented for 90 days or more shall be treated
as occupied by the owner of the building as of the 1st day it
is not rented.
(4) New building
The term "new building" means a building the original use of
which begins with the taxpayer.
(5) Existing building
The term "existing building" means any building which is not a
new building.
(6) Application to estates and trusts
In the case of an estate or trust, the amount of the credit
determined under subsection (a) and any increase in tax under
subsection (j) shall be apportioned between the estate or trust
and the beneficiaries on the basis of the income of the estate or
trust allocable to each.
(7) Impact of tenant's right of 1st refusal to acquire property
(A) In general
No Federal income tax benefit shall fail to be allowable to
the taxpayer with respect to any qualified low-income building
merely by reason of a right of 1st refusal held by the tenants
(in cooperative form or otherwise) or resident management
corporation of such building or by a qualified nonprofit
organization (as defined in subsection (h)(5)(C)) or government
agency to purchase the property after the close of the
compliance period for a price which is not less than the
minimum purchase price determined under subparagraph (B).
(B) Minimum purchase price
For purposes of subparagraph (A), the minimum purchase price
under this subparagraph is an amount equal to the sum of -
(i) the principal amount of outstanding indebtedness
secured by the building (other than indebtedness incurred
within the 5-year period ending on the date of the sale to
the tenants), and
(ii) all Federal, State, and local taxes attributable to
such sale.
Except in the case of Federal income taxes, there shall not be
taken into account under clause (ii) any additional tax
attributable to the application of clause (ii).
(j) Recapture of credit
(1) In general
If -
(A) as of the close of any taxable year in the compliance
period, the amount of the qualified basis of any building with
respect to the taxpayer is less than
(B) the amount of such basis as of the close of the preceding
taxable year,
then the taxpayer's tax under this chapter for the taxable year
shall be increased by the credit recapture amount.
(2) Credit recapture amount
For purposes of paragraph (1), the credit recapture amount is
an amount equal to the sum of -
(A) the aggregate decrease in the credits allowed to the
taxpayer under section 38 for all prior taxable years which
would have resulted if the accelerated portion of the credit
allowable by reason of this section were not allowed for all
prior taxable years with respect to the excess of the amount
described in paragraph (1)(B) over the amount described in
paragraph (1)(A), plus
(B) interest at the overpayment rate established under
section 6621 on the amount determined under subparagraph (A)
for each prior taxable year for the period beginning on the due
date for filing the return for the prior taxable year involved.
No deduction shall be allowed under this chapter for interest
described in subparagraph (B).
(3) Accelerated portion of credit
For purposes of paragraph (2), the accelerated portion of the
credit for the prior taxable years with respect to any amount of
basis is the excess of -
(A) the aggregate credit allowed by reason of this section
(without regard to this subsection) for such years with respect
to such basis, over
(B) the aggregate credit which would be allowable by reason
of this section for such years with respect to such basis if
the aggregate credit which would (but for this subsection) have
been allowable for the entire compliance period were allowable
ratably over 15 years.
(4) Special rules
(A) Tax benefit rule
The tax for the taxable year shall be increased under
paragraph (1) only with respect to credits allowed by reason of
this section which were used to reduce tax liability. In the
case of credits not so used to reduce tax liability, the
carryforwards and carrybacks under section 39 shall be
appropriately adjusted.
(B) Only basis for which credit allowed taken into account
Qualified basis shall be taken into account under paragraph
(1)(B) only to the extent such basis was taken into account in
determining the credit under subsection (a) for the preceding
taxable year referred to in such paragraph.
(C) No recapture of additional credit allowable by reason of
subsection (f)(3)
Paragraph (1) shall apply to a decrease in qualified basis
only to the extent such decrease exceeds the amount of
qualified basis with respect to which a credit was allowable
for the taxable year referred to in paragraph (1)(B) by reason
of subsection (f)(3).
(D) No credits against tax
Any increase in tax under this subsection shall not be
treated as a tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter.
(E) No recapture by reason of casualty loss
The increase in tax under this subsection shall not apply to
a reduction in qualified basis by reason of a casualty loss to
the extent such loss is restored by reconstruction or
replacement within a reasonable period established by the
Secretary.
(F) No recapture where de minimis changes in floor space
The Secretary may provide that the increase in tax under this
subsection shall not apply with respect to any building if -
(i) such increase results from a de minimis change in the
floor space fraction under subsection (c)(1), and
(ii) the building is a qualified low-income building after
such change.
(5) Certain partnerships treated as the taxpayer
(A) In general
For purposes of applying this subsection to a partnership to
which this paragraph applies -
(i) such partnership shall be treated as the taxpayer to
which the credit allowable under subsection (a) was allowed,
(ii) the amount of such credit allowed shall be treated as
the amount which would have been allowed to the partnership
were such credit allowable to such partnership,
(iii) paragraph (4)(A) shall not apply, and
(iv) the amount of the increase in tax under this
subsection for any taxable year shall be allocated among the
partners of such partnership in the same manner as such
partnership's taxable income for such year is allocated among
such partners.
(B) Partnerships to which paragraph applies
This paragraph shall apply to any partnership which has 35 or
more partners unless the partnership elects not to have this
paragraph apply.
(C) Special rules
(i) Husband and wife treated as 1 partner
For purposes of subparagraph (B)(i), a husband and wife
(and their estates) shall be treated as 1 partner.
(ii) Election irrevocable
Any election under subparagraph (B), once made, shall be
irrevocable.
(6) No recapture on disposition of building (or interest therein)
where bond posted
In the case of a disposition of a building or an interest
therein, the taxpayer shall be discharged from liability for any
additional tax under this subsection by reason of such
disposition if -
(A) the taxpayer furnishes to the Secretary a bond in an
amount satifactory (!5) to the Secretary and for the period
required by the Secretary, and
(B) it is reasonably expected that such building will
continue to be operated as a qualified low-income building for
the remaining compliance period with respect to such building.
(k) Application of at-risk rules
For purposes of this section -
(1) In general
Except as otherwise provided in this subsection, rules similar
to the rules of section 49(a)(1) (other than subparagraphs
(D)(ii)(II) and (D)(iv)(I) thereof), section 49(a)(2), and
section 49(b)(1) shall apply in determining the qualified basis
of any building in the same manner as such sections apply in
determining the credit base of property.
(2) Special rules for determining qualified person
For purposes of paragraph (1) -
(A) In general
If the requirements of subparagraphs (B), (C), and (D) are
met with respect to any financing borrowed from a qualified
nonprofit organization (as defined in subsection (h)(5)), the
determination of whether such financing is qualified commercial
financing with respect to any qualified low-income building
shall be made without regard to whether such organization -
(i) is actively and regularly engaged in the business of
lending money, or
(ii) is a person described in section 49(a)(1)(D)(iv)(II).
(B) Financing secured by property
The requirements of this subparagraph are met with respect to
any financing if such financing is secured by the qualified
low-income building, except that this subparagraph shall not
apply in the case of a federally assisted building described in
subsection (d)(6)(B) if -
(i) a security interest in such building is not permitted
by a Federal agency holding or insuring the mortgage secured
by such building, and
(ii) the proceeds from the financing (if any) are applied
to acquire or improve such building..(!6)
(C) Portion of building attributable to financing
The requirements of this subparagraph are met with respect to
any financing for any taxable year in the compliance period if,
as of the close of such taxable year, not more than 60 percent
of the eligible basis of the qualified low-income building is
attributable to such financing (reduced by the principal and
interest of any governmental financing which is part of a
wrap-around mortgage involving such financing).
(D) Repayment of principal and interest
The requirements of this subparagraph are met with respect to
any financing if such financing is fully repaid on or before
the earliest of -
(i) the date on which such financing matures,
(ii) the 90th day after the close of the compliance period
with respect to the qualified low-income building, or
(iii) the date of its refinancing or the sale of the
building to which such financing relates.
In the case of a qualified nonprofit organization which is not
described in section 49(a)(1)(D)(iv)(II) with respect to a
building, clause (ii) of this subparagraph shall be applied as
if the date described therein were the 90th day after the
earlier of the date the building ceases to be a qualified
low-income building or the date which is 15 years after the
close of a compliance period with respect thereto.
(3) Present value of financing
If the rate of interest on any financing described in paragraph
(2)(A) is less than the rate which is 1 percentage point below
the applicable Federal rate as of the time such financing is
incurred, then the qualified basis (to which such financing
relates) of the qualified low-income building shall be the
present value of the amount of such financing, using as the
discount rate such applicable Federal rate. For purposes of the
preceding sentence, the rate of interest on any financing shall
be determined by treating interest to the extent of government
subsidies as not payable.
(4) Failure to fully repay
(A) In general
To the extent that the requirements of paragraph (2)(D) are
not met, then the taxpayer's tax under this chapter for the
taxable year in which such failure occurs shall be increased by
an amount equal to the applicable portion of the credit under
this section with respect to such building, increased by an
amount of interest for the period -
(i) beginning with the due date for the filing of the
return of tax imposed by chapter 1 for the 1st taxable year
for which such credit was allowable, and
(ii) ending with the due date for the taxable year in which
such failure occurs,
determined by using the underpayment rate and method under
section 6621.
(B) Applicable portion
For purposes of subparagraph (A), the term "applicable
portion" means the aggregate decrease in the credits allowed to
a taxpayer under section 38 for all prior taxable years which
would have resulted if the eligible basis of the building were
reduced by the amount of financing which does not meet
requirements of paragraph (2)(D).
(C) Certain rules to apply
Rules similar to the rules of subparagraphs (A) and (D) of
subsection (j)(4) shall apply for purposes of this subsection.
(l) Certifications and other reports to Secretary
(1) Certification with respect to 1st year of credit period
Following the close of the 1st taxable year in the credit
period with respect to any qualified low-income building, the
taxpayer shall certify to the Secretary (at such time and in such
form and in such manner as the Secretary prescribes) -
(A) the taxable year, and calendar year, in which such
building was placed in service,
(B) the adjusted basis and eligible basis of such building as
of the close of the 1st year of the credit period,
(C) the maximum applicable percentage and qualified basis
permitted to be taken into account by the appropriate housing
credit agency under subsection (h),
(D) the election made under subsection (g) with respect to
the qualified low-income housing project of which such building
is a part, and
(E) such other information as the Secretary may require.
In the case of a failure to make the certification required by
the preceding sentence on the date prescribed therefor, unless it
is shown that such failure is due to reasonable cause and not to
willful neglect, no credit shall be allowable by reason of
subsection (a) with respect to such building for any taxable year
ending before such certification is made.
(2) Annual reports to the Secretary
The Secretary may require taxpayers to submit an information
return (at such time and in such form and manner as the Secretary
prescribes) for each taxable year setting forth -
(A) the qualified basis for the taxable year of each
qualified low-income building of the taxpayer,
(B) the information described in paragraph (1)(C) for the
taxable year, and
(C) such other information as the Secretary may require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor.
(3) Annual reports from housing credit agencies
Each agency which allocates any housing credit amount to any
building for any calendar year shall submit to the Secretary (at
such time and in such manner as the Secretary shall prescribe) an
annual report specifying -
(A) the amount of housing credit amount allocated to each
building for such year,
(B) sufficient information to identify each such building and
the taxpayer with respect thereto, and
(C) such other information as the Secretary may require.
The penalty under section 6652(j) shall apply to any failure to
submit the report required by the preceding sentence on the date
prescribed therefor.
(m) Responsibilities of housing credit agencies
(1) Plans for allocation of credit among projects
(A) In general
Notwithstanding any other provision of this section, the
housing credit dollar amount with respect to any building shall
be zero unless -
(i) such amount was allocated pursuant to a qualified
allocation plan of the housing credit agency which is
approved by the governmental unit (in accordance with rules
similar to the rules of section 147(f)(2) (other than
subparagraph (B)(ii) thereof)) of which such agency is a
part,
(ii) such agency notifies the chief executive officer (or
the equivalent) of the local jurisdiction within which the
building is located of such project and provides such
individual a reasonable opportunity to comment on the
project,
(iii) a comprehensive market study of the housing needs of
low-income individuals in the area to be served by the
project is conducted before the credit allocation is made and
at the developer's expense by a disinterested party who is
approved by such agency, and
(iv) a written explanation is available to the general
public for any allocation of a housing credit dollar amount
which is not made in accordance with established priorities
and selection criteria of the housing credit agency.
(B) Qualified allocation plan
For purposes of this paragraph, the term "qualified
allocation plan" means any plan -
(i) which sets forth selection criteria to be used to
determine housing priorities of the housing credit agency
which are appropriate to local conditions,
(ii) which also gives preference in allocating housing
credit dollar amounts among selected projects to -
(I) projects serving the lowest income tenants,
(II) projects obligated to serve qualified tenants for
the longest periods, and
(III) projects which are located in qualified census
tracts (as defined in subsection (d)(5)(C)) and the
development of which contributes to a concerted community
revitalization plan, and
(iii) which provides a procedure that the agency (or an
agent or other private contractor of such agency) will follow
in monitoring for noncompliance with the provisions of this
section and in notifying the Internal Revenue Service of such
noncompliance which such agency becomes aware of and in
monitoring for noncompliance with habitability standards
through regular site visits.
(C) Certain selection criteria must be used
The selection criteria set forth in a qualified allocation
plan must include
(i) project location,
(ii) housing needs characteristics,
(iii) project characteristics, including whether the
project includes the use of existing housing as part of a
community revitalization plan,
(iv) sponsor characteristics,
(v) tenant populations with special housing needs,
(vi) public housing waiting lists,
(vii) tenant populations of individuals with children, and
(viii) projects intended for eventual tenant ownership.
(D) Application to bond financed projects
Subsection (h)(4) shall not apply to any project unless the
project satisfies the requirements for allocation of a housing
credit dollar amount under the qualified allocation plan
applicable to the area in which the project is located.
(2) Credit allocated to building not to exceed amount necessary
to assure project feasibility
(A) In general
The housing credit dollar amount allocated to a project shall
not exceed the amount the housing credit agency determines is
necessary for the financial feasibility of the project and its
viability as a qualified low-income housing project throughout
the credit period.
(B) Agency evaluation
In making the determination under subparagraph (A), the
housing credit agency shall consider -
(i) the sources and uses of funds and the total financing
planned for the project,
(ii) any proceeds or receipts expected to be generated by
reason of tax benefits,
(iii) the percentage of the housing credit dollar amount
used for project costs other than the cost of intermediaries,
and
(iv) the reasonableness of the developmental and
operational costs of the project.
Clause (iii) shall not be applied so as to impede the
development of projects in hard-to-develop areas. Such a
determination shall not be construed to be a representation or
warranty as to the feasibility or viability of the project.
(C) Determination made when credit amount applied for and when
building placed in service
(i) In general
A determination under subparagraph (A) shall be made as of
each of the following times:
(I) The application for the housing credit dollar amount.
(II) The allocation of the housing credit dollar amount.
(III) The date the building is placed in service.
(ii) Certification as to amount of other subsidies
Prior to each determination under clause (i), the taxpayer
shall certify to the housing credit agency the full extent of
all Federal, State, and local subsidies which apply (or which
the taxpayer expects to apply) with respect to the building.
(D) Application to bond financed projects
Subsection (h)(4) shall not apply to any project unless the
governmental unit which issued the bonds (or on behalf of which
the bonds were issued) makes a determination under rules
similar to the rules of subparagraphs (A) and (B).
(n) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section,
including regulations -
(1) dealing with -
(A) projects which include more than 1 building or only a
portion of a building,
(B) buildings which are placed in service in portions,
(2) providing for the application of this section to short
taxable years,
(3) preventing the avoidance of the rules of this section, and
(4) providing the opportunity for housing credit agencies to
correct administrative errors and omissions with respect to
allocations and record keeping within a reasonable period after
their discovery, taking into account the availability of
regulations and other administrative guidance from the Secretary.
-SOURCE-
(Added Pub. L. 99-514, title II, Sec. 252(a), Oct. 22, 1986, 100
Stat. 2189; amended Pub. L. 99-509, title VIII, Sec. 8072(a), Oct.
21, 1986, 100 Stat. 1964; Pub. L. 100-647, title I, Secs.
1002(l)(1)-(25), (32), 1007(g)(3)(B), title IV, Secs. 4003(a),
(b)(1), (3), 4004(a), Nov. 10, 1988, 102 Stat. 3373-3381, 3435,
3643, 3644; Pub. L. 101-239, title VII, Secs. 7108(a)(1),
(b)-(e)(2), (f)-(m), (n)(2)-(q), 7811(a), 7831(c),
7841(d)(13)-(15), Dec. 19, 1989, 103 Stat. 2306-2321, 2406, 2426,
2429; Pub. L. 101-508, title XI, Secs. 11407(a)(1), (b)(1)-(9),
11701(a)(1)-(3)(A), (4), (5)(A), (6)-(10), 11812(b)(3),
11813(b)(3), Nov. 5, 1990, 104 Stat. 1388-474, 1388-475, 1388-505
to 1388-507, 1388-535, 1388-551; Pub. L. 102-227, title I, Sec.
107(a), Dec. 11, 1991, 105 Stat. 1687; Pub. L. 103-66, title XIII,
Sec. 13142(a)(1), (b)(1)-(5), Aug. 10, 1993, 107 Stat. 437-439;
Pub. L. 104-188, title I, Sec. 1704(t)(53), (64), Aug. 20, 1996,
110 Stat. 1890; Pub. L. 105-206, title VI, Sec. 6004(g)(5), July
22, 1998, 112 Stat. 796; Pub. L. 106-400, Sec. 2, Oct. 30, 2000,
114 Stat. 1675; Pub. L. 106-554, Sec. 1(a)(7) [title I, Secs.
131(a)-(c), 132-136], Dec. 21, 2000, 114 Stat. 2763, 2763A-610 to
2763A-613; Pub. L. 107-147, title IV, Sec. 417(2), (3), Mar. 9,
2002, 116 Stat. 56.)
-STATAMEND-
LOW-INCOME HOUSING CREDIT ADJUSTMENT FOR CALENDAR YEAR 2004
For inflation adjustment of amounts in subsection (h)(3)(C)(ii)
of this section used to calculate the State housing credit ceiling
for low-income housing credit for calendar year 2004, see section
3.07 of Revenue Procedure 2003-85, set out as a note under section
1 of this title.
-REFTEXT-
REFERENCES IN TEXT
Section 8 of the United States Housing Act of 1937, referred to
in subsecs. (c)(2), (d)(6)(B)(i), (g)(2)(B), and (h)(6)(B)(iv), is
classified to section 1437f of Title 42, The Public Health and
Welfare. Section 8(e)(2) of the Act was repealed by Pub. L.
101-625, title II, Sec. 289(b)(1), Nov. 28, 1990, 104 Stat. 4128,
effective Oct. 1, 1991, but to remain in effect with respect to
single room occupancy dwellings as authorized by subchapter IV
(Sec. 11361 et seq.) of chapter 119 of Title 42. See section
12839(b) of Title 42.
The McKinney-Vento Homeless Assistance Act, referred to in
subsec. (c)(2), is Pub. L. 100-77, July 22, 1987, 101 Stat. 482, as
amended, which is classified principally to chapter 119 (Sec. 11301
et seq.) of Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title note set
out under section 11301 of Title 42 and Tables.
The date of the enactment of this sentence, referred to in
subsec. (c)(2), is the date of the enactment of Pub. L. 101-508,
which was approved Nov. 5, 1990.
Section 201(a) of the Tax Reform Act of 1986, referred to in
subsec. (c)(2)(B), is section 201(a) of Pub. L. 99-514, which
amended section 168 of this title generally.
The date of the enactment of the Tax Reform Act of 1986, referred
to in subsec. (d)(2)(D)(i)(I), (6)(B), is the date of enactment of
Pub. L. 99-514, which was approved Oct. 22, 1986.
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsec. (d)(2)(D)(i)(I), (5)(B), is the date
of the enactment of Pub. L. 101-508, which was approved Nov. 5,
1990.
Sections 221(d)(3) and 236 of the National Housing Act, referred
to in subsec. (d)(6)(B)(ii), are classified to sections 1715l(d)(3)
and 1715z-1, respectively, of Title 12, Banks and Banking.
Sections 515 and 502(c) of the Housing Act of 1949, referred to
in subsecs. (d)(6)(B)(iii), (C)(i) and (g)(2)(B)(iv), are
classified to sections 1485 and 1472(c), respectively, of Title 42,
The Public Health and Welfare.
The Emergency Low Income Housing Preservation Act of 1987,
referred to in subsec. (d)(6)(C)(i), now the Low-Income Housing
Preservation and Resident Homeownership Act of 1990, is title II of
Pub. L. 100-242, Feb. 5, 1988, 101 Stat. 1877, as amended. Subtitle
B of title II, which was formerly set out as a note under section
1715l of Title 12, Banks and Banking, and which amended section
1715z-6 of Title 12, was amended generally by Pub. L. 101-625 and
is classified to chapter 42 (Sec. 4101 et seq.) of Title 12. For
complete classification of this Act to the Code, see Short Title
note set out under section 4101 of Title 12 and Tables.
Section 3 of the Federal Deposit Insurance Act, referred to in
subsec. (d)(6)(D), is classified to section 1813 of Title 12.
The date of the enactment of this subparagraph, referred to in
subsec. (g)(2)(E), is the date of enactment of Pub. L. 100-647,
which was approved Nov. 10, 1988.
Sections 106, 107, and 108 of the Housing and Community
Development Act of 1974 (as in effect on the date of the enactment
of this sentence), referred to in subsec. (i)(2)(D), are classified
to sections 5306, 5307, and 5308 of Title 42, The Public Health and
Welfare, as in effect on the date of enactment of Pub. L. 101-239,
which was approved Dec. 19, 1989.
The HOME Investment Partnerships Act (as in effect on the date of
the enactment of this subparagraph), referred to in subsec.
(i)(2)(E)(i), is title II of Pub. L. 101-625, Nov. 28, 1990, 104
Stat. 4094, as in effect on the date of enactment of Pub. L.
103-66, which was approved Aug. 10, 1993. Title II of Pub. L.
101-625 is classified principally to subchapter II (Sec. 12721 et
seq.) of chapter 130 of Title 42. For complete classification of
this Act to the Code, see Short Title note set out under section
12701 of Title 42 and Tables.
The Native American Housing Assistance and Self-Determination Act
of 1996, referred to in subsec. (i)(2)(E)(i), is Pub. L. 104-330,
Oct. 26, 1996, 110 Stat. 4016, as amended, which is classified
principally to chapter 43 (Sec. 4101 et seq.) of Title 25, Indians.
For complete classification of this Act to the Code, see Short
Title note set out under section 4101 of Title 25 and Tables.
The date of the enactment of this clause, referred to in subsec.
(i)(3)(B)(iii)(I), is date of enactment of Pub. L. 101-239, which
was approved Dec. 19, 1989.
The Social Security Act, referred to in subsec. (i)(3)(D)(i)(I),
is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title IV
of the Act is classified generally to subchapter IV (Sec. 601 et
seq.) of chapter 7 of Title 42, The Public Health and Welfare. For
complete classification of this Act to the Code, see section 1305
of Title 42 and Tables.
The Job Training Partnership Act, referred to in subsec.
(i)(3)(D)(i)(II), is Pub. L. 97-300, Oct. 13, 1982, 96 Stat. 1322,
which was classified generally to chapter 19 (Sec. 1501 et seq.) of
Title 29, Labor, and was repealed by Pub. L. 105-220, title I, Sec.
199(b)(2), (c)(2)(B), Aug. 7, 1998, 112 Stat. 1059, effective July
1, 2000. Pursuant to section 2940(b) of Title 29, references to a
provision of the Job Training Partnership Act, effective Aug. 7,
1998, are deemed to refer to that provision or the corresponding
provision of the Workforce Investment Act of 1998, Pub. L. 105-220,
Aug. 7, 1998, 112 Stat. 936, and effective July 1, 2000, are deemed
to refer to the corresponding provision of the Workforce Investment
Act of 1998. For complete classification of the Job Training
Partnership Act to the Code, see Tables. For complete
classification of the Workforce Investment Act of 1998 to the Code,
see Short Title note set out under section 9201 of Title 20,
Education, and Tables.
-MISC1-
PRIOR PROVISIONS
A prior section 42, added Pub. L. 94-12, title II, Sec. 203(a),
Mar. 29, 1975, 89 Stat. 29; amended Pub. L. 94-164, Sec. 3(a)(1),
Dec. 23, 1975, 89 Stat. 972; Pub. L. 94-455, title IV, Sec.
401(a)(2)(A), (B), title V, Sec. 503(b)(4), title XIX, Sec.
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1555, 1562, 1834; Pub. L.
95-30, title I, Sec. 101(c), May 23, 1977, 91 Stat. 132, which
related to general tax credit allowed to individuals in an amount
equal to the greater of (1) 2% of taxable income not exceeding
$9,000 or (2) $35 multiplied by each exemption the taxpayer was
entitled to, expired Dec. 31, 1978, pursuant to the terms of: (1)
Pub. L. 94-12, Sec. 209(a) as amended by Pub. L. 94-164, Sec. 2(e),
set out as an Effective and Termination Dates of 1975 Amendment
note under section 56 of this title; (2) Pub. L. 94-164, Sec. 3(b),
as amended by Pub. L. 94-455, Sec. 401(a)(1) and Pub. L. 95-30,
Sec. 103(a); and (3) Pub. L. 94-455, Sec. 401(e), as amended by
Pub. L. 95-30, Sec. 103(c) and Pub. L. 95-600, title I, Sec.
103(b), Nov. 6, 1978, 92 Stat. 2771, set out as an Effective and
Termination Dates of 1976 Amendment note under section 32 of this
title.
Another prior section 42 was renumbered section 36 of this title.
AMENDMENTS
2002 - Subsec. (h)(3)(C). Pub. L. 107-147, Sec. 417(2),
substituted "the amounts described in clauses (ii) through (iv)
over the aggregate housing credit dollar amount allocated for such
year" for "the amounts described in clauses (ii) and (iii) over the
aggregate housing credit dollar amount allocated for such year" in
concluding provisions.
Subsec. (m)(1)(B)(ii)(II), (III). Pub. L. 107-147, Sec. 417(3),
struck out second "and" at end of subcl. (II) and inserted "and" at
end of subcl. (III).
2000 - Subsec. (c)(2). Pub. L. 106-400 substituted
"McKinney-Vento Homeless Assistance Act" for "Stewart B. McKinney
Homeless Assistance Act" in concluding provisions.
Subsec. (d)(4)(A). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
134(a)(1)], substituted "subparagraphs (B) and (C)" for
"subparagraph (B)".
Subsec. (d)(4)(C), (D). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 134(a)(2), (3)], added subpar. (C) and redesignated former
subpar. (C) as (D).
Subsec. (d)(5)(C)(ii)(I). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 135(b)], in first sentence, inserted "either" before "in which
50 percent" and "or which has a poverty rate of at least 25
percent" before period at end.
Subsec. (h)(1)(E)(ii). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 135(a)(1)], in first sentence, substituted "(as of the later
of the date which is 6 months after the date that the allocation
was made or the close of the calendar year in which the allocation"
for "(as of the close of the calendar year in which the
allocation".
Subsec. (h)(3)(C). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
136(b)], which directed the substitution of "clauses (i) through
(iv)" for "clauses (i) and (iii)" in the first sentence of
concluding provisions, could not be executed because the words
"clauses (i) and (iii)" did not appear subsequent to the amendment
by Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 131(c)(1)(B)]. See
below.
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 135(a)(2)], in last
sentence of concluding provisions, substituted "project which fails
to meet the 10 percent test under paragraph (1)(E)(ii) on a date
after the close of the calendar year in which the allocation was
made or which" for "project which".
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 131(c)(1)], in first
sentence of concluding provisions, substituted "clause (i)" for
"clause (ii)" and "clauses (ii)" for "clauses (i)".
Subsec. (h)(3)(C)(i), (ii). Pub. L. 106-554, Sec. 1(a)(7) [title
I, Sec. 131(a)], amended cls. (i) and (ii) generally. Prior to
amendment, cls. (i) and (ii) read as follows:
"(i) $1.25 multiplied by the State population,
"(ii) the unused State housing credit ceiling (if any) of such
State for the preceding calendar year,".
Subsec. (h)(3)(D)(ii). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 136(a)], substituted "the excess (if any) of - " for "the
excess (if any) of the unused State housing credit ceiling for such
year (as defined in subparagraph (C)(i)) over the excess (if any)
of - " in introductory provisions, added subcls. (I) and (II), and
struck out former subcls. (I) and (II) which read as follows:
"(I) the aggregate housing credit dollar amount allocated for
such year, over
"(II) the sum of the amounts described in clauses (ii) and (iii)
of subparagraph (C)."
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 131(c)(2)],
substituted "subparagraph (C)(i)" for "subparagraph (C)(ii)" in
introductory provisions and "clauses (ii)" for "clauses (i)" in
subcl. (II).
Subsec. (h)(3)(H). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
131(b)], added subpar. (H).
Subsec. (i)(2)(E). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
134(b)(2)], inserted "or Native American housing assistance" after
"HOME assistance" in heading.
Subsec. (i)(2)(E)(i). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 134(b)(1)], inserted "or the Native American Housing
Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et
seq.) (as in effect on October 1, 1997)" after "this
subparagraph)".
Subsec. (i)(3)(B)(iii)(I). Pub. L. 106-400 substituted
"McKinney-Vento Homeless Assistance Act" for "Stewart B. McKinney
Homeless Assistance Act".
Subsec. (m)(1)(A)(iii), (iv). Pub. L. 106-554, Sec. 1(a)(7)
[title I, Sec. 133(a)], added cls. (iii) and (iv).
Subsec. (m)(1)(B)(ii)(III). Pub. L. 106-554, Sec. 1(a)(7) [title
I, Sec. 132(b)], added subcl. (III).
Subsec. (m)(1)(B)(iii). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 133(b)], inserted "and in monitoring for noncompliance with
habitability standards through regular site visits" before period
at end.
Subsec. (m)(1)(C)(iii). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 132(a)(1)], inserted ", including whether the project includes
the use of existing housing as part of a community revitalization
plan" before comma at end.
Subsec. (m)(1)(C)(v) to (viii). Pub. L. 106-554, Sec. 1(a)(7)
[title I, Sec. 132(a)(2)], added cls. (v) to (viii) and struck out
former cls. (v) to (vii) which read as follows:
"(v) participation of local tax-exempt organizations,
"(vi) tenant populations with special housing needs, and
"(vii) public housing waiting lists."
1998 - Subsec. (j)(4)(D). Pub. L. 105-206 substituted "this
chapter" for "subpart A, B, D, or G of this part".
1996 - Subsec. (c)(2). Pub. L. 104-188, Sec. 1704(t)(64), struck
out "of 1988" after "Homeless Assistance Act".
Subsec. (d)(5)(B). Pub. L. 104-188, Sec. 1704(t)(53), provided
that section 11812(b)(3) of Pub. L. 101-508 shall be applied by not
executing the amendment therein to the heading of subsec. (d)(5)(B)
of this section. See 1990 Amendment note below.
1993 - Subsec. (g)(8). Pub. L. 103-66, Sec. 13142(b)(3), added
par. (8).
Subsec. (h)(6)(B)(iv) to (vi). Pub. L. 103-66, Sec. 13142(b)(4),
added cl. (iv) and redesignated former cls. (iv) and (v) as (v) and
(vi), respectively.
Subsec. (i)(2)(E). Pub. L. 103-66, Sec. 13142(b)(5), added
subpar. (E).
Subsec. (i)(3)(D). Pub. L. 103-66, Sec. 13142(b)(2), amended
heading and text of subpar. (D) generally. Prior to amendment, text
read as follows: "A unit shall not fail to be treated as a
low-income unit merely because it is occupied by an individual who
is -
"(i) a student and receiving assistance under title IV of the
Social Security Act, or
"(ii) enrolled in a job training program receiving assistance
under the Job Training Partnership Act or under other similar
Federal, State, or local laws."
Subsec. (m)(2)(B)(iv). Pub. L. 103-66, Sec. 13142(b)(1), added
cl. (iv).
Subsec. (o). Pub. L. 103-66, Sec. 13142(a)(1), struck out subsec.
(o) which provided that subsec. (h)(3)(C)(i) would not apply to any
amount allocated after June 30, 1992, and that subsec. (h)(4) would
not apply to any building placed in service after June 30, 1992,
with an exception for bond-financed buildings in progress.
1991 - Subsec. (o)(1). Pub. L. 102-227, Sec. 107(a)(1), struck
out ", for any calendar year after 1991" after "paragraph (2)" in
introductory provisions, inserted "to any amount allocated after
June 30, 1992" before comma at end of subpar. (A), and substituted
"June 30, 1992" for "1991" in subpar. (B).
Subsec. (o)(2). Pub. L. 102-227, Sec. 107(a)(2), substituted
"July 1, 1992" for "1992" in introductory provisions and subpar.
(A), "June 30, 1992" for "December 31, 1991" and "June 30, 1994"
for "December 31, 1993" in subpar. (B), and "July 1, 1994" for
"January 1, 1994" in subpar. (C).
1990 - Subsec. (b)(1). Pub. L. 101-508, Sec. 11701(a)(1)(B),
struck out at end "A building shall not be treated as described in
subparagraph (B) if, at any time during the credit period, moderate
rehabilitation assistance is provided with respect to such building
under section 8(e)(2) of the United States Housing Act of 1937."
Subsec. (c)(2). Pub. L. 101-508, Sec. 11701(a)(1)(A), inserted at
end "Such term does not include any building with respect to which
moderate rehabilitation assistance is provided, at any time during
the compliance period, under section 8(e)(2) of the United States
Housing Act of 1937."
Pub. L. 101-508, Sec. 11407(b)(5)(A), inserted before period at
end of last sentence "(other than assistance under the Stewart B.
McKinney Homeless Assistance Act of 1988 (as in effect on the date
of the enactment of this sentence))".
Subsec. (d)(2)(D)(i)(I). Pub. L. 101-508, Sec. 11812(b)(3),
inserted "(as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990)" after "section 167(k)."
Subsec. (d)(2)(D)(ii)(V). Pub. L. 101-508, Sec. 11407(b)(8),
added subcl. (V).
Subsec. (d)(5)(B). Pub. L. 101-508, Sec. 11812(b)(3), which
directed the insertion of "(as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990)" after
"section 167(k)", was executed to the text, and not the heading, of
subpar. (B). See 1996 Amendment note above.
Subsec. (d)(5)(C)(ii)(I). Pub. L. 101-508, Sec. 11407(b)(4),
inserted at end "If the Secretary of Housing and Urban Development
determines that sufficient data for any period are not available to
apply this clause on the basis of census tracts, such Secretary
shall apply this clause for such period on the basis of enumeration
districts."
Pub. L. 101-508, Sec. 11701(a)(2)(B), inserted before period at
end "for such year".
Pub. L. 101-508, Sec. 11701(a)(2)(A), which directed the
insertion of "which is designated by the Secretary of Housing and
Urban Development and, for the most recent year for which census
data are available on household income in such tract," after
"census tract", was executed by making the insertion after "any
census tract" to reflect the probable intent of Congress.
Subsec. (g)(2)(B)(iv). Pub. L. 101-508, Sec. 11407(b)(3), added
cl. (iv).
Subsec. (g)(2)(D)(i). Pub. L. 101-508, Sec. 11701(a)(3)(A),
inserted before period at end "and such unit continues to be
rent-restricted".
Subsec. (g)(2)(D)(ii). Pub. L. 101-508, Sec. 11701(a)(4),
inserted at end "In the case of a project described in section
142(d)(4)(B), the preceding sentence shall be applied by
substituting '170 percent' for '140 percent' and by substituting
'any low-income unit in the building is occupied by a new resident
whose income exceeds 40 percent of area median gross income' for
'any residential unit in the building (of a size comparable to, or
smaller than, such unit) is occupied by a new resident whose income
exceeds such income limitation'."
Subsec. (g)(3)(A). Pub. L. 101-508, Sec. 11701(a)(5)(A),
substituted "the 1st year of the credit period for such building"
for "the 12-month period beginning on the date the building is
placed in service".
Subsec. (h)(3)(C). Pub. L. 101-508, Sec. 11701(a)(6)(A),
substituted "the sum of the amounts described in clauses (i) and
(iii)" for "the amount described in clause (i)" in second sentence.
Subsec. (h)(3)(D)(ii)(II). Pub. L. 101-508, Sec. 11701(a)(6)(B),
substituted "the sum of the amounts described in clauses (i) and
(iii)" for "the amount described in clause (i)".
Subsec. (h)(5)(B). Pub. L. 101-508, Sec. 11407(b)(9)(A), inserted
"own an interest in the project (directly or through a partnership)
and" after "nonprofit organization is to".
Subsec. (h)(5)(C)(i) to (iii). Pub. L. 101-508, Sec.
11407(b)(9)(B), added cl. (ii) and redesignated former cl. (ii) as
(iii).
Subsec. (h)(5)(D)(i). Pub. L. 101-508, Sec. 11407(b)(9)(C),
inserted "ownership and" before "material participation".
Subsec. (h)(6)(B)(i). Pub. L. 101-508, Sec. 11701(a)(7)(A),
inserted before comma at end "and which prohibits the actions
described in subclauses (I) and (II) of subparagraph (E)(ii)".
Subsec. (h)(6)(B)(ii). Pub. L. 101-508, Sec. 11701(a)(7)(B),
substituted "requirement and prohibitions" for "requirement".
Subsec. (h)(6)(B)(iii) to (v). Pub. L. 101-508, Sec.
11701(a)(8)(A), added cl. (iii) and redesignated former cls. (iii)
and (iv) as (iv) and (v), respectively.
Subsec. (h)(6)(E)(i)(I). Pub. L. 101-508, Sec. 11701(a)(9),
inserted before comma "unless the Secretary determines that such
acquisition is part of an arrangement with the taxpayer a purpose
of which is to terminate such period".
Subsec. (h)(6)(E)(ii)(II). Pub. L. 101-508, Sec. 11701(a)(8)(C),
inserted before period at end "not otherwise permitted under this
section".
Subsec. (h)(6)(F). Pub. L. 101-508, Sec. 11701(a)(8)(D), inserted
"the nonlow-income portion of the building for fair market value
and" before "the low-income portion" in introductory provisions.
Subsec. (h)(6)(J) to (L). Pub. L. 101-508, Sec. 11701(a)(8)(B),
redesignated subpars. (K) and (L) as (J) and (K), respectively, and
struck out former subpar. (J) which related to sales of less than
the low-income portions of a building.
Subsec. (i)(3)(D). Pub. L. 101-508, Sec. 11407(b)(6), substituted
"Certain students" for "Students in government-supported job
training programs" in heading and amended text generally. Prior to
amendment, text read as follows: "A unit shall not fail to be
treated as a low-income unit merely because it is occupied by an
individual who is enrolled in a job training program receiving
assistance under the Job Training Partnership Act or under other
similar Federal, State, or local laws."
Subsec. (i)(7). Pub. L. 101-508, Sec. 11701(a)(10), redesignated
par. (8) as (7).
Subsec. (i)(7)(A). Pub. L. 101-508, Sec. 11407(b)(1), substituted
"the tenants (in cooperative form or otherwise) or resident
management corporation of such building or by a qualified nonprofit
organization (as defined in subsection (h)(5)(C)) or government
agency" for "the tenants of such building".
Subsec. (i)(8). Pub. L. 101-508, Sec. 11701(a)(10), redesignated
par. (8) as (7).
Subsec. (k)(1). Pub. L. 101-508, Sec. 11813(b)(3)(A), substituted
"49(a)(1)" for "46(c)(8)", "49(a)(2)" for "46(c)(9)", and
"49(b)(1)" for "47(d)(1)".
Subsec. (k)(2)(A)(ii), (D). Pub. L. 101-508, Sec. 11813(b)(3)(B),
substituted "49(a)(1)(D)(iv)(II)" for "46(c)(8)(D)(iv)(II)".
Subsec. (m)(1)(B)(ii) to (iv). Pub. L. 101-508, Sec.
11407(b)(7)(B), redesignated cls. (iii) and (iv) as (ii) and (iii),
respectively, and struck out former cl. (ii) which read as follows:
"which gives the highest priority to those projects as to which the
highest percentage of the housing credit dollar amount is to be
used for project costs other than the cost of intermediaries unless
granting such priority would impede the development of projects in
hard-to-develop areas,".
Pub. L. 101-508, Sec. 11407(b)(2), amended cl. (iv) generally.
Prior to amendment, cl. (iv) read as follows: "which provides a
procedure that the agency will follow in notifying the Internal
Revenue Service of noncompliance with the provisions of this
section which such agency becomes aware of."
Subsec. (m)(2)(B). Pub. L. 101-508, Sec. 11407(b)(7)(A), added
cl. (iii) and inserted provision that cl. (iii) not be applied so
as to impede the development of projects in hard-to-develop areas.
Subsec. (o)(1). Pub. L. 101-508, Sec. 11407(a)(1)(A), substituted
"1991" for "1990" wherever appearing.
Subsec. (o)(2). Pub. L. 101-508, Sec. 11407(a)(1)(B), added par.
(2) and struck out former par. (2) which read as follows: "For
purposes of paragraph (1)(B), a building shall be treated as placed
in service before 1990 if -
"(A) the bonds with respect to such building are issued before
1990,
"(B) such building is constructed, reconstructed, or
rehabilitated by the taxpayer,
"(C) more than 10 percent of the reasonably anticipated cost of
such construction, reconstruction, or rehabilitation has been
incurred as of January 1, 1990, and some of such cost is incurred
on or after such date, and
"(D) such building is placed in service before January 1,
1992."
1989 - Subsec. (b)(1). Pub. L. 101-239, Sec. 7108(h)(5), inserted
at end "A building shall not be treated as described in
subparagraph (B) if, at any time during the credit period, moderate
rehabilitation assistance is provided with respect to such building
under section 8(e)(2) of the United States Housing Act of 1937."
Subsec. (b)(3)(C). Pub. L. 101-239, Sec. 7108(c)(2), which
directed amendment of subpar. (C) by substituting "subsection
(h)(7)" for "subsection (h)(6))", was executed by substituting
"subsection (h)(7)" for "subsection (h)(6)", as the probable intent
of Congress.
Subsec. (c)(1)(E). Pub. L. 101-239, Sec. 7108(i)(2), added
subpar. (E).
Subsec. (d)(1). Pub. L. 101-239, Sec. 7108(l)(1), inserted "as of
the close of the 1st taxable year of the credit period" before
period at end.
Subsec. (d)(2)(A). Pub. L. 101-239, Sec. 7108(l)(2), substituted
"subparagraph (B), its adjusted basis as of the close of the 1st
taxable year of the credit period, and" for "subparagraph (B), the
sum of -
"(I) the portion of its adjusted basis attributable to its
acquisition cost, plus
"(II) amounts chargeable to capital account and incurred by the
taxpayer (before the close of the 1st taxable year of the credit
period for such building) for property (or additions or
improvements to property) of a character subject to the allowance
for depreciation, and".
Subsec. (d)(2)(B)(iv). Pub. L. 101-239, Sec. 7108(d)(1), added
cl. (iv).
Subsec. (d)(2)(C). Pub. L. 101-239, Sec. 7108(l)(3)(A),
substituted "Adjusted basis" for "Acquisition cost" in heading and
"adjusted basis" for "cost" in text.
Subsec. (d)(5). Pub. L. 101-239, Sec. 7108(l)(3)(B), substituted
"Special rules for determining eligible basis" for "Eligible basis
determined when building placed in service" in heading.
Subsec. (d)(5)(A). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (B) as (A) and struck out former subpar. (A)
which read as follows: "Except as provided in subparagraphs (B) and
(C), the eligible basis of any building for the entire compliance
period for such building shall be its eligible basis on the date
such building is placed in service (increased, in the case of an
existing building which meets the requirements of paragraph (2)(B),
by the amounts described in paragraph (2)(A)(i)(II))."
Subsec. (d)(5)(B). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (C) as (B). Former subpar. (B) redesignated
(A).
Subsec. (d)(5)(C). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (D) as (C). Former subpar. (C) redesignated
(B).
Pub. L. 101-239, Sec. 7811(a)(1), inserted "section" before
"167(k)" in heading.
Subsec. (d)(5)(D). Pub. L. 101-239, Sec. 7108(l)(3)(B),
redesignated subpar. (D) as (C).
Pub. L. 101-239, Sec. 7108(g), added subpar. (D).
Subsec. (d)(6)(A)(i). Pub. L. 101-239, Sec. 7841(d)(13),
substituted "Farmers Home Administration" for "Farmers' Home
Administration".
Subsec. (d)(6)(C) to (E). Pub. L. 101-239, Sec. 7108(f), added
subpars. (C) and (D) and redesignated former subpar. (C) as (E).
Subsec. (d)(7)(A). Pub. L. 101-239, Sec. 7831(c)(6), inserted
"(or interest therein)" after "subparagraph (B)" in introductory
provisions.
Subsec. (d)(7)(A)(ii). Pub. L. 101-239, Sec. 7841(d)(14),
substituted "under subsection (a)" for "under sebsection (a)".
Subsec. (e)(2)(A). Pub. L. 101-239, Sec. 7841(d)(15), substituted
"to capital account" for "to captial account".
Subsec. (e)(3). Pub. L. 101-239, Sec. 7108(d)(3), substituted
"Minimum expenditures to qualify" for "Average of rehabilitation
expenditures must be $2,000 or more" in heading, added subpars. (A)
and (B), redesignated former subpar. (B) as (C), and struck out
former subpar. (A) which read as follows: "Paragraph (1) shall
apply to rehabilitation expenditures with respect to any building
only if the qualified basis attributable to such expenditures
incurred during any 24-month period, when divided by the low-income
units in the building, is $2,000 or more."
Subsec. (e)(5). Pub. L. 101-239, Sec. 7108(l)(3)(C), substituted
"subsection (d)(2)(A)(i)" for "subsection (d)(2)(A)(i)(II)".
Subsec. (f)(4). Pub. L. 101-239, Sec. 7831(c)(4), added par. (4).
Subsec. (f)(5). Pub. L. 101-239, Sec. 7108(d)(2), added par. (5).
Subsec. (g)(2)(A). Pub. L. 101-239, Sec. 7108(e)(2), inserted at
end "For purposes of the preceding sentence, the amount of the
income limitation under paragraph (1) applicable for any period
shall not be less than such limitation applicable for the earliest
period the building (which contains the unit) was included in the
determination of whether the project is a qualified low-income
housing project."
Pub. L. 101-239, Sec. 7108(e)(1)(B), substituted "the imputed
income limitation applicable to such unit" for "the income
limitation under paragraph (1) applicable to individuals occupying
such unit".
Subsec. (g)(2)(B). Pub. L. 101-239, Sec. 7108(h)(2), added cl.
(iii) and concluding provisions which defined "supportive service".
Subsec. (g)(2)(C) to (E). Pub. L. 101-239, Sec. 7108(e)(1)(A),
added subpars. (C) and (D) and redesignated former subpar. (C) as
(E).
Subsec. (g)(3)(D). Pub. L. 101-239, Sec. 7108(m)(3), added
subpar. (D).
Subsec. (g)(4). Pub. L. 101-239, Sec. 7108(n)(2), struck out
"(other than section 142(d)(4)(B)(iii))" after "in applying such
provisions".
Subsec. (g)(7). Pub. L. 101-239, Sec. 7108(h)(3), added par. (7).
Subsec. (h)(1)(B). Pub. L. 101-239, Sec. 7108(m)(2), substituted
"(E), or (F)" for "or (E)".
Subsec. (h)(1)(F). Pub. L. 101-239, Sec. 7108(m)(1), added
subpar. (F).
Subsec. (h)(3)(C) to (G). Pub. L. 101-239, Sec. 7108(b)(1), added
subpars. (C) and (D), redesignated former subpars. (D) to (F) as
(E) to (G), respectively, and struck out former subpar. (C) which
read as follows: "The State housing credit ceiling applicable to
any State for any calendar year shall be an amount equal to $1.25
multiplied by the State population."
Subsec. (h)(4)(B). Pub. L. 101-239, Sec. 7108(j), substituted "50
percent" for "70 percent" in heading and in text.
Subsec. (h)(5)(D)(ii). Pub. L. 101-239, Sec. 7811(a)(2),
substituted "clause (i)" for "clause (ii)".
Subsec. (h)(5)(E). Pub. L. 101-239, Sec. 7108(b)(2)(A),
substituted "subparagraph (F)" for "subparagraph (E)".
Subsec. (h)(6). Pub. L. 101-239, Sec. 7108(c)(1), added par. (6).
Former par. (6) redesignated (7).
Subsec. (h)(6)(B) to (E). Pub. L. 101-239, Sec. 7108(b)(2)(B),
redesignated subpars. (C) to (E) as (B) to (D), respectively, and
struck out former subpar. (B) which provided that the housing
credit dollar amount could not be carried over to any other
calendar year.
Subsec. (h)(7), (8). Pub. L. 101-239, Sec. 7108(c)(1),
redesignated pars. (6) and (7) as (7) and (8), respectively.
Subsec. (i)(2)(D). Pub. L. 101-239, Sec. 7108(k), inserted at end
"Such term shall not include any loan which would be a below market
Federal loan solely by reason of assistance provided under section
106, 107, or 108 of the Housing and Community Development Act of
1974 (as in effect on the date of the enactment of this sentence)."
Subsec. (i)(3)(B). Pub. L. 101-239, Sec. 7108(i)(1), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: "A unit shall not be treated as a low-income unit unless
the unit is suitable for occupancy (as determined under regulations
prescribed by the Secretary taking into account local health,
safety, and building codes) and used other than on a transient
basis. For purposes of the preceding sentence, a single-room
occupancy unit shall not be treated as used on a transient basis
merely because it is rented on a month-by-month basis."
Pub. L. 101-239, Sec. 7831(c)(1), inserted "(as determined under
regulations prescribed by the Secretary taking into account local
health, safety, and building codes)" after "suitable for
occupancy".
Pub. L. 101-239, Sec. 7108(h)(1), inserted at end "For purposes
of the preceding sentence, a single-room occupancy unit shall not
be treated as used on a transient basis merely because it is rented
on a month-by-month basis."
Subsec. (i)(3)(D). Pub. L. 101-239, Sec. 7831(c)(2), added
subpar. (D).
Subsec. (i)(3)(E). Pub. L. 101-239, Sec. 7108(h)(4), added
subpar. (E).
Subsec. (i)(6). Pub. L. 101-239, Sec. 7831(c)(3), added par. (6).
Subsec. (i)(8). Pub. L. 101-239, Sec. 7108(q), added par. (8).
Subsec. (k)(2)(D). Pub. L. 101-239, Sec. 7108(o), added provision
at end relating to the applicability of cl. (ii) to qualified
nonprofit organizations not described in section
46(c)(8)(D)(iv)(II) with respect to a building.
Subsec. (l)(1). Pub. L. 101-239, Sec. 7108(p), in introductory
provisions, substituted "Following" for "Not later than the 90th
day following" and inserted "at such time and" before "in such
form".
Subsec. (m). Pub. L. 101-239, Sec. 7108(o), added subsec. (m).
Former subsec. (m) redesignated (n).
Subsec. (m)(4). Pub. L. 101-239, Sec. 7831(c)(5), added par. (4).
Subsec. (n). Pub. L. 101-239, Sec. 7108(o), redesignated subsec.
(m) as (n). Former subsec. (n) redesignated (o).
Pub. L. 101-239, Sec. 7108(a)(1), amended subsec. (n) generally.
Prior to amendment, subsec. (n) read as follows: "The State housing
credit ceiling under subsection (h) shall be zero for any calendar
year after 1989 and subsection (h)(4) shall not apply to any
building placed in service after 1989."
Subsec. (o). Pub. L. 101-239, Sec. 7108(o), redesignated subsec.
(n) as (o).
1988 - Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 1002(l)(1)(A),
substituted "for the earlier of - " for "for the month in which
such building is placed in service" and added cls. (i) and (ii) and
concluding provisions.
Subsec. (b)(2)(C)(ii). Pub. L. 100-647, Sec. 1002(l)(1)(B),
substituted "the month applicable under clause (i) or (ii) of
subparagraph (A)" for "the month in which the building was placed
in service".
Subsec. (b)(3). Pub. L. 100-647, Sec. 1002(l)(9)(B), amended par.
(3) generally. Prior to amendment, par. (3) read as follows: "For
treatment of certain rehabilitation expenditures as separate new
buildings, see subsection (e)."
Subsec. (c)(2)(A). Pub. L. 100-647, Sec. 1002(l)(2)(A), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: "which at all times during the compliance period with
respect to such building is part of a qualified low-income housing
project, and".
Subsec. (d)(2)(D)(ii). Pub. L. 100-647, Sec. 1002(l)(3),
substituted "Special rules for certain transfers" for "Special rule
for nontaxable exchanges" in heading and amended text generally.
Prior to amendment, text read as follows: "For purposes of
determining under subparagraph (B)(ii) when a building was last
placed in service, there shall not be taken into account any
placement in service in connection with the acquisition of the
building in a transaction in which the basis of the building in the
hands of the person acquiring it is determined in whole or in part
by reference to the adjusted basis of such building in the hands of
the person from whom aquired [sic]."
Subsec. (d)(3). Pub. L. 100-647, Sec. 1002(l)(4), amended par.
(3) generally. Prior to amendment, par. (3) read as follows: "The
eligible basis of any building shall be reduced by an amount equal
to the portion of the adjusted basis of the building which is
attributable to residential rental units in the building which are
not low-income units and which are above the average quality
standard of the low-income units in the building."
Subsec. (d)(5)(A). Pub. L. 100-647, Sec. 1002(l)(6)(B),
substituted "subparagraphs (B) and (C)" for "subparagraph (B)".
Pub. L. 100-647, Sec. 1002(l)(5), inserted "(increased, in the
case of an existing building which meets the requirements of
paragraph (2)(B), by the amounts described in paragraph
(2)(A)(i)(II))" before period at end.
Subsec. (d)(5)(C). Pub. L. 100-647, Sec. 1002(l)(6)(A), added
subpar. (C).
Subsec. (d)(6)(A)(iii). Pub. L. 100-647, Sec. 1002(l)(7), struck
out cl. (iii) which related to other circumstances of financial
distress.
Subsec. (d)(6)(B)(ii). Pub. L. 100-647, Sec. 1002(l)(8), struck
out "of 1934" after "Act".
Subsec. (f)(1). Pub. L. 100-647, Sec. 1002(l)(2)(B), substituted
"beginning with - " for "beginning with" and subpars. (A) and (B)
and concluding provisions for "the taxable year in which the
building is placed in service or, at the election of the taxpayer,
the succeeding taxable year. Such an election, once made, shall be
irrevocable."
Subsec. (f)(3). Pub. L. 100-647, Sec. 1002(l)(9)(A), amended par.
(3) generally. Prior to amendment, par. (3) "Special rule where
increase in qualified basis after 1st year of credit period" read
as follows:
"(A) Credit increased. - If -
"(i) as of the close of any taxable year in the compliance
period (after the 1st year of the credit period) the qualified
basis of any building exceeds
"(ii) the qualified basis of such building as of the close of
the 1st year of the credit period,
the credit allowable under subsection (a) for the taxable year
(determined without regard to this paragraph) shall be increased by
an amount equal to the product of such excess and the percentage
equal to 2/3 of the applicable percentage for such building.
"(B) 1st year computation applies. - A rule similar to the rule
of paragraph (2)(A) shall apply to the additional credit allowable
by reason of this paragraph for the 1st year in which such
additional credit is allowable."
Subsec. (g)(2)(B)(i). Pub. L. 100-647, Sec. 1002(l)(10), struck
out "Federal" after "comparable".
Subsec. (g)(2)(C). Pub. L. 100-647, Sec. 1002(l)(11), added
subpar. (C).
Subsec. (g)(3). Pub. L. 100-647, Sec. 1002(l)(12), amended par.
(3) generally, substituting subpars. (A) to (C) for former subpars.
(A) and (B).
Subsec. (g)(4). Pub. L. 100-647, Sec. 1002(l)(13), inserted ";
except that, in applying such provisions (other than section
142(d)(4)(B)(iii)) for such purposes, the term 'gross rent' shall
have the meaning given such term by paragraph (2)(B) of this
subsection" before period at end.
Subsec. (g)(6). Pub. L. 100-647, Sec. 1002(l)(32), added par.
(6).
Subsec. (h)(1). Pub. L. 100-647, Sec. 1002(l)(14)(A), amended
par. (1) generally. Prior to amendment, par. (1) read as follows:
"No credit shall be allowed by reason of this section for any
taxable year with respect to any building in excess of the housing
credit dollar amount allocated to such building under this
subsection. An allocation shall be taken into account under the
preceding sentence only if it occurs not later than the earlier of
-
"(A) the 60th day after the close of the taxable year, or
"(B) the close of the calendar year in which such taxable year
ends."
Subsec. (h)(1)(B). Pub. L. 100-647, Sec. 4003(b)(1), substituted
"(C), (D), or (E)" for "(C) or (D)".
Subsec. (h)(1)(E). Pub. L. 100-647, Sec. 4003(a), added subpar.
(E).
Subsec. (h)(4)(A). Pub. L. 100-647, Sec. 1002(l)(15), substituted
"if - " for "and which is taken into account under section 146" and
added cls. (i) and (ii).
Subsec. (h)(5)(D), (E). Pub. L. 100-647, Sec. 1002(l)(16), added
subpar. (D) and redesignated former subpar. (D) as (E).
Subsec. (h)(6)(B)(ii). Pub. L. 100-647, Sec. 1002(l)(14)(B),
struck out cl. (ii) which read as follows:
"(ii) Allocation may not be earlier than year in which building
placed in service. - A housing credit agency may allocate its
housing credit dollar amount for any calendar year only to
buildings placed in service before the close of such calendar
year."
Subsec. (h)(6)(D). Pub. L. 100-647, Sec. 1002(l)(17), amended
subpar. (D) generally. Prior to amendment, subpar. (D) "Credit
allowable determined without regard to averaging convention, etc."
read as follows: "For purposes of this subsection, the credit
allowable under subsection (a) with respect to any building shall
be determined -
"(i) without regard to paragraphs (2)(A) and (3)(B) of
subsection (f), and
"(ii) by applying subsection (f)(3)(A) without regard to 'the
percentage equal to 2/3 of'."
Subsec. (h)(6)(E). Pub. L. 100-647, Sec. 1002(l)(18), added
subpar. (E).
Subsec. (i)(2)(A). Pub. L. 100-647, Sec. 1002(l)(19)(A), inserted
"or any prior taxable year" after "such taxable year" and
substituted "is or was outstanding" for "is outstanding" and "are
or were used" for "are used".
Subsec. (i)(2)(B). Pub. L. 100-647, Sec. 1002(l)(19)(B),
substituted "balance of loan or proceeds of obligations" for
"outstanding balance of loan" in heading and amended text
generally. Prior to amendment, text read as follows: "A loan shall
not be taken into account under subparagraph (A) if the taxpayer
elects to exclude an amount equal to the outstanding balance of
such loan from the eligible basis of the building for purposes of
subsection (d)."
Subsec. (i)(2)(C). Pub. L. 100-647, Sec. 1002(l)(19)(C), added
subpar. (C). Former subpar. (C) redesignated (D).
Subsec. (i)(2)(D). Pub. L. 100-647, Sec. 1002(l)(19)(C), (D),
redesignated former subpar. (C) as (D) and substituted "this
paragraph" for "subparagraph (A)".
Subsec. (j)(4)(D). Pub. L. 100-647, Sec. 1007(g)(3)(B),
substituted "D, or G" for "or D".
Subsec. (j)(4)(F). Pub. L. 100-647, Sec. 1002(l)(20), added
subpar. (F).
Subsec. (j)(5)(B). Pub. L. 100-647, Sec. 4004(a), amended subpar.
(B) generally. Prior to amendment, subpar. (B) read as follows:
"This paragraph shall apply to any partnership -
"(i) more than 1/2 the capital interests, and more than 1/2
the profit interests, in which are owned by a group of 35 or more
partners each of whom is a natural person or an estate, and
"(ii) which elects the application of this paragraph."
Subsec. (j)(5)(B)(i). Pub. L. 100-647, Sec. 1002(l)(21), amended
cl. (i) generally. Prior to amendment, cl. (i) read as follows:
"which has 35 or more partners each of whom is a natural person or
an estate, and".
Subsec. (j)(6). Pub. L. 100-647, Sec. 1002(l)(22), inserted "(or
interest therein)" after "disposition of building" in heading, and
in text inserted "or an interest therein" after "of a building".
Subsec. (k)(2)(B). Pub. L. 100-647, Sec. 1002(l)(23), inserted
before period at end ", except that this subparagraph shall not
apply in the case of a federally assisted building described in
subsection (d)(6)(B) if - " and cls. (i) and (ii).
Subsec. (l). Pub. L. 100-647, Sec. 1002(l)(24)(B), substituted
"Certifications and other reports to Secretary" for "Certifications
to Secretary" in heading.
Subsec. (l)(2), (3). Pub. L. 100-647, Sec. 1002(l)(24)(A), added
par. (2) and redesignated former par. (2) as (3).
Subsec. (n). Pub. L. 100-647, Sec. 4003(b)(3), amended subsec.
(n) generally, substituting a single par. for former pars. (1) and
(2).
Subsec. (n)(1). Pub. L. 100-647, Sec. 1002(l)(25), inserted ",
and, except for any building described in paragraph (2)(B),
subsection (h)(4) shall not apply to any building placed in service
after 1989" after "year after 1989".
1986 - Subsec. (k)(1). Pub. L. 99-509 substituted "subparagraphs
(D)(ii)(II) and (D)(iv)(I)" for "subparagraph (D)(iv)(I)".
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title I, subtitle D, Sec. 131(d)],
Dec. 21, 2000, 114 Stat. 2763, 2763A-611, provided that: "The
amendments made by this section [amending this section] shall apply
to calendar years after 2000."
Pub. L. 106-554, Sec. 1(a)(7) [title I, subtitle D, Sec. 137],
Dec. 21, 2000, 114 Stat. 2763, 2763A-613, provided that: "Except as
otherwise provided in this subtitle [amending this section and
enacting provisions set out above], the amendments made by this
subtitle shall apply to -
"(1) housing credit dollar amounts allocated after December 31,
2000; and
"(2) buildings placed in service after such date to the extent
paragraph (1) of section 42(h) of the Internal Revenue Code of
1986 does not apply to any building by reason of paragraph (4)
thereof, but only with respect to bonds issued after such date."
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13142(a)(2) of Pub. L. 103-66 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to periods ending after June 30, 1992."
Section 13142(b)(6) of Pub. L. 103-66, as amended by Pub. L.
104-188, title I, Sec. 1703(b), Aug. 20, 1996, 110 Stat. 1875,
provided that:
"(A) In general. - Except as provided in subparagraphs (B) and
(C), the amendments made by this subsection [amending this section]
shall apply to -
"(i) determinations under section 42 of the Internal Revenue
Code of 1986 with respect to housing credit dollar amounts
allocated from State housing credit ceilings after June 30, 1992,
or
"(ii) buildings placed in service after June 30, 1992, to the
extent paragraph (1) of section 42(h) of such Code does not apply
to any building by reason of paragraph (4) thereof, but only with
respect to bonds issued after such date.
"(B) Full-time students, waiver authority, and prohibited
discrimination. - The amendments made by paragraphs (2), (3), and
(4) [amending this section] shall take effect on the date of the
enactment of this Act [Aug. 10, 1993].
"(C) HOME assistance. - The amendment made by paragraph (5)
[amending this section] shall apply to periods after the date of
the enactment of this Act."
EFFECTIVE DATE OF 1991 AMENDMENT
Section 107(b) of Pub. L. 102-227 provided that: "The amendments
made by this section [amending this section] shall apply to
calendar years after 1991."
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11407(a)(3) of Pub. L. 101-508 provided that: "The
amendments made by this subsection [amending this section and
repealing provisions set out below] shall apply to calendar years
after 1989."
Section 11407(b)(10) of Pub. L. 101-508 provided that:
"(A) In general. - Except as otherwise provided in this
paragraph, the amendments made by this subsection [amending this
section] shall apply to -
"(i) determinations under section 42 of the Internal Revenue
Code of 1986 with respect to housing credit dollar amounts
allocated from State housing credit ceilings for calendar years
after 1990, or
"(ii) buildings placed in service after December 31, 1990, to
the extent paragraph (1) of section 42(h) of such Code does not
apply to any building by reason of paragraph (4) thereof, but
only with respect to bonds issued after such date.
"(B) Tenant rights, etc. - The amendments made by paragraphs (1),
(6), (8), and (9) [amending this section] shall take effect on the
date of the enactment of this Act [Nov. 5, 1990].
"(C) Monitoring. - The amendment made by paragraph (2) [amending
this section] shall take effect on January 1, 1992, and shall apply
to buildings placed in service before, on, or after such date.
"(D) Study. - The Inspector General of the Department of Housing
and Urban Development and the Secretary of the Treasury shall
jointly conduct a study of the effectiveness of the amendment made
by paragraph (5) [amending this section] in carrying out the
purposes of section 42 of the Internal Revenue Code of 1986. The
report of such study shall be submitted not later than January 1,
1993, to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate."
Section 11701(a)(3)(B) of Pub. L. 101-508 provided that: "In the
case of a building to which (but for this subparagraph) the
amendment made by subparagraph (A) [amending this section] does not
apply, such amendment shall apply to -
"(i) determinations of qualified basis for taxable years
beginning after the date of the enactment of this Act [Nov. 5,
1990], and
"(ii) determinations of qualified basis for taxable years
beginning on or before such date except that determinations for
such taxable years shall be made without regard to any reduction
in gross rent after August 3, 1990, for any period before August
4, 1990."
Section 11701(n) of Pub. L. 101-508 provided that: "Except as
otherwise provided in this section, any amendment made by this
section [amending this section and sections 148, 163, 172, 403,
1031, 1253, 2056, 4682, 4975, 4978B and 6038 of this title, and
provisions set out as notes under this section and section 2040 of
this title] shall take effect as if included in the provision of
the Revenue Reconciliation Act of 1989 [Pub. L. 101-239, title VII]
to which such amendment relates."
Section 11812(c) of Pub. L. 101-508 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
56, 167, 168, 312, 381, 404, 460, 642, 1016, 1250, and 7701 of this
title] shall apply to property placed in service after the date of
the enactment of this Act [Nov. 5, 1990].
"(2) Exception. - The amendments made by this section shall not
apply to any property to which section 168 of the Internal Revenue
Code of 1986 does not apply by reason of subsection (f)(5) thereof.
"(3) Exception for previously grandfather expenditures. - The
amendments made by this section shall not apply to rehabilitation
expenditures described in section 252(f)(5) of the Tax Reform Act
of 1986 [Pub. L. 99-514] (as added by section 1002(l)(31) of the
Technical and Miscellaneous Revenue Act of 1988 [see Transitional
Rules note below])."
Amendment by section 11813(b)(3) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7108(r) of Pub. L. 101-239, as amended by Pub. L.
101-508, title XI, Sec. 11701(a)(11), (12), Nov. 5, 1990, 104 Stat.
1388-507; Pub. L. 104-188, title I, Sec. 1702(g)(5)(A), Aug. 20,
1996, 110 Stat. 1873, provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and section 142 of this title] shall apply to
determinations under section 42 of the Internal Revenue Code of
1986 with respect to housing credit dollar amounts allocated from
State housing credit ceilings for calendar years after 1989.
"(2) Buildings not subject to allocation limits. - Except as
otherwise provided in this subsection, to the extent paragraph (1)
of section 42(h) of such Code does not apply to any building by
reason of paragraph (4) thereof, the amendments made by this
section shall apply to buildings placed in service after December
31, 1989.
"(3) One-year carryover of unused credit authority, etc. - The
amendments made by subsection (b) [amending this section] shall
apply to calendar years after 1989, but clauses (ii), (iii), and
(iv) of section 42(h)(3)(C) of such Code (as added by this section)
shall be applied without regard to allocations for 1989 or any
preceding year.
"(4) Additional buildings eligible for waiver of 10-year rule. -
The amendments made by subsection (f) [amending this section] shall
take effect on the date of the enactment of this Act [Dec. 19,
1989].
"(5) Certifications with respect to 1st year of credit period. -
The amendment made by subsection (p) [amending this section] shall
apply to taxable years ending on or after December 31, 1989.
"(6) Certain rules which apply to bonds. - Paragraphs (1)(D) and
(2)(D) of section 42(m) of such Code, as added by this section,
shall apply to obligations issued after December 31, 1989.
"(7) Clarifications. - The amendments made by the following
provisions of this section shall apply as if included in the
amendments made by section 252 of the Tax Reform Act of 1986 [Pub.
L. 99-514, enacting this section and amending sections 38 and 55 of
this title]:
"(A) Paragraph (1) of subsection (h) (relating to units rented
on a monthly basis) [amending this section].
"(B) Subsection (l) (relating to eligible basis for new
buildings to include expenditures before close of 1st year of
credit period) [amending this section].
"(8) Guidance on difficult development areas and posting of bond
to avoid recapture. - Not later than 180 days after the date of the
enactment of this Act [Dec. 19, 1989] -
"(A) the Secretary of Housing and Urban Development shall
publish initial guidance on the designation of difficult
development areas under section 42(d)(5)(C) of such Code, as
added by this section, and
"(B) the Secretary of the Treasury shall publish initial
guidance under section 42(j)(6) of such Code (relating to no
recapture on disposition of building (or interest therein) where
bond posted)."
[Pub. L. 104-188, title I, Sec. 1702(g)(5), Aug. 20, 1996, 110
Stat. 1873, provided that:
["(A) Paragraph (11) of section 11701(a) of the Revenue
Reconciliation Act of 1990 (and the amendment made by such
paragraph) [Pub. L. 101-508, which amended section 7108(r)(2) of
Pub. L. 101-239, set out above, by inserting "but only with respect
to bonds issued after such date" before the period at the end of
such section 7108(r)(2)] are hereby repealed, and section
7108(r)(2) of the Revenue Reconciliation Act of 1989 [Pub. L.
101-239] shall be applied as if such paragraph (and amendment) had
never been enacted.
["(B) Subparagraph (A) shall not apply to any building if the
owner of such building establishes to the satisfaction of the
Secretary of the Treasury or his delegate that such owner
reasonably relied on the amendment made by such paragraph (11)."]
Amendment by section 7811(a) of Pub. L. 101-239 effective, except
as otherwise provided, as if included in the provision of the
Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647,
to which such amendment relates, see section 7817 of Pub. L.
101-239, set out as a note under section 1 of this title.
Amendment by section 7831(c) of Pub. L. 101-239 effective as if
included in the provision of the Tax Reform Act of 1986, Pub. L.
99-514, to which such amendment relates, see section 7831(g) of
Pub. L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by sections 1002(l)(1)-(25), (32) and 1007(g)(3)(B) of
Pub. L. 100-647 effective, except as otherwise provided, as if
included in the provision of the Tax Reform Act of 1986, Pub. L.
99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 4003(c) of Pub. L. 100-647 provided that: "The amendments
made by this section [amending this section and provisions set out
as a note under section 469 of this title] shall apply to amounts
allocated in calendar years after 1987."
Section 4004(b) of Pub. L. 100-647 provided that:
"(1) In general. - The amendment made by subsection (a) [amending
this section] shall take effect as if included in the amendments
made by section 252 of the Reform Act [section 252 of Pub. L.
99-514, enacting this section and amending sections 38 and 55 of
this title].
"(2) Period for election. - The period for electing not to have
section 42(j)(5) of the 1986 Code apply to any partnership shall
not expire before the date which is 6 months after the date of the
enactment of this Act [Nov. 10, 1988]."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 8072(b) of Pub. L. 99-509 provided that: "The amendment
made by subsection (a) [amending this section] shall take effect as
if included in the amendment made by section 252(a) of the Tax
Reform Act of 1986 [enacting this section]."
EFFECTIVE DATE
Section 252(e) of Pub. L. 99-514 provided that:
"(1) In general. - The amendments made by this section [enacting
this section and amending sections 38 and 55 of this title] shall
apply to buildings placed in service after December 31, 1986, in
taxable years ending after such date.
"(2) Special rule for rehabilitation expenditures. - Subsection
(e) of section 42 of the Internal Revenue Code of 1986 (as added by
this section) shall apply for purposes of paragraph (1)."
SAVINGS PROVISION
For provisions that nothing in amendment by sections 11812(b)(3)
and 11813(b)(3) of Pub. L. 101-508 be construed to affect treatment
of certain transactions occurring, property acquired, or items of
income, loss, deduction, or credit taken into account prior to Nov.
5, 1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
ELECTION TO DETERMINE RENT LIMITATION BASED ON NUMBER OF BEDROOMS
AND DEEP RENT SKEWING
Section 13142(c) of Pub. L. 103-66 provided that:
"(1) In the case of a building to which the amendments made by
subsection (e)(1) or (n)(2) of section 7108 of the Revenue
Reconciliation Act of 1989 [Pub. L. 101-239, amending this section]
did not apply, the taxpayer may elect to have such amendments apply
to such building if the taxpayer has met the requirements of the
procedures described in section 42(m)(1)(B)(iii) of the Internal
Revenue Code of 1986.
"(2) In the case of the amendment made by such subsection (e)(1),
such election shall apply only with respect to tenants first
occupying any unit in the building after the date of the election.
"(3) In the case of the amendment made by such subsection (n)(2),
such election shall apply only if rents of low-income tenants in
such building do not increase as a result of such election.
"(4) An election under this subsection may be made only during
the 180-day period beginning on the date of the enactment of this
Act [Aug. 10, 1993] and, once made, shall be irrevocable."
ELECTION TO ACCELERATE CREDIT INTO 1990
Section 11407(c) of Pub. L. 101-508 provided that:
"(1) In general. - At the election of an individual, the credit
determined under section 42 of the Internal Revenue Code of 1986
for the taxpayer's first taxable year ending on or after October
25, 1990, shall be 150 percent of the amount which would (but for
this paragraph) be so allowable with respect to investments held by
such individual on or before October 25, 1990.
"(2) Reduction in aggregate credit to reflect increased 1990
credit. - The aggregate credit allowable to any person under
section 42 of such Code with respect to any investment for taxable
years after the first taxable year referred to in paragraph (1)
shall be reduced on a pro rata basis by the amount of the increased
credit allowable by reason of paragraph (1) with respect to such
first taxable year. The preceding sentence shall not be construed
to affect whether any taxable year is part of the credit,
compliance, or extended use periods.
"(3) Election. - The election under paragraph (1) shall be made
at the time and in the manner prescribed by the Secretary of the
Treasury or his delegate, and, once made, shall be irrevocable. In
the case of a partnership, such election shall be made by the
partnership."
EXCEPTION TO TIME PERIOD FOR MEETING PROJECT REQUIREMENTS IN ORDER
TO QUALIFY AS LOW-INCOME HOUSING
Section 11701(a)(5)(B) of Pub. L. 101-508 provided that: "In the
case of a building to which the amendment made by subparagraph (A)
[amending this section] does not apply, the period specified in
section 42(g)(3)(A) of the Internal Revenue Code of 1986 (as in
effect before the amendment made by subparagraph (A)) shall not
expire before the close of the taxable year following the taxable
year in which the building is placed in service."
STATE HOUSING CREDIT CEILING FOR CALENDAR YEAR 1990
Section 7108(a)(2) of Pub. L. 101-239 provided that in the case
of calendar year 1990, section 42(h)(3)(C)(i) of the Internal
Revenue Code of 1986 be applied by substituting "$.9375" for
"$1.25", prior to repeal by Pub. L. 101-508, title XI, Sec.
11407(a)(2), (3), Nov. 5, 1990, 104 Stat. 1388-474, applicable to
calendar years after 1989.
TRANSITIONAL RULES
Section 252(f) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1002(l)(28)-(31), Nov. 10, 1988, 102 Stat. 3381,
provided that:
"(1) Limitation to non-acrs buildings not to apply to certain
buildings, etc. -
"(A) In general. - In the case of a building which is part of a
project described in subparagraph (B) -
"(i) section 42(c)(2)(B) of the Internal Revenue Code of 1986
(as added by this section) shall not apply,
"(ii) such building shall be treated as not federally
subsidized for purposes of section 42(b)(1)(A) of such Code,
"(iii) the eligible basis of such building shall be treated,
for purposes of section 42(h)(4)(A) of such Code, as if it were
financed by an obligation the interest on which is exempt from
tax under section 103 of such Code and which is taken into
account under section 146 of such Code, and
"(iv) the amendments made by section 803 [enacting section
263A of this title, amending sections 48, 267, 312, 447, 464,
and 471 of this title, and repealing sections 189, 278, and 280
of this title] shall not apply.
"(B) Project described. - A project is described in this
subparagraph if -
"(i) an urban development action grant application with
respect to such project was submitted on September 13, 1984,
"(ii) a zoning commission map amendment related to such
project was granted on July 17, 1985, and
"(iii) the number assigned to such project by the Federal
Housing Administration is 023-36602.
"(C) Additional units eligible for credit. - In the case of a
building to which subparagraph (A) applies and which is part of a
project which meets the requirements of subparagraph (D), for
each low-income unit in such building which is occupied by
individuals whose income is 30 percent or less of area median
gross income, one additional unit (not otherwise a low-income
unit) in such building shall be treated as a low-income unit for
purposes of such section 42.
"(D) Project described. - A project is described in this
subparagraph if -
"(i) rents charged for units in such project are restricted
by State regulations,
"(ii) the annual cash flow of such project is restricted by
State law,
"(iii) the project is located on land owned by or ground
leased from a public housing authority,
"(iv) construction of such project begins on or before
December 31, 1986, and units within such project are placed in
service on or before June 1, 1990, and
"(v) for a 20-year period, 20 percent or more of the
residential units in such project are occupied by individuals
whose income is 50 percent or less of area median gross income.
"(E) Maximum additional credit. - The maximum present value of
additional credits allowable under section 42 of such Code by
reason of subparagraph (C) shall not exceed 25 percent of the
eligible basis of the building.
"(2) Additional allocation of housing credit ceiling. -
"(A) In general. - There is hereby allocated to each housing
credit agency described in subparagraph (B) an additional housing
credit dollar amount determined in accordance with the following
table:
The additional
"For calendar year: allocation is:
1987 $3,900,000
1988 $7,600,000
1989 $1,300,000.
--------------------------------------------------------------------
"(B) Housing credit agencies described. - The housing credit
agencies described in this subparagraph are:
"(i) A corporate governmental agency constituted as a public
benefit corporation and established in 1971 under the
provisions of Article XII of the Private Housing Finance Law of
the State.
"(ii) A city department established on December 20, 1979,
pursuant to chapter XVIII of a municipal code of such city for
the purpose of supervising and coordinating the formation and
execution of projects and programs affecting housing within
such city.
"(iii) The State housing finance agency referred to in
subparagraph (C), but only with respect to projects described
in subparagraph (C).
"(C) Project described. - A project is described in this
subparagraph if such project is a qualified low-income housing
project which -
"(i) receives financing from a State housing finance agency
from the proceeds of bonds issued pursuant to chapter 708 of
the Acts of 1966 of such State pursuant to loan commitments
from such agency made between May 8, 1984, and July 8, 1986,
and
"(ii) is subject to subsidy commitments issued pursuant to a
program established under chapter 574 of the Acts of 1983 of
such State having award dates from such agency between May 31,
1984, and June 11, 1985.
"(D) Special rules. -
"(i) Any building -
"(I) which is allocated any housing credit dollar amount by
a housing credit agency described in clause (iii) of
subparagraph (B), and
"(II) which is placed in service after June 30, 1986, and
before January 1, 1987,
shall be treated for purposes of the amendments made by this
section as placed in service on January 1, 1987.
"(ii) Section 42(c)(2)(B) of the Internal Revenue Code of
1986 shall not apply to any building which is allocated any
housing credit dollar amount by any agency described in
subparagraph (B).
"(E) All units treated as low income units in certain cases. -
In the case of any building -
"(i) which is allocated any housing credit dollar amount by
any agency described in subparagraph (B), and
"(ii) which after the application of subparagraph (D)(ii) is
a qualified low-income building at all times during any taxable
year,
such building shall be treated as described in section
42(b)(1)(B) of such Code and having an applicable fraction for
such year of 1. The preceding sentence shall apply to any
building only to the extent of the portion of the additional
housing credit dollar amount (allocated to such agency under
subparagraph (A)) allocated to such building.
"(3) Certain projects placed in service before 1987. -
"(A) In general. - In the case of a building which is part of a
project described in subparagraph (B) -
"(i) section 42(c)(2)(B) of such Code shall not apply,
"(ii) such building shall be treated as placed in service
during the first calendar year after 1986 and before 1990 in
which such building is a qualified low-income building
(determined after the application of clause (i)), and
"(iii) for purposes of section 42(h) of such Code, such
building shall be treated as having allocated to it a housing
credit dollar amount equal to the dollar amount appearing in
the clause of subparagraph (B) in which such building is
described.
"(B) Project described. - A project is described in this
subparagraph if the code number assigned to such project by the
Farmers' Home Administration appears in the following table:
The housing credit
"The code number is: dollar amount is:
(i) 49284553664 $16,000
(ii) 4927742022446 $22,000
(iii) 49270742276087 $64,000
(iv) 490270742387293 $48,000
(v) 4927074218234 $32,000
(vi) 49270742274019 $36,000
(vii) 51460742345074 $53,000.
--------------------------------------------------------------------
"(C) Determination of adjusted basis. - The adjusted basis of
any building to which this paragraph applies for purposes of
section 42 of such Code shall be its adjusted basis as of the
close of the taxable year ending before the first taxable year of
the credit period for such building.
"(D) Certain rules to apply. - Rules similar to the rules of
subparagraph (E) of paragraph (2) shall apply for purposes of
this paragraph.
"(4) Definitions. - For purposes of this subsection, terms used
in such subsection which are also used in section 42 of the
Internal Revenue Code of 1986 (as added by this section) shall have
the meanings given such terms by such section 42.
"(5) Transitional rule. - In the case of any rehabilitation
expenditures incurred with respect to units located in the
neighborhood strategy area within the community development block
grant program in Ft. Wayne, Indiana -
"(A) the amendments made by this section [enacting this section
and amending sections 38 and 55 of this title] shall not apply,
and
"(B) paragraph (1) of section 167(k) of the Internal Revenue
Code of 1986, shall be applied as if it did not contain the
phrase 'and before January 1, 1987'.
The number of units to which the preceding sentence applies shall
not exceed 150."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 45D, 55, 469,
772, 774, 1400I of this title; title 12 section 1715z-22; title 15
sections 632, 657d; title 42 sections 1437, 1437f, 1437z-7, 1485,
1490p-2, 12745.
-FOOTNOTE-
(!1) See References in Text note below.
(!2) So in original. Probably should be "sections".
(!3) So in original. Probably should be "etc.,".
(!4) So in original. The semicolon probably should be a comma.
(!5) So in original. Probably should be "satisfactory".
(!6) So in original.
-End-
-CITE-
26 USC Sec. 43 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 43. Enhanced oil recovery credit
-STATUTE-
(a) General rule
For purposes of section 38, the enhanced oil recovery credit for
any taxable year is an amount equal to 15 percent of the taxpayer's
qualified enhanced oil recovery costs for such taxable year.
(b) Phase-out of credit as crude oil prices increase
(1) In general
The amount of the credit determined under subsection (a) for
any taxable year shall be reduced by an amount which bears the
same ratio to the amount of such credit (determined without
regard to this paragraph) as -
(A) the amount by which the reference price for the calendar
year preceding the calendar year in which the taxable year
begins exceeds $28, bears to
(B) $6.
(2) Reference price
For purposes of this subsection, the term "reference price"
means, with respect to any calendar year, the reference price
determined for such calendar year under section 29(d)(2)(C).
(3) Inflation adjustment
(A) In general
In the case of any taxable year beginning in a calendar year
after 1991, there shall be substituted for the $28 amount under
paragraph (1)(A) an amount equal to the product of -
(i) $28, multiplied by
(ii) the inflation adjustment factor for such calendar
year.
(B) Inflation adjustment factor
The term "inflation adjustment factor" means, with respect to
any calendar year, a fraction the numerator of which is the GNP
implicit price deflator for the preceding calendar year and the
denominator of which is the GNP implicit price deflator for
1990. For purposes of the preceding sentence, the term "GNP
implicit price deflator" means the first revision of the
implicit price deflator for the gross national product as
computed and published by the Secretary of Commerce. Not later
than April 1 of any calendar year, the Secretary shall publish
the inflation adjustment factor for the preceding calendar
year.
(c) Qualified enhanced oil recovery costs
For purposes of this section -
(1) In general
The term "qualified enhanced oil recovery costs" means any of
the following:
(A) Any amount paid or incurred during the taxable year for
tangible property -
(i) which is an integral part of a qualified enhanced oil
recovery project, and
(ii) with respect to which depreciation (or amortization in
lieu of depreciation) is allowable under this chapter.
(B) Any intangible drilling and development costs -
(i) which are paid or incurred in connection with a
qualified enhanced oil recovery project, and
(ii) with respect to which the taxpayer may make an
election under section 263(c) for the taxable year.
(C) Any qualified tertiary injectant expenses (as defined in
section 193(b)) which are paid or incurred in connection with a
qualified enhanced oil recovery project and for which a
deduction is allowable for the taxable year.
(2) Qualified enhanced oil recovery project
For purposes of this subsection -
(A) In general
The term "qualified enhanced oil recovery project" means any
project -
(i) which involves the application (in accordance with
sound engineering principles) of 1 or more tertiary recovery
methods (as defined in section 193(b)(3)) which can
reasonably be expected to result in more than an
insignificant increase in the amount of crude oil which will
ultimately be recovered,
(ii) which is located within the United States (within the
meaning of section 638(1)), and
(iii) with respect to which the first injection of liquids,
gases, or other matter commences after December 31, 1990.
(B) Certification
A project shall not be treated as a qualified enhanced oil
recovery project unless the operator submits to the Secretary
(at such times and in such manner as the Secretary provides) a
certification from a petroleum engineer that the project meets
(and continues to meet) the requirements of subparagraph (A).
(3) At-risk limitation
For purposes of determining qualified enhanced oil recovery
costs, rules similar to the rules of section 49(a)(1), section
49(a)(2), and section 49(b) shall apply.
(4) Special rule for certain gas displacement projects
For purposes of this section, immiscible non-hydrocarbon gas
displacement shall be treated as a tertiary recovery method under
section 193(b)(3).
(d) Other rules
(1) Disallowance of deduction
Any deduction allowable under this chapter for any costs taken
into account in computing the amount of the credit determined
under subsection (a) shall be reduced by the amount of such
credit attributable to such costs.
(2) Basis adjustments
For purposes of this subtitle, if a credit is determined under
this section for any expenditure with respect to any property,
the increase in the basis of such property which would (but for
this subsection) result from such expenditure shall be reduced by
the amount of the credit so allowed.
(e) Election to have credit not apply
(1) In general
A taxpayer may elect to have this section not apply for any
taxable year.
(2) Time for making election
An election under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration of the 3-year
period beginning on the last date prescribed by law for filing
the return for such taxable year (determined without regard to
extensions).
(3) Manner of making election
An election under paragraph (1) (or revocation thereof) shall
be made in such manner as the Secretary may by regulations
prescribe.
-SOURCE-
(Added Pub. L. 101-508, title XI, Sec. 11511(a), Nov. 5, 1990, 104
Stat. 1388-483; amended Pub. L. 106-554, Sec. 1(a)(7) [title III,
Sec. 317(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A-645.)
-MISC1-
PRIOR PROVISIONS
A prior section 43 was renumbered section 32 of this title.
Another prior section 43 was renumbered section 36 of this title.
AMENDMENTS
2000 - Subsec. (c)(1)(C). Pub. L. 106-554 inserted "(as defined
in section 193(b))" after "expenses" and struck out "under section
193" after "allowable".
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 317(b)], Dec. 21,
2000, 114 Stat. 2763, 2763A-645, provided that: "The amendment made
by this section [amending this section] shall take effect as if
included in section 11511 of the Revenue Reconciliation Act of 1990
[Pub. L. 101-508]."
EFFECTIVE DATE
Section 11511(d) of Pub. L. 101-508 provided that:
"(1) In general. - The amendments made by this section [enacting
this section and amending sections 38, 39, 196, and 6501 of this
title] shall apply to costs paid or incurred in taxable years
beginning after December 31, 1990.
"(2) Special rule for significant expansion of projects. - For
purposes of section 43(c)(2)(A)(iii) of the Internal Revenue Code
of 1986 (as added by subsection (a)), any significant expansion
after December 31, 1990, of a project begun before January 1, 1991,
shall be treated as a project with respect to which the first
injection commences after December 31, 1990."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 29, 38, 39, 196, 6501 of
this title.
-End-
-CITE-
26 USC Sec. 44 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 44. Expenditures to provide access to disabled individuals
-STATUTE-
(a) General rule
For purposes of section 38, in the case of an eligible small
business, the amount of the disabled access credit determined under
this section for any taxable year shall be an amount equal to 50
percent of so much of the eligible access expenditures for the
taxable year as exceed $250 but do not exceed $10,250.
(b) Eligible small business
For purposes of this section, the term "eligible small business"
means any person if -
(1) either -
(A) the gross receipts of such person for the preceding
taxable year did not exceed $1,000,000, or
(B) in the case of a person to which subparagraph (A) does
not apply, such person employed not more than 30 full-time
employees during the preceding taxable year, and
(2) such person elects the application of this section for the
taxable year.
For purposes of paragraph (1)(B), an employee shall be considered
full-time if such employee is employed at least 30 hours per week
for 20 or more calendar weeks in the taxable year.
(c) Eligible access expenditures
For purposes of this section -
(1) In general
The term "eligible access expenditures" means amounts paid or
incurred by an eligible small business for the purpose of
enabling such eligible small business to comply with applicable
requirements under the Americans With Disabilities Act of 1990
(as in effect on the date of the enactment of this section).
(2) Certain expenditures included
The term "eligible access expenditures" includes amounts paid
or incurred -
(A) for the purpose of removing architectural, communication,
physical, or transportation barriers which prevent a business
from being accessible to, or usable by, individuals with
disabilities,
(B) to provide qualified interpreters or other effective
methods of making aurally delivered materials available to
individuals with hearing impairments,
(C) to provide qualified readers, taped texts, and other
effective methods of making visually delivered materials
available to individuals with visual impairments,
(D) to acquire or modify equipment or devices for individuals
with disabilities, or
(E) to provide other similar services, modifications,
materials, or equipment.
(3) Expenditures must be reasonable
Amounts paid or incurred for the purposes described in
paragraph (2) shall include only expenditures which are
reasonable and shall not include expenditures which are
unnecessary to accomplish such purposes.
(4) Expenses in connection with new construction are not eligible
The term "eligible access expenditures" shall not include
amounts described in paragraph (2)(A) which are paid or incurred
in connection with any facility first placed in service after the
date of the enactment of this section.
(5) Expenditures must meet standards
The term "eligible access expenditures" shall not include any
amount unless the taxpayer establishes, to the satisfaction of
the Secretary, that the resulting removal of any barrier (or the
provision of any services, modifications, materials, or
equipment) meets the standards promulgated by the Secretary with
the concurrence of the Architectural and Transportation Barriers
Compliance Board and set forth in regulations prescribed by the
Secretary.
(d) Definition of disability; special rules
For purposes of this section -
(1) Disability
The term "disability" has the same meaning as when used in the
Americans With Disabilities Act of 1990 (as in effect on the date
of the enactment of this section).
(2) Controlled groups
(A) In general
All members of the same controlled group of corporations
(within the meaning of section 52(a)) and all persons under
common control (within the meaning of section 52(b)) shall be
treated as 1 person for purposes of this section.
(B) Dollar limitation
The Secretary shall apportion the dollar limitation under
subsection (a) among the members of any group described in
subparagraph (A) in such manner as the Secretary shall by
regulations prescribe.
(3) Partnerships and S corporations
In the case of a partnership, the limitation under subsection
(a) shall apply with respect to the partnership and each partner.
A similar rule shall apply in the case of an S corporation and
its shareholders.
(4) Short years
The Secretary shall prescribe such adjustments as may be
appropriate for purposes of paragraph (1) of subsection (b) if
the preceding taxable year is a taxable year of less than 12
months.
(5) Gross receipts
Gross receipts for any taxable year shall be reduced by returns
and allowances made during such year.
(6) Treatment of predecessors
The reference to any person in paragraph (1) of subsection (b)
shall be treated as including a reference to any predecessor.
(7) Denial of double benefit
In the case of the amount of the credit determined under this
section -
(A) no deduction or credit shall be allowed for such amount
under any other provision of this chapter, and
(B) no increase in the adjusted basis of any property shall
result from such amount.
(e) Regulations
The Secretary shall prescribe regulations necessary to carry out
the purposes of this section.
-SOURCE-
(Added Pub. L. 101-508, title XI, Sec. 11611(a), Nov. 5, 1990, 104
Stat. 1388-501.)
-REFTEXT-
REFERENCES IN TEXT
The Americans With Disabilities Act of 1990, referred to in
subsecs. (c)(1) and (d)(1) is Pub. L. 101-336, July 26, 1990, 104
Stat. 327, as amended, which is classified principally to chapter
126 (Sec. 12101 et seq.) of Title 42, The Public Health and
Welfare. For complete classification of this Act to the Code, see
Short Title note set out under section 12101 of Title 42 and
Tables.
The date of the enactment of this section, referred to in
subsecs. (c)(1), (4) and (d)(1), is the date of enactment of Pub.
L. 101-508, which was approved Nov. 5, 1990.
-MISC1-
PRIOR PROVISIONS
A prior section 44, added Pub. L. 94-12, title II, Sec. 208(a),
Mar. 29, 1975, 89 Stat. 32; amended Pub. L. 94-45, title IV, Sec.
401(a), June 30, 1975, 89 Stat. 243; Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, related to
purchase of new principal residence, prior to repeal by Pub. L.
98-369, div. A, title IV, Sec. 474(m)(1), July 18, 1984, 98 Stat.
833, applicable to taxable years beginning after Dec. 31, 1983, and
to carrybacks from such years.
Another prior section 44 was renumbered section 36 of this title.
EFFECTIVE DATE
Section applicable to expenditures paid or incurred after Nov. 5,
1990, see section 11611(e)(1) of Pub. L. 101-508, set out as an
Effective Date of 1990 Amendment note under section 38 of this
title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39 of this title.
-End-
-CITE-
26 USC Sec. 44A 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44A. Renumbered Sec. 21]
-STATUTE-
-End-
-CITE-
26 USC Sec. 44B 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44B. Repealed. Pub. L. 98-369, div. A, title IV, Sec.
474(m)(1), July 18, 1984, 98 Stat. 833]
-MISC1-
Section, added Pub. L. 95-30, title II, Sec. 202(a), May 23,
1977, 91 Stat. 141; amended Pub. L. 95-600, title III, Sec.
321(b)(1), Nov. 6, 1978, 92 Stat. 2834; Pub. L. 96-222, title I,
Sec. 103(a)(6)(G)(i), (ii), Apr. 1, 1980, 94 Stat. 210, related to
credit for employment of certain new employees.
EFFECTIVE DATE OF REPEAL
Repeal applicable to taxable years beginning after Dec. 31, 1983,
and to carrybacks from such years, see section 475(a) of Pub. L.
98-369, set out as an Effective Date of 1984 Amendment note under
section 21 of this title.
-End-
-CITE-
26 USC Sec. 44C 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44C. Renumbered Sec. 23]
-STATUTE-
-End-
-CITE-
26 USC Sec. 44D 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44D. Renumbered Sec. 29]
-STATUTE-
-End-
-CITE-
26 USC Sec. 44E 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44E. Renumbered Sec. 40]
-STATUTE-
-End-
-CITE-
26 USC Sec. 44F 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44F. Renumbered Sec. 30]
-STATUTE-
-End-
-CITE-
26 USC Sec. 44G 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44G. Renumbered Sec. 41]
-STATUTE-
-End-
-CITE-
26 USC Sec. 44H 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
[Sec. 44H. Renumbered Sec. 45C]
-STATUTE-
-End-
-CITE-
26 USC Sec. 45 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45. Electricity produced from certain renewable resources
-STATUTE-
(a) General rule
For purposes of section 38, the renewable electricity production
credit for any taxable year is an amount equal to the product of -
(1) 1.5 cents, multiplied by
(2) the kilowatt hours of electricity -
(A) produced by the taxpayer -
(i) from qualified energy resources, and
(ii) at a qualified facility during the 10-year period
beginning on the date the facility was originally placed in
service, and
(B) sold by the taxpayer to an unrelated person during the
taxable year.
(b) Limitations and adjustments
(1) Phaseout of credit
The amount of the credit determined under subsection (a) shall
be reduced by an amount which bears the same ratio to the amount
of the credit (determined without regard to this paragraph) as -
(A) the amount by which the reference price for the calendar
year in which the sale occurs exceeds 8 cents, bears to
(B) 3 cents.
(2) Credit and phaseout adjustment based on inflation
The 1.5 cent amount in subsection (a) and the 8 cent amount in
paragraph (1) shall each be adjusted by multiplying such amount
by the inflation adjustment factor for the calendar year in which
the sale occurs. If any amount as increased under the preceding
sentence is not a multiple of 0.1 cent, such amount shall be
rounded to the nearest multiple of 0.1 cent.
(3) Credit reduced for grants, tax-exempt bonds, subsidized
energy financing, and other credits
The amount of the credit determined under subsection (a) with
respect to any project for any taxable year (determined after the
application of paragraphs (1) and (2)) shall be reduced by the
amount which is the product of the amount so determined for such
year and a fraction -
(A) the numerator of which is the sum, for the taxable year
and all prior taxable years, of -
(i) grants provided by the United States, a State, or a
political subdivision of a State for use in connection with
the project,
(ii) proceeds of an issue of State or local government
obligations used to provide financing for the project the
interest on which is exempt from tax under section 103,
(iii) the aggregate amount of subsidized energy financing
provided (directly or indirectly) under a Federal, State, or
local program provided in connection with the project, and
(iv) the amount of any other credit allowable with respect
to any property which is part of the project, and
(B) the denominator of which is the aggregate amount of
additions to the capital account for the project for the
taxable year and all prior taxable years.
The amounts under the preceding sentence for any taxable year
shall be determined as of the close of the taxable year.
(c) Definitions
For purposes of this section -
(1) Qualified energy resources
The term "qualified energy resources" means -
(A) wind,
(B) closed-loop biomass, and
(C) poultry waste.
(2) Closed-loop biomass
The term "closed-loop biomass" means any organic material from
a plant which is planted exclusively for purposes of being used
at a qualified facility to produce electricity.
(3) Qualified facility
(A) Wind facility
In the case of a facility using wind to produce electricity,
the term "qualified facility" means any facility owned by the
taxpayer which is originally placed in service after December
31, 1993, and before January 1, 2004.
(B) Closed-loop biomass facility
In the case of a facility using closed-loop biomass to
produce electricity, the term "qualified facility" means any
facility owned by the taxpayer which is originally placed in
service after December 31, 1992, and before January 1, 2004.
(C) Poultry waste facility
In the case of a facility using poultry waste to produce
electricity, the term "qualified facility" means any facility
of the taxpayer which is originally placed in service after
December 31, 1999, and before January 1, 2004.
(4) Poultry waste
The term "poultry waste" means poultry manure and litter,
including wood shavings, straw, rice hulls, and other bedding
material for the disposition of manure.
(d) Definitions and special rules
For purposes of this section -
(1) Only production in the United States taken into account
Sales shall be taken into account under this section only with
respect to electricity the production of which is within -
(A) the United States (within the meaning of section 638(1)),
or
(B) a possession of the United States (within the meaning of
section 638(2)).
(2) Computation of inflation adjustment factor and reference
price
(A) In general
The Secretary shall, not later than April 1 of each calendar
year, determine and publish in the Federal Register the
inflation adjustment factor and the reference price for such
calendar year in accordance with this paragraph.
(B) Inflation adjustment factor
The term "inflation adjustment factor" means, with respect to
a calendar year, a fraction the numerator of which is the GDP
implicit price deflator for the preceding calendar year and the
denominator of which is the GDP implicit price deflator for the
calendar year 1992. The term "GDP implicit price deflator"
means the most recent revision of the implicit price deflator
for the gross domestic product as computed and published by the
Department of Commerce before March 15 of the calendar year.
(C) Reference price
The term "reference price" means, with respect to a calendar
year, the Secretary's determination of the annual average
contract price per kilowatt hour of electricity generated from
the same qualified energy resource and sold in the previous
year in the United States. For purposes of the preceding
sentence, only contracts entered into after December 31, 1989,
shall be taken into account.
(3) Production attributable to the taxpayer
In the case of a facility in which more than 1 person has an
ownership interest, except to the extent provided in regulations
prescribed by the Secretary, production from the facility shall
be allocated among such persons in proportion to their respective
ownership interests in the gross sales from such facility.
(4) Related persons
Persons shall be treated as related to each other if such
persons would be treated as a single employer under the
regulations prescribed under section 52(b). In the case of a
corporation which is a member of an affiliated group of
corporations filing a consolidated return, such corporation shall
be treated as selling electricity to an unrelated person if such
electricity is sold to such a person by another member of such
group.
(5) Pass-thru in the case of estates and trusts
Under regulations prescribed by the Secretary, rules similar to
the rules of subsection (d) of section 52 shall apply.
(6) Credit eligibility in the case of government-owned facilities
using poultry waste
In the case of a facility using poultry waste to produce
electricity and owned by a governmental unit, the person eligible
for the credit under subsection (a) is the lessee or the operator
of such facility.
(7) Credit not to apply to electricity sold to utilities under
certain contracts
(A) In general
The credit determined under subsection (a) shall not apply to
electricity -
(i) produced at a qualified facility described in
subsection (c)(3)(A) which is placed in service by the
taxpayer after June 30, 1999, and
(ii) sold to a utility pursuant to a contract originally
entered into before January 1, 1987 (whether or not amended
or restated after that date).
(B) Exception
Subparagraph (A) shall not apply if -
(i) the prices for energy and capacity from such facility
are established pursuant to an amendment to the contract
referred to in subparagraph (A)(ii),
(ii) such amendment provides that the prices set forth in
the contract which exceed avoided cost prices determined at
the time of delivery shall apply only to annual quantities of
electricity (prorated for partial years) which do not exceed
the greater of -
(I) the average annual quantity of electricity sold to
the utility under the contract during calendar years 1994,
1995, 1996, 1997, and 1998, or
(II) the estimate of the annual electricity production
set forth in the contract, or, if there is no such
estimate, the greatest annual quantity of electricity sold
to the utility under the contract in any of the calendar
years 1996, 1997, or 1998, and
(iii) such amendment provides that energy and capacity in
excess of the limitation in clause (ii) may be -
(I) sold to the utility only at prices that do not exceed
avoided cost prices determined at the time of delivery, or
(II) sold to a third party subject to a mutually agreed
upon advance notice to the utility.
For purposes of this subparagraph, avoided cost prices shall be
determined as provided for in 18 CFR 292.304(d)(1) or any
successor regulation.
-SOURCE-
(Added Pub. L. 102-486, title XIX, Sec. 1914(a), Oct. 24, 1992, 106
Stat. 3020; amended Pub. L. 106-170, title V, Sec. 507(a)-(c), Dec.
17, 1999, 113 Stat. 1922; Pub. L. 106-554, Sec. 1(a)(7) [title III,
Sec. 319(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-646; Pub. L.
107-147, title VI, Sec. 603(a), Mar. 9, 2002, 116 Stat. 59.)
-MISC1-
PRIOR PROVISIONS
A prior section 45 was renumbered section 36 of this title.
AMENDMENTS
2002 - Subsec. (c)(3). Pub. L. 107-147 substituted "2004" for
"2002" in subpars. (A) to (C).
2000 - Subsec. (d)(7)(A)(i). Pub. L. 106-554 substituted
"subsection (c)(3)(A)" for "paragraph (3)(A)".
1999 - Subsec. (c)(1)(C). Pub. L. 106-170, Sec. 507(b)(1), added
subpar. (C).
Subsec. (c)(3). Pub. L. 106-170, Sec. 507(a), reenacted heading
without change and amended text generally. Prior to amendment, text
read as follows: "The term 'qualified facility' means any facility
owned by the taxpayer which is originally placed in service after
December 31, 1993 (December 31, 1992, in the case of a facility
using closed-loop biomass to produce electricity), and before July
1, 1999."
Subsec. (c)(4). Pub. L. 106-170, Sec. 507(b)(2), added par. (4).
Subsec. (d)(6), (7). Pub. L. 106-170, Sec. 507(c), added pars.
(6) and (7).
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title VI, Sec. 603(b), Mar. 9, 2002, 116 Stat.
59, provided that: "The amendments made by subsection (a) [amending
this section] shall apply to facilities placed in service after
December 31, 2001."
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106-170, title V, Sec. 507(d), Dec. 17, 1999, 113 Stat.
1923, provided that: "The amendments made by this section [amending
this section] shall take effect on the date of the enactment of
this Act [Dec. 17, 1999]."
EFFECTIVE DATE
Section applicable to taxable years ending after Dec. 31, 1992,
see section 1914(e) of Pub. L. 102-486, set out as an Effective
Date of 1992 Amendment note under section 38 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39 of this title.
-End-
-CITE-
26 USC Sec. 45A 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45A. Indian employment credit
-STATUTE-
(a) Amount of credit
For purposes of section 38, the amount of the Indian employment
credit determined under this section with respect to any employer
for any taxable year is an amount equal to 20 percent of the excess
(if any) of -
(1) the sum of -
(A) the qualified wages paid or incurred during such taxable
year, plus
(B) qualified employee health insurance costs paid or
incurred during such taxable year, over
(2) the sum of the qualified wages and qualified employee
health insurance costs (determined as if this section were in
effect) which were paid or incurred by the employer (or any
predecessor) during calendar year 1993.
(b) Qualified wages; qualified employee health insurance costs
For purposes of this section -
(1) Qualified wages
(A) In general
The term "qualified wages" means any wages paid or incurred
by an employer for services performed by an employee while such
employee is a qualified employee.
(B) Coordination with work opportunity credit
The term "qualified wages" shall not include wages
attributable to service rendered during the 1-year period
beginning with the day the individual begins work for the
employer if any portion of such wages is taken into account in
determining the credit under section 51.
(2) Qualified employee health insurance costs
(A) In general
The term "qualified employee health insurance costs" means
any amount paid or incurred by an employer for health insurance
to the extent such amount is attributable to coverage provided
to any employee while such employee is a qualified employee.
(B) Exception for amounts paid under salary reduction
arrangements
No amount paid or incurred for health insurance pursuant to a
salary reduction arrangement shall be taken into account under
subparagraph (A).
(3) Limitation
The aggregate amount of qualified wages and qualified employee
health insurance costs taken into account with respect to any
employee for any taxable year (and for the base period under
subsection (a)(2)) shall not exceed $20,000.
(c) Qualified employee
For purposes of this section -
(1) In general
Except as otherwise provided in this subsection, the term
"qualified employee" means, with respect to any period, any
employee of an employer if -
(A) the employee is an enrolled member of an Indian tribe or
the spouse of an enrolled member of an Indian tribe,
(B) substantially all of the services performed during such
period by such employee for such employer are performed within
an Indian reservation, and
(C) the principal place of abode of such employee while
performing such services is on or near the reservation in which
the services are performed.
(2) Individuals receiving wages in excess of $30,000 not eligible
An employee shall not be treated as a qualified employee for
any taxable year of the employer if the total amount of the wages
paid or incurred by such employer to such employee during such
taxable year (whether or not for services within an Indian
reservation) exceeds the amount determined at an annual rate of
$30,000.
(3) Inflation adjustment
The Secretary shall adjust the $30,000 amount under paragraph
(2) for years beginning after 1994 at the same time and in the
same manner as under section 415(d).
(4) Employment must be trade or business employment
An employee shall be treated as a qualified employee for any
taxable year of the employer only if more than 50 percent of the
wages paid or incurred by the employer to such employee during
such taxable year are for services performed in a trade or
business of the employer. Any determination as to whether the
preceding sentence applies with respect to any employee for any
taxable year shall be made without regard to subsection (e)(2).
(5) Certain employees not eligible
The term "qualified employee" shall not include -
(A) any individual described in subparagraph (A), (B), or (C)
of section 51(i)(1),
(B) any 5-percent owner (as defined in section 416(i)(1)(B)),
and
(C) any individual if the services performed by such
individual for the employer involve the conduct of class I, II,
or III gaming as defined in section 4 of the Indian Gaming
Regulatory Act (25 U.S.C. 2703), or are performed in a building
housing such gaming activity.
(6) Indian tribe defined
The term "Indian tribe" means any Indian tribe, band, nation,
pueblo, or other organized group or community, including any
Alaska Native village, or regional or village corporation, as
defined in, or established pursuant to, the Alaska Native Claims
Settlement Act (43 U.S.C. 1601 et seq.) which is recognized as
eligible for the special programs and services provided by the
United States to Indians because of their status as Indians.
(7) Indian reservation defined
The term "Indian reservation" has the meaning given such term
by section 168(j)(6).
(d) Early termination of employment by employer
(1) In general
If the employment of any employee is terminated by the taxpayer
before the day 1 year after the day on which such employee began
work for the employer -
(A) no wages (or qualified employee health insurance costs)
with respect to such employee shall be taken into account under
subsection (a) for the taxable year in which such employment is
terminated, and
(B) the tax under this chapter for the taxable year in which
such employment is terminated shall be increased by the
aggregate credits (if any) allowed under section 38(a) for
prior taxable years by reason of wages (or qualified employee
health insurance costs) taken into account with respect to such
employee.
(2) Carrybacks and carryovers adjusted
In the case of any termination of employment to which paragraph
(1) applies, the carrybacks and carryovers under section 39 shall
be properly adjusted.
(3) Subsection not to apply in certain cases
(A) In general
Paragraph (1) shall not apply to -
(i) a termination of employment of an employee who
voluntarily leaves the employment of the taxpayer,
(ii) a termination of employment of an individual who
before the close of the period referred to in paragraph (1)
becomes disabled to perform the services of such employment
unless such disability is removed before the close of such
period and the taxpayer fails to offer reemployment to such
individual, or
(iii) a termination of employment of an individual if it is
determined under the applicable State unemployment
compensation law that the termination was due to the
misconduct of such individual.
(B) Changes in form of business
For purposes of paragraph (1), the employment relationship
between the taxpayer and an employee shall not be treated as
terminated -
(i) by a transaction to which section 381(a) applies if the
employee continues to be employed by the acquiring
corporation, or
(ii) by reason of a mere change in the form of conducting
the trade or business of the taxpayer if the employee
continues to be employed in such trade or business and the
taxpayer retains a substantial interest in such trade or
business.
(4) Special rule
Any increase in tax under paragraph (1) shall not be treated as
a tax imposed by this chapter for purposes of -
(A) determining the amount of any credit allowable under this
chapter, and
(B) determining the amount of the tax imposed by section 55.
(e) Other definitions and special rules
For purposes of this section -
(1) Wages
The term "wages" has the same meaning given to such term in
section 51.
(2) Controlled groups
(A) All employers treated as a single employer under section
(a) or (b) of section 52 shall be treated as a single employer
for purposes of this section.
(B) The credit (if any) determined under this section with
respect to each such employer shall be its proportionate share of
the wages and qualified employee health insurance costs giving
rise to such credit.
(3) Certain other rules made applicable
Rules similar to the rules of section 51(k) and subsections
(c), (d), and (e) of section 52 shall apply.
(4) Coordination with nonrevenue laws
Any reference in this section to a provision not contained in
this title shall be treated for purposes of this section as a
reference to such provision as in effect on the date of the
enactment of this paragraph.
(5) Special rule for short taxable years
For any taxable year having less than 12 months, the amount
determined under subsection (a)(2) shall be multiplied by a
fraction, the numerator of which is the number of days in the
taxable year and the denominator of which is 365.
(f) Termination
This section shall not apply to taxable years beginning after
December 31, 2004.
-SOURCE-
(Added Pub. L. 103-66, title XIII, Sec. 13322(b), Aug. 10, 1993,
107 Stat. 559; amended Pub. L. 104-188, title I, Sec. 1201(e)(1),
Aug. 20, 1996, 110 Stat. 1772; Pub. L. 105-206, title VI, Sec.
6023(1), July 22, 1998, 112 Stat. 824; Pub. L. 107-147, title VI,
Sec. 613(a), Mar. 9, 2002, 116 Stat. 61.)
-REFTEXT-
REFERENCES IN TEXT
The Alaska Native Claims Settlement Act, referred to in subsec.
(c)(6), is Pub. L. 92-203, Dec. 18, 1971, 85 Stat. 688, as amended,
which is classified generally to chapter 33 (Sec. 1601 et seq.) of
Title 43, Public Lands. For complete classification of this Act to
the Code, see Short Title note set out under section 1601 of Title
43 and Tables.
The date of the enactment of this paragraph, referred to in
subsec. (e)(4), is the date of enactment of Pub. L. 103-66, which
was approved Aug. 10, 1993.
-MISC1-
AMENDMENTS
2002 - Subsec. (f). Pub. L. 107-147 substituted "December 31,
2004" for "December 31, 2003".
1998 - Subsec. (b)(1)(B). Pub. L. 105-206 substituted "work
opportunity credit" for "targeted jobs credit" in heading.
1996 - Subsec. (b)(1)(B). Pub. L. 104-188, which directed that
subsec. (b)(1)(B) of this section be amended in the text by
substituting "work opportunity credit" for "targeted jobs credit",
could not be executed because the words "targeted jobs credit" did
not appear in the text.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 applicable to individuals who begin
work for the employer after Sept. 30, 1996, see section 1201(g) of
Pub. L. 104-188, set out as a note under section 38 of this title.
EFFECTIVE DATE
Section applicable to wages paid or incurred after Dec. 31, 1993,
see section 13322(f) of Pub. L. 103-66, set out as an Effective
Date of 1993 Amendment note under section 38 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 196, 280C of this
title.
-End-
-CITE-
26 USC Sec. 45B 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45B. Credit for portion of employer social security taxes paid
with respect to employee cash tips
-STATUTE-
(a) General rule
For purposes of section 38, the employer social security credit
determined under this section for the taxable year is an amount
equal to the excess employer social security tax paid or incurred
by the taxpayer during the taxable year.
(b) Excess employer social security tax
For purposes of this section -
(1) In general
The term "excess employer social security tax" means any tax
paid by an employer under section 3111 with respect to tips
received by an employee during any month, to the extent such tips
-
(A) are deemed to have been paid by the employer to the
employee pursuant to section 3121(q) (without regard to whether
such tips are reported under section 6053), and
(B) exceed the amount by which the wages (excluding tips)
paid by the employer to the employee during such month are less
than the total amount which would be payable (with respect to
such employment) at the minimum wage rate applicable to such
individual under section 6(a)(1) of the Fair Labor Standards
Act of 1938 (determined without regard to section 3(m) of such
Act).
(2) Only tips received for food or beverages taken into account
In applying paragraph (1), there shall be taken into account
only tips received from customers in connection with the
providing, delivering, or serving of food or beverages for
consumption if the tipping of employees delivering or serving
food or beverages by customers is customary.
(c) Denial of double benefit
No deduction shall be allowed under this chapter for any amount
taken into account in determining the credit under this section.
(d) Election not to claim credit
This section shall not apply to a taxpayer for any taxable year
if such taxpayer elects to have this section not apply for such
taxable year.
-SOURCE-
(Added Pub. L. 103-66, title XIII, Sec. 13443(a), Aug. 10, 1993,
107 Stat. 568; amended Pub. L. 104-188, title I, Sec. 1112(a)(1),
(b)(1), Aug. 20, 1996, 110 Stat. 1759.)
-REFTEXT-
REFERENCES IN TEXT
Sections 3(m) and 6(a)(1) of the Fair Labor Standards Act of
1938, referred to in subsec. (b)(1)(B), are classified to sections
203(m) and 206(a)(1), respectively, of Title 29, Labor.
-MISC1-
AMENDMENTS
1996 - Subsec. (b)(1)(A). Pub. L. 104-188, Sec. 1112(a)(1),
inserted "(without regard to whether such tips are reported under
section 6053)" after "section 3121(q)".
Subsec. (b)(2). Pub. L. 104-188, Sec. 1112(b)(1), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: "Only
tips received at food and beverage establishments taken into
account. - In applying paragraph (1), there shall be taken into
account only tips received from customers in connection with the
provision of food or beverages for consumption on the premises of
an establishment with respect to which the tipping of employees
serving food or beverages by customers is customary."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1112(a)(3) of Pub. L. 104-188 provided that: "The
amendments made by this subsection [amending this section and
provisions set out as a note under section 38 of this title] shall
take effect as if included in the amendments made by, and the
provisions of, section 13443 of the Revenue Reconciliation Act of
1993 [Pub. L. 103-66]."
Section 1112(b)(2) of Pub. L. 104-188 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to tips received for services performed after December 31, 1996."
EFFECTIVE DATE
Section applicable with respect to taxes paid after Dec. 31,
1993, with respect to services performed before, on, or after such
date, see section 13443(d) of Pub. L. 103-66, as amended, set out
as an Effective Date of 1993 Amendment note under section 38 of
this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 196, 6501 of this
title.
-End-
-CITE-
26 USC Sec. 45C 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45C. Clinical testing expenses for certain drugs for rare
diseases or conditions
-STATUTE-
(a) General rule
For purposes of section 38, the credit determined under this
section for the taxable year is an amount equal to 50 percent of
the qualified clinical testing expenses for the taxable year.
(b) Qualified clinical testing expenses
For purposes of this section -
(1) Qualified clinical testing expenses
(A) In general
Except as otherwise provided in this paragraph, the term
"qualified clinical testing expenses" means the amounts which
are paid or incurred by the taxpayer during the taxable year
which would be described in subsection (b) of section 41 if
such subsection were applied with the modifications set forth
in subparagraph (B).
(B) Modifications
For purposes of subparagraph (A), subsection (b) of section
41 shall be applied -
(i) by substituting "clinical testing" for "qualified
research" each place it appears in paragraphs (2) and (3) of
such subsection, and
(ii) by substituting "100 percent" for "65 percent" in
paragraph (3)(A) of such subsection.
(C) Exclusion for amounts funded by grants, etc.
The term "qualified clinical testing expenses" shall not
include any amount to the extent such amount is funded by any
grant, contract, or otherwise by another person (or any
governmental entity).
(D) Special rule
For purposes of this paragraph, section 41 shall be deemed to
remain in effect for periods after June 30, 1995, and before
July 1, 1996, and periods after June 30, 2004.
(2) Clinical testing
(A) In general
The term "clinical testing" means any human clinical testing
-
(i) which is carried out under an exemption for a drug
being tested for a rare disease or condition under section
505(i) of the Federal Food, Drug, and Cosmetic Act (or
regulations issued under such section),
(ii) which occurs -
(I) after the date such drug is designated under section
526 of such Act, and
(II) before the date on which an application with respect
to such drug is approved under section 505(b) of such Act
or, if the drug is a biological product, before the date on
which a license for such drug is issued under section 351
of the Public Health Service Act; (!1) and
(iii) which is conducted by or on behalf of the taxpayer to
whom the designation under such section 526 applies.
(B) Testing must be related to use for rare disease or
condition
Human clinical testing shall be taken into account under
subparagraph (A) only to the extent such testing is related to
the use of a drug for the rare disease or condition for which
it was designated under section 526 of the Federal Food, Drug,
and Cosmetic Act.
(c) Coordination with credit for increasing research expenditures
(1) In general
Except as provided in paragraph (2), any qualified clinical
testing expenses for a taxable year to which an election under
this section applies shall not be taken into account for purposes
of determining the credit allowable under section 41 for such
taxable year.
(2) Expenses included in determining base period research
expenses
Any qualified clinical testing expenses for any taxable year
which are qualified research expenses (within the meaning of
section 41(b)) shall be taken into account in determining base
period research expenses for purposes of applying section 41 to
subsequent taxable years.
(d) Definition and special rules
(1) Rare disease or condition
For purposes of this section, the term "rare disease or
condition" means any disease or condition which -
(A) affects less than 200,000 persons in the United States,
or
(B) affects more than 200,000 persons in the United States
but for which there is no reasonable expectation that the cost
of developing and making available in the United States a drug
for such disease or condition will be recovered from sales in
the United States of such drug.
Determinations under the preceding sentence with respect to any
drug shall be made on the basis of the facts and circumstances as
of the date such drug is designated under section 526 of the
Federal Food, Drug, and Cosmetic Act.
(2) Special limitations on foreign testing
(A) In general
No credit shall be allowed under this section with respect to
any clinical testing conducted outside the United States unless
-
(i) such testing is conducted outside the United States
because there is an insufficient testing population in the
United States, and
(ii) such testing is conducted by a United States person or
by any other person who is not related to the taxpayer to
whom the designation under section 526 of the Federal Food,
Drug, and Cosmetic Act applies.
(B) Special limitation for corporations to which section 936
applies
No credit shall be allowed under this section with respect to
any clinical testing conducted by a corporation to which an
election under section 936 applies.
(3) Certain rules made applicable
Rules similar to the rules of paragraphs (1) and (2) of section
41(f) shall apply for purposes of this section.
(4) Election
This section shall apply to any taxpayer for any taxable year
only if such taxpayer elects (at such time and in such manner as
the Secretary may by regulations prescribe) to have this section
apply for such taxable year.
-SOURCE-
(Added Pub. L. 97-414, Sec. 4(a), Jan. 4, 1983, 96 Stat. 2053, Sec.
44H; renumbered Sec. 28 and amended Pub. L. 98-369, div. A, title
IV, Secs. 471(c), 474(g), title VI, Sec. 612(e)(1), July 18, 1984,
98 Stat. 826, 831, 912; Pub. L. 99-514, title II, Secs.
231(d)(3)(A), 232, title VII, Sec. 701(c)(2), title XII, Sec.
1275(c)(4), title XVIII, Sec. 1879(b)(1), (2), Oct. 22, 1986, 100
Stat. 2178, 2180, 2340, 2599, 2905; Pub. L. 100-647, title I, Sec.
1018(q)(1), title IV, Sec. 4008(c)(1), Nov. 10, 1988, 102 Stat.
3585, 3653; Pub. L. 101-239, title VII, Sec. 7110(a)(3), Dec. 19,
1989, 103 Stat. 2323; Pub. L. 101-508, title XI, Secs. 11402(b)(2),
11411, Nov. 5, 1990, 104 Stat. 1388-473, 1388-479; Pub. L. 102-227,
title I, Secs. 102(b), 111(a), Dec. 11, 1991, 105 Stat. 1686, 1688;
Pub. L. 103-66, title XIII, Sec. 13111(a)(2), (b), Aug. 10, 1993,
107 Stat. 420; renumbered Sec. 45C and amended Pub. L. 104-188,
title I, Secs. 1204(e), 1205(a)(1), (b), (d)(1), (2), Aug. 20,
1996, 110 Stat. 1775, 1776; Pub. L. 105-34, title VI, Secs.
601(b)(2), 604(a), Aug. 5, 1997, 111 Stat. 862, 863; Pub. L.
105-115, title I, Sec. 125(b)(2)(O), Nov. 21, 1997, 111 Stat. 2326;
Pub. L. 105-277, div. J, title I, Sec. 1001(b), Oct. 21, 1998, 112
Stat. 2681-888; Pub. L. 106-170, title V, Sec. 502(a)(2), Dec. 17,
1999, 113 Stat. 1919.)
-REFTEXT-
REFERENCES IN TEXT
Sections 505(b), (i) and 526 of the Federal Food, Drug, and
Cosmetic Act, referred to in subsecs. (b)(2)(A) and (d)(1),
(2)(A)(ii), are classified to sections 355(b), (i) and 360bb,
respectively, of Title 21, Food and Drugs.
Section 351 of the Public Health Service Act, referred to in
subsec. (b)(2)(A)(ii)(II), is classified to section 262 of Title
42, The Public Health and Welfare.
-MISC1-
AMENDMENTS
1999 - Subsec. (b)(1)(D). Pub. L. 106-170 substituted "June 30,
2004" for "June 30, 1999".
1998 - Subsec. (b)(1)(D). Pub. L. 105-277 substituted "June 30,
1999" for "June 30, 1998".
1997 - Subsec. (b)(1)(D). Pub. L. 105-34, Sec. 601(b)(2),
substituted "June 30, 1998" for "May 31, 1997".
Subsec. (b)(2)(A)(ii)(II). Pub. L. 105-115 struck out "or 507"
after "505(b)".
Subsec. (e). Pub. L. 105-34, Sec. 604(a), struck out subsec. (e)
which read as follows:
"(e) Termination. - This section shall not apply to any amount
paid or incurred -
"(1) after December 31, 1994, and before July 1, 1996, or
"(2) after May 31, 1997."
1996 - Pub. L. 104-188, Sec. 1205(a)(1), renumbered section 28 of
this title as this section.
Subsec. (a). Pub. L. 104-188, Sec. 1205(d)(1), substituted "For
purposes of section 38, the credit determined under this section
for the taxable year is" for "There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year".
Subsec. (b)(1)(D). Pub. L. 104-188, Sec. 1204(e), inserted ", and
before July 1, 1996, and periods after May 31, 1997" after "June
30, 1995".
Subsec. (d)(2) to (5). Pub. L. 104-188, Sec. 1205(d)(2),
redesignated pars. (3) to (5) as (2) to (4), respectively, and
struck out former par. (2) which read as follows: "Limitation based
on amount of tax. - The credit allowed by this section for any
taxable year shall not exceed the excess (if any) of -
"(A) the regular tax (reduced by the sum of the credits
allowable under subpart A and section 27), over
"(B) the tentative minimum tax for the taxable year."
Subsec. (e). Pub. L. 104-188, Sec. 1205(b), amended subsec. (e)
generally. Prior to amendment, subsec. (e) read as follows:
"Termination. - This section shall not apply to any amount paid or
incurred after December 31, 1994."
1993 - Subsec. (b)(1)(D). Pub. L. 103-66, Sec. 13111(a)(2),
substituted "June 30, 1995" for "June 30, 1992".
Subsec. (e). Pub. L. 103-66, Sec. 13111(b), substituted "December
31, 1994" for "June 30, 1992".
1991 - Subsec. (b)(1)(D). Pub. L. 102-227, Sec. 102(b),
substituted "June 30, 1992" for "December 31, 1991".
Subsec. (e). Pub. L. 102-227, Sec. 111(a), substituted "June 30,
1992" for "December 31, 1991".
1990 - Subsec. (b)(1)(D). Pub. L. 101-508, Sec. 11402(b)(2),
substituted "December 31, 1991" for "December 31, 1990".
Subsec. (e). Pub. L. 101-508, Sec. 11411, substituted "December
31, 1991" for "December 31, 1990".
1989 - Subsec. (b)(1)(D). Pub. L. 101-239 substituted "1990" for
"1989".
1988 - Subsec. (b)(1)(D). Pub. L. 100-647, Sec. 4008(c)(1),
substituted "1989" for "1988".
Subsec. (b)(2)(A)(ii)(II). Pub. L. 100-647, Sec. 1018(q)(1),
amended subcl. (II) generally. Prior to amendment, subcl. (II) read
as follows: "before the date on which an application with respect
to such drug is approved under section 505(b) of such Act or, if
the drug is a biological product, before the date on which a
license for such drug is issued under section 351 of the Public
Health Services Act, and".
1986 - Subsec. (b)(1). Pub. L. 99-514, Sec. 231(d)(3)(A)(i),
(iv), substituted "41" for "30" in subpars. (A), (B), and (D), and
substituted "1988" for "1985" in subpar. (D).
Subsec. (b)(2)(A)(ii)(I). Pub. L. 99-514, Sec. 1879(b)(1)(A),
substituted "the date such drug" for "the date of such drug".
Subsec. (b)(2)(A)(ii)(II). Pub. L. 99-514, Sec. 1879(b)(1)(B),
inserted "or, if the drug is a biological product, before the date
on which a license for such drug is issued under section 351 of the
Public Health Services Act".
Subsec. (c). Pub. L. 99-514, Sec. 231(d)(3)(A)(i), (ii),
substituted "41" for "30" in pars. (1) and (2) and "41(b)" for
"30(b)" in par. (2).
Subsec. (d)(1). Pub. L. 99-514, Sec. 1879(b)(2), amended par. (1)
generally. Prior to amendment, par. (1) read as follows: "For
purposes of this section, the term 'rare disease or condition'
means any disease or condition which occurs so infrequently in the
United States that there is no reasonable expectation that the cost
of developing and making available in the United States a drug for
such disease or condition will be recovered from sales in the
United States of such drug. Determinations under the preceding
sentence with respect to any drug shall be made on the basis of the
facts and circumstances as of the date such drug is designated
under section 526 of the Federal Food, Drug, and Cosmetic Act."
Subsec. (d)(2). Pub. L. 99-514, Sec. 701(c)(2), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: "The
credit allowed by this section for any taxable year shall not
exceed the taxpayer's tax liability for the taxable year (as
defined in section 26(b)), reduced by the sum of the credits
allowable under subpart A and section 27."
Subsec. (d)(3)(B). Pub. L. 99-514, Sec. 1275(c)(4), struck out
"934(b) or" before "936" in heading and amended text generally.
Prior to amendment, text read as follows: "No credit shall be
allowed under this section with respect to any clinical testing
conducted by a corporation to which section 934(b) applies or to
which an election under section 936 applies."
Subsec. (d)(4). Pub. L. 99-514, Sec. 231(d)(3)(A)(iii),
substituted "section 41(f)" for "section 30(f)".
Subsec. (e). Pub. L. 99-514, Sec. 232, substituted "1990" for
"1987".
1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44H of
this title as this section.
Subsec. (b)(1)(A), (B), (D). Pub. L. 98-369, Sec. 474(g)(1)(A),
substituted "section 30" for "section 44F".
Subsec. (c)(1). Pub. L. 98-369, Sec. 474(g)(1)(A), substituted
"section 30" for "section 44F".
Subsec. (c)(2). Pub. L. 98-369, Sec. 474(g)(1)(A), (B),
substituted "section 30" for "section 44F" and "section 30(b)" for
"section 44F(b)".
Subsec. (d)(2). Pub. L. 98-369, Sec. 612(e)(1), substituted
"section 26(b)" for "section 25(b)".
Pub. L. 98-369, Sec. 474(g)(2), amended par. (2) generally,
substituting "shall not exceed the taxpayer's tax liability for the
taxable year (as defined in section 25(b), reduced by the sum of
the credits allowable under subpart A and section 27" for "shall
not exceed the amount of the tax imposed by this chapter for the
taxable year reduced by the sum of the credits allowable under a
section of this subpart having a lower number or letter designation
than this section, other than the credits allowable by sections 31,
39, and 43. For purposes of the preceding sentence, the term 'tax
imposed by this chapter' shall not include any tax treated as not
imposed by this chapter under the last sentence of section 53(a)".
Subsec. (d)(4). Pub. L. 98-369, Sec. 474(g)(1)(C), substituted
"section 30(f)" for "section 44F(f)".
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106-170 applicable to amounts paid or
incurred after June 30, 1999, see section 502(a)(3) of Pub. L.
106-170, set out as a note under section 41 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-277 applicable to amounts paid or
incurred after June 30, 1998, see section 1001(c) of Pub. L.
105-277, set out as a note under section 41 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by section 601(b)(2) of Pub. L. 105-34 applicable to
amounts paid or incurred after May 31, 1997, see section 601(c) of
Pub. L. 105-34, set out as a note under section 41 of this title.
Section 604(b) of Pub. L. 105-34 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
amounts paid or incurred after May 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1204(e) of Pub. L. 104-188 applicable to
taxable years ending after June 30, 1996, and not to be taken into
account under section 6654 or 6655 of this title in determining
amount of any installment required to be paid for a taxable year
beginning in 1997, see section 1204(f) of Pub. L. 104-188, set out
as a note under section 41 of this title.
Amendment by section 1205(a)(1), (b), (d)(1), (2) of Pub. L.
104-188 applicable to amounts paid or incurred in taxable years
ending after June 30, 1996, see section 1205(e) of Pub. L. 104-188,
set out as a note under section 29 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13111(c) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and section 41 of this
title] shall apply to taxable years ending after June 30, 1992."
EFFECTIVE DATE OF 1991 AMENDMENT
Section 102(c) of Pub. L. 102-227 provided that: "The amendments
made by this section [amending this section and section 41 of this
title] shall apply to taxable years ending after December 31,
1991."
Section 111(b) of Pub. L. 102-227 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years ending after December 31, 1991."
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11402(c) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section and section
41 of this title and repealing provisions set out as a note under
section 41 of this title] shall apply to taxable years beginning
after December 31, 1989."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1018(q)(1) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Amendment by section 4008(c)(1) of Pub. L. 100-647 applicable to
taxable years beginning after Dec. 31, 1988, see section 4008(d) of
Pub. L. 100-647, set out as a note under section 41 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 231(d)(3)(A) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1985, see section 231(g) of
Pub. L. 99-514, set out as a note under section 41 of this title.
Amendment by section 701(c)(2) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
Amendment by section 1275(c)(4) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 1277 of Pub. L. 99-514,
set out as a note under section 931 of this title.
Section 1879(b)(3) of Pub. L. 99-514 provided that: "The
amendments made by this subsection [amending this section] shall
apply to amounts paid or incurred after December 31, 1982, in
taxable years ending after such date."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(g) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Amendment by section 612(e)(1) of Pub. L. 98-369, applicable to
interest paid or accrued after December 31, 1984, on indebtedness
incurred after December 31, 1984, see section 612(g) of Pub. L.
98-369, set out as an Effective Date note under section 25 of this
title.
EFFECTIVE DATE
Section 4(d) of Pub. L. 97-414 provided that: "The amendments
made by this section [enacting this section and amending sections
280C and 6096 of this title] shall apply to amounts paid or
incurred after December 31, 1982, in taxable years ending after
such date."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN
RELATION TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(c)(2) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had
been included in the provision of Pub. L. 99-514 to which such
amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,
set out as a note under section 861 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 280C of this
title.
-FOOTNOTE-
(!1) So in original. The semicolon probably should be a comma.
-End-
-CITE-
26 USC Sec. 45D 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45D. New markets tax credit
-STATUTE-
(a) Allowance of credit
(1) In general
For purposes of section 38, in the case of a taxpayer who holds
a qualified equity investment on a credit allowance date of such
investment which occurs during the taxable year, the new markets
tax credit determined under this section for such taxable year is
an amount equal to the applicable percentage of the amount paid
to the qualified community development entity for such investment
at its original issue.
(2) Applicable percentage
For purposes of paragraph (1), the applicable percentage is -
(A) 5 percent with respect to the first 3 credit allowance
dates, and
(B) 6 percent with respect to the remainder of the credit
allowance dates.
(3) Credit allowance date
For purposes of paragraph (1), the term "credit allowance date"
means, with respect to any qualified equity investment -
(A) the date on which such investment is initially made, and
(B) each of the 6 anniversary dates of such date thereafter.
(b) Qualified equity investment
For purposes of this section -
(1) In general
The term "qualified equity investment" means any equity
investment in a qualified community development entity if -
(A) such investment is acquired by the taxpayer at its
original issue (directly or through an underwriter) solely in
exchange for cash,
(B) substantially all of such cash is used by the qualified
community development entity to make qualified low-income
community investments, and
(C) such investment is designated for purposes of this
section by the qualified community development entity.
Such term shall not include any equity investment issued by a
qualified community development entity more than 5 years after
the date that such entity receives an allocation under subsection
(f). Any allocation not used within such 5-year period may be
reallocated by the Secretary under subsection (f).
(2) Limitation
The maximum amount of equity investments issued by a qualified
community development entity which may be designated under
paragraph (1)(C) by such entity shall not exceed the portion of
the limitation amount allocated under subsection (f) to such
entity.
(3) Safe harbor for determining use of cash
The requirement of paragraph (1)(B) shall be treated as met if
at least 85 percent of the aggregate gross assets of the
qualified community development entity are invested in qualified
low-income community investments.
(4) Treatment of subsequent purchasers
The term "qualified equity investment" includes any equity
investment which would (but for paragraph (1)(A)) be a qualified
equity investment in the hands of the taxpayer if such investment
was a qualified equity investment in the hands of a prior holder.
(5) Redemptions
A rule similar to the rule of section 1202(c)(3) shall apply
for purposes of this subsection.
(6) Equity investment
The term "equity investment" means -
(A) any stock (other than nonqualified preferred stock as
defined in section 351(g)(2)) in an entity which is a
corporation, and
(B) any capital interest in an entity which is a partnership.
(c) Qualified community development entity
For purposes of this section -
(1) In general
The term "qualified community development entity" means any
domestic corporation or partnership if -
(A) the primary mission of the entity is serving, or
providing investment capital for, low-income communities or
low-income persons,
(B) the entity maintains accountability to residents of
low-income communities through their representation on any
governing board of the entity or on any advisory board to the
entity, and
(C) the entity is certified by the Secretary for purposes of
this section as being a qualified community development entity.
(2) Special rules for certain organizations
The requirements of paragraph (1) shall be treated as met by -
(A) any specialized small business investment company (as
defined in section 1044(c)(3)), and
(B) any community development financial institution (as
defined in section 103 of the Community Development Banking and
Financial Institutions Act of 1994 (12 U.S.C. 4702)).
(d) Qualified low-income community investments
For purposes of this section -
(1) In general
The term "qualified low-income community investment" means -
(A) any capital or equity investment in, or loan to, any
qualified active low-income community business,
(B) the purchase from another qualified community development
entity of any loan made by such entity which is a qualified
low-income community investment,
(C) financial counseling and other services specified in
regulations prescribed by the Secretary to businesses located
in, and residents of, low-income communities, and
(D) any equity investment in, or loan to, any qualified
community development entity.
(2) Qualified active low-income community business
(A) In general
For purposes of paragraph (1), the term "qualified active
low-income community business" means, with respect to any
taxable year, any corporation (including a nonprofit
corporation) or partnership if for such year -
(i) at least 50 percent of the total gross income of such
entity is derived from the active conduct of a qualified
business within any low-income community,
(ii) a substantial portion of the use of the tangible
property of such entity (whether owned or leased) is within
any low-income community,
(iii) a substantial portion of the services performed for
such entity by its employees are performed in any low-income
community,
(iv) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is
attributable to collectibles (as defined in section
408(m)(2)) other than collectibles that are held primarily
for sale to customers in the ordinary course of such
business, and
(v) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is
attributable to nonqualified financial property (as defined
in section 1397C(e)).
(B) Proprietorship
Such term shall include any business carried on by an
individual as a proprietor if such business would meet the
requirements of subparagraph (A) were it incorporated.
(C) Portions of business may be qualified active low-income
community business
The term "qualified active low-income community business"
includes any trades or businesses which would qualify as a
qualified active low-income community business if such trades
or businesses were separately incorporated.
(3) Qualified business
For purposes of this subsection, the term "qualified business"
has the meaning given to such term by section 1397C(d); except
that -
(A) in lieu of applying paragraph (2)(B) thereof, the rental
to others of real property located in any low-income community
shall be treated as a qualified business if there are
substantial improvements located on such property, and
(B) paragraph (3) thereof shall not apply.
(e) Low-income community
For purposes of this section -
(1) In general
The term "low-income community" means any population census
tract if -
(A) the poverty rate for such tract is at least 20 percent,
or
(B)(i) in the case of a tract not located within a
metropolitan area, the median family income for such tract does
not exceed 80 percent of statewide median family income, or
(ii) in the case of a tract located within a metropolitan
area, the median family income for such tract does not exceed
80 percent of the greater of statewide median family income or
the metropolitan area median family income.
Subparagraph (B) shall be applied using possessionwide median
family income in the case of census tracts located within a
possession of the United States.
(2) Targeted areas
The Secretary may designate any area within any census tract as
a low-income community if -
(A) the boundary of such area is continuous,
(B) the area would satisfy the requirements of paragraph (1)
if it were a census tract, and
(C) an inadequate access to investment capital exists in such
area.
(3) Areas not within census tracts
In the case of an area which is not tracted for population
census tracts, the equivalent county divisions (as defined by the
Bureau of the Census for purposes of defining poverty areas)
shall be used for purposes of determining poverty rates and
median family income.
(f) National limitation on amount of investments designated
(1) In general
There is a new markets tax credit limitation for each calendar
year. Such limitation is -
(A) $1,000,000,000 for 2001,
(B) $1,500,000,000 for 2002 and 2003,
(C) $2,000,000,000 for 2004 and 2005, and
(D) $3,500,000,000 for 2006 and 2007.
(2) Allocation of limitation
The limitation under paragraph (1) shall be allocated by the
Secretary among qualified community development entities selected
by the Secretary. In making allocations under the preceding
sentence, the Secretary shall give priority to any entity -
(A) with a record of having successfully provided capital or
technical assistance to disadvantaged businesses or
communities, or
(B) which intends to satisfy the requirement under subsection
(b)(1)(B) by making qualified low-income community investments
in 1 or more businesses in which persons unrelated to such
entity (within the meaning of section 267(b) or 707(b)(1)) hold
the majority equity interest.
(3) Carryover of unused limitation
If the new markets tax credit limitation for any calendar year
exceeds the aggregate amount allocated under paragraph (2) for
such year, such limitation for the succeeding calendar year shall
be increased by the amount of such excess. No amount may be
carried under the preceding sentence to any calendar year after
2014.
(g) Recapture of credit in certain cases
(1) In general
If, at any time during the 7-year period beginning on the date
of the original issue of a qualified equity investment in a
qualified community development entity, there is a recapture
event with respect to such investment, then the tax imposed by
this chapter for the taxable year in which such event occurs
shall be increased by the credit recapture amount.
(2) Credit recapture amount
For purposes of paragraph (1), the credit recapture amount is
an amount equal to the sum of -
(A) the aggregate decrease in the credits allowed to the
taxpayer under section 38 for all prior taxable years which
would have resulted if no credit had been determined under this
section with respect to such investment, plus
(B) interest at the underpayment rate established under
section 6621 on the amount determined under subparagraph (A)
for each prior taxable year for the period beginning on the due
date for filing the return for the prior taxable year involved.
No deduction shall be allowed under this chapter for interest
described in subparagraph (B).
(3) Recapture event
For purposes of paragraph (1), there is a recapture event with
respect to an equity investment in a qualified community
development entity if -
(A) such entity ceases to be a qualified community
development entity,
(B) the proceeds of the investment cease to be used as
required of subsection (b)(1)(B), or
(C) such investment is redeemed by such entity.
(4) Special rules
(A) Tax benefit rule
The tax for the taxable year shall be increased under
paragraph (1) only with respect to credits allowed by reason of
this section which were used to reduce tax liability. In the
case of credits not so used to reduce tax liability, the
carryforwards and carrybacks under section 39 shall be
appropriately adjusted.
(B) No credits against tax
Any increase in tax under this subsection shall not be
treated as a tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter or for
purposes of section 55.
(h) Basis reduction
The basis of any qualified equity investment shall be reduced by
the amount of any credit determined under this section with respect
to such investment. This subsection shall not apply for purposes of
sections 1202, 1400B, and 1400F.
(i) Regulations
The Secretary shall prescribe such regulations as may be
appropriate to carry out this section, including regulations -
(1) which limit the credit for investments which are directly
or indirectly subsidized by other Federal tax benefits (including
the credit under section 42 and the exclusion from gross income
under section 103),
(2) which prevent the abuse of the purposes of this section,
(3) which provide rules for determining whether the requirement
of subsection (b)(1)(B) is treated as met,
(4) which impose appropriate reporting requirements, and
(5) which apply the provisions of this section to newly formed
entities.
-SOURCE-
(Added Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 121(a)], Dec.
21, 2000, 114 Stat. 2763, 2763A-605.)
-MISC1-
EFFECTIVE DATE
Section applicable to investments made after Dec. 31, 2000, see
Sec. 1(a)(7) [title I, Sec. 121(e)] of Pub. L. 106-554, set out as
a Effective Date of 2000 Amendment note under section 38 of this
title.
GUIDANCE ON ALLOCATION OF NATIONAL LIMITATION
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 121(f)], Dec. 21,
2000, 114 Stat. 2763, 2763A-610, provided that: "Not later than 120
days after the date of the enactment of this Act [Dec. 21, 2000],
the Secretary of the Treasury or the Secretary's delegate shall
issue guidance which specifies -
"(1) how entities shall apply for an allocation under section
45D(f)(2) of the Internal Revenue Code of 1986, as added by this
section;
"(2) the competitive procedure through which such allocations
are made; and
"(3) the actions that such Secretary or delegate shall take to
ensure that such allocations are properly made to appropriate
entities."
AUDIT AND REPORT
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 121(g)], Dec. 21,
2000, 114 Stat. 2763, 2763A-610, provided that: "Not later than
January 31 of 2004, 2007, and 2010, the Comptroller General of the
United States shall, pursuant to an audit of the new markets tax
credit program established under section 45D of the Internal
Revenue Code of 1986 (as added by subsection (a)), report to
Congress on such program, including all qualified community
development entities that receive an allocation under the new
markets credit under such section."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 196 of this
title.
-End-
-CITE-
26 USC Sec. 45E 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45E. Small employer pension plan startup costs
-STATUTE-
(a) General rule
For purposes of section 38, in the case of an eligible employer,
the small employer pension plan startup cost credit determined
under this section for any taxable year is an amount equal to 50
percent of the qualified startup costs paid or incurred by the
taxpayer during the taxable year.
(b) Dollar limitation
The amount of the credit determined under this section for any
taxable year shall not exceed -
(1) $500 for the first credit year and each of the 2 taxable
years immediately following the first credit year, and
(2) zero for any other taxable year.
(c) Eligible employer
For purposes of this section -
(1) In general
The term "eligible employer" has the meaning given such term by
section 408(p)(2)(C)(i).
(2) Requirement for new qualified employer plans
Such term shall not include an employer if, during the
3-taxable year period immediately preceding the 1st taxable year
for which the credit under this section is otherwise allowable
for a qualified employer plan of the employer, the employer or
any member of any controlled group including the employer (or any
predecessor of either) established or maintained a qualified
employer plan with respect to which contributions were made, or
benefits were accrued, for substantially the same employees as
are in the qualified employer plan.
(d) Other definitions
For purposes of this section -
(1) Qualified startup costs
(A) In general
The term "qualified startup costs" means any ordinary and
necessary expenses of an eligible employer which are paid or
incurred in connection with -
(i) the establishment or administration of an eligible
employer plan, or
(ii) the retirement-related education of employees with
respect to such plan.
(B) Plan must have at least 1 participant
Such term shall not include any expense in connection with a
plan that does not have at least 1 employee eligible to
participate who is not a highly compensated employee.
(2) Eligible employer plan
The term "eligible employer plan" means a qualified employer
plan within the meaning of section 4972(d).
(3) First credit year
The term "first credit year" means -
(A) the taxable year which includes the date that the
eligible employer plan to which such costs relate becomes
effective, or
(B) at the election of the eligible employer, the taxable
year preceding the taxable year referred to in subparagraph
(A).
(e) Special rules
For purposes of this section -
(1) Aggregation rules
All persons treated as a single employer under subsection (a)
or (b) of section 52, or subsection (m) or (o) of section 414,
shall be treated as one person. All eligible employer plans shall
be treated as 1 eligible employer plan.
(2) Disallowance of deduction
No deduction shall be allowed for that portion of the qualified
startup costs paid or incurred for the taxable year which is
equal to the credit determined under subsection (a).
(3) Election not to claim credit
This section shall not apply to a taxpayer for any taxable year
if such taxpayer elects to have this section not apply for such
taxable year.
-SOURCE-
(Added Pub. L. 107-16, title VI, Sec. 619(a), June 7, 2001, 115
Stat. 108; amended Pub. L. 107-147, title IV, Sec. 411(n)(1), Mar.
9, 2002, 116 Stat. 48.)
-STATAMEND-
TERMINATION OF SECTION
For termination of section by section 901 of Pub. L. 107-16, see
Effective and Termination Dates note below.
-MISC1-
AMENDMENTS
2002 - Subsec. (e)(1). Pub. L. 107-147 substituted "subsection
(m)" for "subsection (n)".
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107-147 effective as if included in the
provisions of the Economic Growth and Tax Relief Reconciliation Act
of 2001, Pub. L. 107-16, to which such amendment relates, see
section 411(x) of Pub. L. 107-147, set out as a note under section
25B of this title.
EFFECTIVE AND TERMINATION DATES
Section applicable to costs paid or incurred in taxable years
beginning after Dec. 31, 2001, with respect to qualified employer
plans first effective after such date, see section 619(d) of Pub.
L. 107-16, as amended, set out as an Effective and Termination
Dates of 2001 Amendment note under section 38 of this title.
Section inapplicable to taxable, plan, or limitation years
beginning after Dec. 31, 2010, and the Internal Revenue Code of
1986 to be applied and administered to such years as if it had
never been enacted, see section 901 of Pub. L. 107-16, set out as
an Effective and Termination Dates of 2001 Amendment note under
section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 196 of this
title.
-End-
-CITE-
26 USC Sec. 45F 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
-HEAD-
Sec. 45F. Employer-provided child care credit
-STATUTE-
(a) In general
For purposes of section 38, the employer-provided child care
credit determined under this section for the taxable year is an
amount equal to the sum of -
(1) 25 percent of the qualified child care expenditures, and
(2) 10 percent of the qualified child care resource and
referral expenditures,
of the taxpayer for such taxable year.
(b) Dollar limitation
The credit allowable under subsection (a) for any taxable year
shall not exceed $150,000.
(c) Definitions
For purposes of this section -
(1) Qualified child care expenditure
(A) In general
The term "qualified child care expenditure" means any amount
paid or incurred -
(i) to acquire, construct, rehabilitate, or expand property
-
(I) which is to be used as part of a qualified child care
facility of the taxpayer,
(II) with respect to which a deduction for depreciation
(or amortization in lieu of depreciation) is allowable, and
(III) which does not constitute part of the principal
residence (within the meaning of section 121) of the
taxpayer or any employee of the taxpayer,
(ii) for the operating costs of a qualified child care
facility of the taxpayer, including costs related to the
training of employees, to scholarship programs, and to the
providing of increased compensation to employees with higher
levels of child care training, or
(iii) under a contract with a qualified child care facility
to provide child care services to employees of the taxpayer.
(B) Fair market value
The term "qualified child care expenditures" shall not
include expenses in excess of the fair market value of such
care.
(2) Qualified child care facility
(A) In general
The term "qualified child care facility" means a facility -
(i) the principal use of which is to provide child care
assistance, and
(ii) which meets the requirements of all applicable laws
and regulations of the State or local government in which it
is located, including the licensing of the facility as a
child care facility.
Clause (i) shall not apply to a facility which is the principal
residence (within the meaning of section 121) of the operator
of the facility.
(B) Special rules with respect to a taxpayer
A facility shall not be treated as a qualified child care
facility with respect to a taxpayer unless -
(i) enrollment in the facility is open to employees of the
taxpayer during the taxable year,
(ii) if the facility is the principal trade or business of
the taxpayer, at least 30 percent of the enrollees of such
facility are dependents of employees of the taxpayer, and
(iii) the use of such facility (or the eligibility to use
such facility) does not discriminate in favor of employees of
the taxpayer who are highly compensated employees (within the
meaning of section 414(q)).
(3) Qualified child care resource and referral expenditure
(A) In general
The term "qualified child care resource and referral
expenditure" means any amount paid or incurred under a contract
to provide child care resource and referral services to an
employee of the taxpayer.
(B) Nondiscrimination
The services shall not be treated as qualified unless the
provision of such services (or the eligibility to use such
services) does not discriminate in favor of employees of the
taxpayer who are highly compensated employees (within the
meaning of section 414(q)).
(d) Recapture of acquisition and construction credit
(1) In general
If, as of the close of any taxable year, there is a recapture
event with respect to any qualified child care facility of the
taxpayer, then the tax of the taxpayer under this chapter for
such taxable year shall be increased by an amount equal to the
product of -
(A) the applicable recapture percentage, and
(B) the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would have
resulted if the qualified child care expenditures of the
taxpayer described in subsection (c)(1)(A) with respect to such
facility had been zero.
(2) Applicable recapture percentage
(A) In general
For purposes of this subsection, the applicable recapture
percentage shall be determined from the following table:
The applicable
If the recapture event recapture
occurs in: percentage is:
Years 1-3 100
Year 4 85
Year 5 70
Year 6 55
Year 7 40
Year 8 25
Years 9 and 10 10
Years 11 and thereafter 0.
(B) Years
For purposes of subparagraph (A), year 1 shall begin on the
first day of the taxable year in which the qualified child care
facility is placed in service by the taxpayer.
(3) Recapture event defined
For purposes of this subsection, the term "recapture event"
means -
(A) Cessation of operation
The cessation of the operation of the facility as a qualified
child care facility.
(B) Change in ownership
(i) In general
Except as provided in clause (ii), the disposition of a
taxpayer's interest in a qualified child care facility with
respect to which the credit described in subsection (a) was
allowable.
(ii) Agreement to assume recapture liability
Clause (i) shall not apply if the person acquiring such
interest in the facility agrees in writing to assume the
recapture liability of the person disposing of such interest
in effect immediately before such disposition. In the event
of such an assumption, the person acquiring the interest in
the facility shall be treated as the taxpayer for purposes of
assessing any recapture liability (computed as if there had
been no change in ownership).
(4) Special rules
(A) Tax benefit rule
The tax for the taxable year shall be increased under
paragraph (1) only with respect to credits allowed by reason of
this section which were used to reduce tax liability. In the
case of credits not so used to reduce tax liability, the
carryforwards and carrybacks under section 39 shall be
appropriately adjusted.
(B) No credits against tax
Any increase in tax under this subsection shall not be
treated as a tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter or for
purposes of section 55.
(C) No recapture by reason of casualty loss
The increase in tax under this subsection shall not apply to
a cessation of operation of the facility as a qualified child
care facility by reason of a casualty loss to the extent such
loss is restored by reconstruction or replacement within a
reasonable period established by the Secretary.
(e) Special rules
For purposes of this section -
(1) Aggregation rules
All persons which are treated as a single employer under
subsections (a) and (b) of section 52 shall be treated as a
single taxpayer.
(2) Pass-thru in the case of estates and trusts
Under regulations prescribed by the Secretary, rules similar to
the rules of subsection (d) of section 52 shall apply.
(3) Allocation in the case of partnerships
In the case of partnerships, the credit shall be allocated
among partners under regulations prescribed by the Secretary.
(f) No double benefit
(1) Reduction in basis
For purposes of this subtitle -
(A) In general
If a credit is determined under this section with respect to
any property by reason of expenditures described in subsection
(c)(1)(A), the basis of such property shall be reduced by the
amount of the credit so determined.
(B) Certain dispositions
If, during any taxable year, there is a recapture amount
determined with respect to any property the basis of which was
reduced under subparagraph (A), the basis of such property
(immediately before the event resulting in such recapture)
shall be increased by an amount equal to such recapture amount.
For purposes of the preceding sentence, the term "recapture
amount" means any increase in tax (or adjustment in carrybacks
or carryovers) determined under subsection (d).
(2) Other deductions and credits
No deduction or credit shall be allowed under any other
provision of this chapter with respect to the amount of the
credit determined under this section.
-SOURCE-
(Added Pub. L. 107-16, title II, Sec. 205(a), June 7, 2001, 115
Stat. 50; amended Pub. L. 107-147, title IV, Sec. 411(d)(1), Mar.
9, 2002, 116 Stat. 46.)
-STATAMEND-
TERMINATION OF SECTION
For termination of section by section 901 of Pub. L. 107-16, see
Effective and Termination Dates note below.
-MISC1-
AMENDMENTS
2002 - Subsec. (d)(4)(B). Pub. L. 107-147 substituted "this
chapter or for purposes of section 55" for "subpart A, B, or D of
this part".
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107-147 effective as if included in the
provisions of the Economic Growth and Tax Relief Reconciliation Act
of 2001, Pub. L. 107-16, to which such amendment relates, see
section 411(x) of Pub. L. 107-147, set out as a note under section
25B of this title.
EFFECTIVE AND TERMINATION DATES
Section applicable to taxable years beginning after Dec. 31,
2001, see section 205(c) of Pub. L. 107-16, set out as an Effective
and Termination Dates of 2001 Amendment note under section 38 of
this title.
Section inapplicable to taxable, plan, or limitation years
beginning after Dec. 31, 2010, and the Internal Revenue Code of
1986 to be applied and administered to such years as if it had
never been enacted, see section 901 of Pub. L. 107-16, set out as
an Effective and Termination Dates of 2001 Amendment note under
section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 1016 of this title.
-End-
-CITE-
26 USC Subpart E - Rules for Computing Investment Credit 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
SUBPART E - RULES FOR COMPUTING INVESTMENT CREDIT
-MISC1-
Sec.
46. Amount of credit.
47. Rehabilitation credit.
48. Energy credit; reforestation credit.
49. At-risk rules.
50. Other special rules.
AMENDMENTS
1990 - Pub. L. 101-508, title XI, Sec. 11813(a), Nov. 5, 1990,
104 Stat. 1388-536, amended heading and analysis generally,
substituting in heading "Investment Credit" for "Credit for
Investment in Certain Depreciable Property", in item 47
"Rehabilitation Credit" for "Certain dispositions, etc., of section
38 property", in item 48 "Energy credit; reforestation credit" for
"Definitions; special rules", in item 49 "At-risk rules" for
"Termination of regular percentage", and adding item 50.
1986 - Pub. L. 99-514, title II, Sec. 211(c), Oct. 22, 1986, 100
Stat. 2168, added item 49.
1984 - Pub. L. 98-369, div. A, title IV, Sec. 474(n)(1), July 18,
1984, 98 Stat. 833, substituted "E" for "B" as subpart designation.
1978 - Pub. L. 95-600, title III, Sec. 312(c)(5), Nov. 6, 1978,
92 Stat. 2826, struck out item 49 "Termination for period beginning
April 19, 1969, and ending during 1971" and item 50 "Restoration of
credit".
1971 - Pub. L. 92-178, title I, Sec. 101(b)(5), Dec. 10, 1971, 85
Stat. 499, substituted "Termination for period beginning April 19,
1969, and ending during 1971" for "Termination of credit" in item
49 and added item 50.
1969 - Pub. L. 91-172, title VII, Sec. 703(d), Dec. 30, 1969, 83
Stat. 667, added item 49.
1962 - Pub. L. 87-834, Sec. 2(b), Oct. 16, 1962, 76 Stat. 963,
added subpart B.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in section 53 of this title.
-End-
-CITE-
26 USC Sec. 46 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
Sec. 46. Amount of credit
-STATUTE-
For purposes of section 38, the amount of the investment credit
determined under this section for any taxable year shall be the sum
of -
(1) the rehabilitation credit,
(2) the energy credit, and
(3) the reforestation credit.
-SOURCE-
(Added Pub. L. 87-834, Sec. 2(b), Oct. 16, 1962, 76 Stat. 963;
amended Pub. L. 88-272, title II, Sec. 201(d)(4), Feb. 26, 1964, 78
Stat. 32; Pub. L. 89-384, Sec. 1(c)(1), Apr. 8, 1966, 80 Stat. 102;
Pub. L. 89-389, Sec. 2(b)(5), Apr. 14, 1966, 80 Stat. 114; Pub. L.
89-800, Sec. 3, Nov. 8, 1966, 80 Stat. 1514; Pub. L. 90-225, Sec.
2(a), Dec. 27, 1967, 81 Stat. 731; Pub. L. 91-172, title III, Sec.
301(b)(4), title IV, Sec. 401(e)(1), title VII, Sec. 703(b), Dec.
30, 1969, 83 Stat. 585, 603, 666; Pub. L. 92-178, title I, Secs.
102(a)(1), (b), 105(a)-(c), 106(a)-(c), 107(a)(1), 108(a), Dec. 10,
1971, 85 Stat. 499, 503, 506, 507; Pub. L. 93-406, title II, Secs.
2001(g)(2)(B), 2002(g)(2), 2005(c)(4), Sept. 2, 1974, 88 Stat. 957,
968, 991; Pub. L. 94-12, title III, Sec. 301(a), (b)(1)-(3),
302(a), (b)(1), Mar. 29, 1975, 89 Stat. 36, 37, 40, 43; Pub. L.
94-455, title V, Sec. 503(b)(4), title VIII, Secs. 802(a),
(b)(1)-(5), 803(a), (b)(1), 805(a), title XVI, Sec. 1607(b)(1)(B),
title XVII, Secs. 1701(b), 1703, title XIX, Secs. 1901(a)(4),
(b)(1)(C), 1906(b)(13)(A), title XXI, Sec. 2112(a)(2), Oct. 4,
1976, 90 Stat. 1562, 1580-1583, 1596, 1756, 1759, 1761, 1764, 1790,
1834, 1905; Pub. L. 95-600, title I, Sec. 141(e), (f)(2), title
III, Secs. 311(a), (c), 312(a), (b), (c)(2), 313(a), 316(a),
(b)(1), (2), title VII, Sec. 703(a)(1), (2), (j)(9), Nov. 6, 1978,
92 Stat. 2794, 2795, 2824-2826, 2829, 2939, 2941; Pub. L. 95-618,
title II, Sec. 241(a), title III, Sec. 301(a), (c)(1), Nov. 9,
1978, 92 Stat. 3192, 3194, 3199; Pub. L. 96-222, title I, Secs.
101(a)(7)(A), (L)(iii)(I), (v)(I), (M)(i), 103(a)(2)(A),
(B)(i)-(iii), (3), (4)(A), 107(a)(3)(A), Apr. 1, 1980, 94 Stat.
197, 200, 201, 208, 209, 223; Pub. L. 96-223, title II, Secs.
221(a), 222(e)(2), 223(b)(1), Apr. 2, 1980, 94 Stat. 260, 263, 266;
Pub. L. 97-34, title II, Secs. 207(c)(1), 211(a)(1), (b), (d),
(e)(1), (2), (f)(1), 212(a)(1), (2), title III, Secs. 302(c)(3),
(d)(1), 332(a), Aug. 13, 1981, 95 Stat. 225, 227-229, 235, 236,
272, 274, 296; Pub. L. 97-248, title II, Sec. 201(d)(8)(A),
formerly Sec. 201(c)(8)(A), Secs. 205(b), 265(b)(2)(A)(i), Sept. 3,
1982, 96 Stat. 420, 430, 547, renumbered Sec. 201(d)(8)(A), Pub. L.
97-448, title III, Sec. 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat.
2400; Pub. L. 97-354, Sec. 5(a)(4)-(6), Oct. 19, 1982, 96 Stat.
1692; Pub. L. 97-424, title V, Secs. 541(b), 546(b), Jan. 6, 1983,
96 Stat. 2192, 2199; Pub. L. 97-448, title I, Sec. 102(e)(1),
(f)(5), title II, Sec. 202(f), Jan. 12, 1983, 96 Stat. 2370, 2372,
2396; Pub. L. 98-21, title I, Sec. 122(c)(1), Apr. 20, 1983, 97
Stat. 87; Pub. L. 98-369, div. A, title I, Secs. 16(a), 31(f),
113(b)(2)(B), title IV, Secs. 431(a), (b)(1), (d)(1)-(3),
474(o)(1)-(7), title VII, Sec. 713(c)(1)(C), July 18, 1984, 98
Stat. 505, 521, 637, 805, 807, 810, 834-836, 957; Pub. L. 99-514,
title II, Secs. 201(d)(7)(B), 251(a), title IV, Sec. 421(a), (b),
title XVIII, Secs. 1802(a)(6), (8), 1844(a), (b)(3), (5),
1847(b)(11), 1848(a), Oct. 22, 1986, 100 Stat. 2141, 2183, 2229,
2789, 2855, 2857; Pub. L. 100-647, title I, Secs. 1002(a)(4), (15),
(17), (25), 1009(a)(1), 1013(a)(44), title IV, Sec. 4006, Nov. 10,
1988, 102 Stat. 3353, 3355, 3356, 3445, 3545, 3652; Pub. L.
101-239, title VII, Secs. 7106, 7814(d), Dec. 19, 1989, 103 Stat.
2306, 2413; Pub. L. 101-508, title XI, Secs. 11406, 11813(a), Nov.
5, 1990, 104 Stat. 1388-474, 1388-536.)
-MISC1-
AMENDMENTS
1990 - Pub. L. 101-508, Sec. 11813(a), amended section generally,
substituting present provisions for provisions relating to amount
of investment credit, determination of percentages, qualified
investments and qualified progress expenditures, limitations with
respect to certain persons, a limitation in the case of certain
regulated companies, a 50 percent credit in the case of certain
vessels, and special rule for cooperatives.
Subsec. (b)(2)(A). Pub. L. 101-508, Sec. 11406, substituted "Dec.
31, 1991" for "Sept. 30, 1990" in table items (viii) C. and (ix) B.
1989 - Subsec. (b)(2)(A). Pub. L. 101-239, Sec. 7106, substituted
"Sept. 30, 1990" for "Dec. 31, 1989" in table items (viii) C., (ix)
B., and (x).
Pub. L. 101-239, Sec. 7814(d), made technical correction to
language of Pub. L. 100-647, Sec. 4006, see 1988 Amendment note
below.
1988 - Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 4006, as amended
by Pub. L. 101-239, Sec. 7814(d), substituted "1989" for "1988" in
table items (viii) C., (ix) B., and (x).
Subsec. (c)(5)(B). Pub. L. 100-647, Sec. 1013(a)(44), substituted
"private activity bonds" for "industrial development bonds" in
heading, and in text substituted "a private activity bond (within
the meaning of section 141)" for "an industrial development bond
(within the meaning of section 103(b)(2))".
Subsec. (c)(7). Pub. L. 100-647, Sec. 1002(a)(17), substituted
"property to which section 168 applies" for "recovery property" in
heading, substituted "property to which section 168 applies" for
"recovery property" and "168(e)" for "168(c)" in subpar. (A),
substituted "168(e)" for "168(c)" in subpar. (B), and inserted "(as
in effect on the day before the date of the enactment of the Tax
Reform Act of 1986)" after "section 168(f)(3)(B)" in concluding
provisions.
Subsec. (d)(1)(B)(i). Pub. L. 100-647, Sec. 1002(a)(25)(A),
substituted "property to which section 168 applies" for "recovery
property (within the meaning of section 168)".
Subsec. (d)(1)(B)(ii). Pub. L. 100-647, Sec. 1002(a)(25)(B),
substituted "to which section 168 does not apply" for "which is not
recovery property (within the meaning of section 168)".
Subsec. (e)(3). Pub. L. 100-647, Sec. 1002(a)(15), substituted
"property to which section 168 applies" for "recovery property
(within the meaning of section 168)", "class life" for "present
class life", and "168(i)(1)" for "168(g)(2)".
Subsec. (e)(4)(B). Pub. L. 100-647, Sec. 1002(a)(4)(A),
substituted "168(i)(3)" for "168(j)(6)".
Subsec. (e)(4)(C). Pub. L. 100-647, Sec. 1009(a)(1), inserted
provisions at end which provided that any such election shall
terminate effective with respect to the 1st taxable year of the
organization making such election which begins after 1986, and
which defined "regular investment tax credit property".
Subsec. (e)(4)(D). Pub. L. 100-647, Sec. 1002(a)(4)(B),
substituted "paragraphs (5) and (6) of section 168(h)" for
"paragraphs (8) and (9) of section 168(j)".
Subsec. (e)(4)(E). Pub. L. 100-647, Sec. 1002(a)(4)(C), (D),
substituted "168(h)" for "168(j)" and "168(h)(2)" for "168(j)(4)".
1986 - Subsec. (b)(2)(A). Pub. L. 99-514, Sec. 1847(b)(11),
substituted "48(l)(3)(A)(viii)" for "48(l)(3)(A)(vii)" in table
item (ii).
Pub. L. 99-514, Sec. 421(a), inserted table items (viii) to (xi).
Subsec. (b)(2)(E). Pub. L. 99-514, Sec. 421(b), added subpar.
(E).
Subsec. (b)(4). Pub. L. 99-514, Sec. 251(a), in amending par. (4)
generally, substituted in subpar. (A) definition of "rehabilitation
percentage" for former table specifying specific rehabilitation
percentages, reenacted subpar. (B), and struck out subpar. (C)
which related to definitions.
Subsec. (c)(8)(D)(v). Pub. L. 99-514, Sec. 1844(a), substituted
"this subparagraph" for "clause (i)".
Pub. L. 99-514, Sec. 201(d)(7)(B), substituted "section
465(b)(3)(C)" for "section 168(e)(4)".
Subsec. (c)(9)(A). Pub. L. 99-514, Sec. 1844(b)(3), substituted
"an increase in the credit base for" for "additional qualified
investment in".
Subsec. (c)(9)(C)(i). Pub. L. 99-514, Sec. 1844(b)(5),
substituted "any increase in a taxpayer's credit base for any
property by reason of this paragraph shall be taken into account as
if it were property placed in service by the taxpayer in the
taxable year in which the property referred to in subparagraph (A)
was first placed in service" for "any increase in a taxpayer's
qualified investment in property by reason of this paragraph shall
be deemed to be additional qualified investment made by the
taxpayer in the year in which the property referred to in
subparagraph (A) was first placed in service".
Subsec. (e)(4)(D), (E). Pub. L. 99-514, Sec. 1802(a)(6), (8),
added subpars. (D) and (E).
Subsec. (f)(9). Pub. L. 99-514, Sec. 1848(a), struck out par. (9)
which related to a special rule for additional credit.
1984 - Subsec. (a). Pub. L. 98-369, Sec. 474(o)(1), amended
subsec. (a) generally, so as to contain provisions relating to
amount of investment credit, which formerly constituted only par.
(2)(A)(i), (ii), and (iv) of subsec. (a).
Subsec. (a)(4). Pub. L. 98-369, Sec. 713(c)(1)(C), substituted
"premature distributions to key employees" for "premature
distributions to owner-employees".
Subsec. (b). Pub. L. 98-369, Sec. 474(o)(1), amended subsec. (b)
generally, substituting provisions relating to determination of
percentages for purposes of subsec. (a), for provisions relating to
carryback and carryover of unused credits.
Subsec. (c)(7)(A). Pub. L. 98-369, Sec. 13(b)(2)(B), inserted
"recovery" before first reference to "property".
Subsec. (c)(8). Pub. L. 98-369, Sec. 431(a), substituted "Certain
nonrecourse financing excluded from credit base" for "Limitation to
amount at risk" in heading.
Subsec. (c)(8)(A). Pub. L. 98-369, Sec. 431(a), substituted
provisions reducing the credit base of any property to which this
paragraph applies by the nonqualified nonrecourse financing with
respect to such property for provisions relating to limitation of
the basis to the amount at risk in the case of new or used section
38 property placed in service during the taxable year by a taxpayer
described in section 465(a)(1) and used in connection with an
activity with respect to which any loss was subject to limitation
under section 465.
Subsec. (c)(8)(B). Pub. L. 98-369, Sec. 431(a), substituted
provisions relating to the property to which this paragraph applies
for provisions defining "at risk" and stating the circumstances
under which a taxpayer would be considered to be at risk for
purposes of this paragraph.
Subsec. (c)(8)(C). Pub. L. 98-369, Sec. 431(a), substituted
provisions defining "credit base" for provisions relating to a
special rule for partnerships and subchapter S corporations.
Subsec. (c)(8)(D). Pub. L. 98-369, Sec. 431(a), substituted
provisions defining "nonqualified nonrecourse financing" for
provisions defining "qualified person".
Subsec. (c)(8)(D)(i)(I). Pub. L. 98-369, Sec. 16(a), repealed
amendments made by Pub. L. 97-34, Sec. 302(c). See 1981 Amendment
note below.
Subsec. (c)(8)(E). Pub. L. 98-369, Sec. 431(a), substituted
provisions relating to the application of this paragraph to
partnerships and subchapter S corporations for provisions defining
"related person".
Subsec. (c)(8)(F)(i). Pub. L. 98-369, Sec. 431(d)(1), substituted
provisions that subpar. (A) shall not apply with respect to
qualified energy property for provisions that subpar. (A) would not
apply to amounts borrowed with respect to qualified energy property
(other than amounts described in subpar. (B)).
Subsec. (c)(8)(F)(ii)(II). Pub. L. 98-369, Sec. 474(o)(2),
substituted "subsection (b)(2)" for "section 46(a)(2)(C)".
Subsec. (c)(8)(F)(ii)(III). Pub. L. 98-369, Sec. 431(d)(2),
substituted provisions that qualified energy property means energy
property to which (but for this subpar.) subpar. (A) applies and
not more than 75 percent of the basis of which is attributable to
nonqualified nonrecourse financing for provisions that qualified
energy property meant energy property to which (but for this
subpar.) subpar. (A) applied and with respect to which the taxpayer
was at risk (within the meaning of section 465(b) without regard to
par. (5) thereof) in an amount equal to at least 25 percent of the
basis of the property.
Subsec. (c)(8)(F)(ii)(IV). Pub. L. 98-369, Sec. 431(d)(3),
substituted "nonqualified nonrecourse financing" for "nonrecourse
financing (other than financing described in section
46(c)(8)(B)(ii))".
Subsec. (c)(9). Pub. L. 98-369, Sec. 431(b)(1), substituted
provisions relating to subsequent decreases in nonqualified
nonrecourse financing with respect to the property for provisions
relating to subsequent increases in the taxpayer's amount at risk
with respect to the property.
Subsec. (e)(1). Pub. L. 98-369, Sec. 474(o)(3)(A), struck out
"and the $25,000 amount specified under subparagraphs (A) and (B)
of subsection (a)(3)", and substituted "such qualified investment"
for "such items", in provisions following subpar. (B).
Subsec. (e)(2). Pub. L. 98-369, Sec. 474(o)(3)(B), substituted
"qualified investment" for "the items described therein" in
introductory provisions.
Subsec. (e)(4). Pub. L. 98-369, Sec. 31(b), added par. (4).
Subsec. (f)(1). Pub. L. 98-369, Sec. 474(o)(4)(A), substituted
"no credit determined under subsection (a) shall be allowed by
section 38" for "no credit shall be allowed by section 38" in
introductory provisions.
Subsec. (f)(1)(A), (B). Pub. L. 98-369, Sec. 474(o)(4)(B),
substituted "the credit determined under subsection (a) and
allowable by section 38" for "the credit allowable by section 38".
Subsec. (f)(2). Pub. L. 98-369, Sec. 474(o)(4)(A), substituted
"no credit determined under subsection (a) shall be allowed by
section 38" for "no credit shall be allowed by section 38" in
introductory provisions.
Subsec. (f)(2)(A), (B). Pub. L. 98-369, Sec. 474(o)(4)(B),
substituted "the credit determined under subsection (a) and
allowable by section 38" for "the credit allowable by section 38".
Subsec. (f)(4)(B). Pub. L. 98-369, Sec. 474(o)(4)(C), substituted
"the credit determined under subsection (a) and allowed by section
38" for "the credit allowed by section 38" in introductory
provisions.
Subsec. (f)(8). Pub. L. 98-369, Sec. 474(o)(5), substituted "the
credit determined under subsection (a) and allowable under section
38" for "the credit allowable under section 38" in two places, and
"(within the meaning of the first sentence of subsection
(c)(3)(B))" for "(within the meaning of subsection (a)(7)(C))".
Subsec. (g)(2). Pub. L. 98-369, Sec. 474(o)(6), substituted "the
limitation of section 38(c)" for "the limitation of subsection
(a)(3)".
Subsec. (h)(1). Pub. L. 98-369, Sec. 474(o)(7), substituted "the
credit determined under subsection (a) and allowable to the
organization under section 38" for "the credit allowable to the
organization under section 38" and "the limitation contained in
section 38(c)" for "the limitation contained in subsection (a)(3)".
1983 - Subsec. (a)(2)(C)(i). Pub. L. 97-424, Sec. 546(b), added
section VII to the table.
Subsec. (a)(2)(C)(iii)(I). Pub. L. 97-448, Sec. 202(f),
substituted "before January 1, 1983, all engineering studies in
connection with the commencement of the construction of the project
have been completed and all environmental and construction permits
required under Federal, State, or local law in connection with the
commencement of the construction of the project have been applied
for, and" for "before January 1, 1983, the taxpayer has completed
all engineering studies in connection with the commencement of the
construction of the project, and has applied for all environmental
and construction permits required under Federal, State, or local
law in connection with the commencement of the construction of the
project, and".
Subsec. (a)(2)(F)(iii)(II). Pub. L. 97-448, Sec. 102(f)(5)(A),
substituted "a qualified rehabilitated building" for "any
building".
Subsec. (a)(2)(F)(iii)(III). Pub. L. 97-448, Sec. 102(f)(5)(B),
substituted "means a qualified rehabilitated building which meets
the requirements of section 48(g)(3)" for "has the meaning given to
such term by section 48(g)(3)".
Subsec. (a)(4)(B). Pub. L. 98-21 substituted "relating to credit
for the elderly and the permanently and totally disabled" for
"relating to credit for the elderly".
Subsec. (c)(7). Pub. L. 97-448, Sec. 102(e)(1), substituted "in
the case of property other than 3-year property (within the meaning
of section 168(c))" for "in the case of 15-year public utility,
10-year, or 5-year property (within the meaning of section 168(c))"
in subpar. (A) and, in provisions following subpar. (B),
substituted "shall be treated as property which is not 3-year
property" for "shall be treated as 5-year property".
Subsec. (f)(10). Pub. L. 97-424, Sec. 541(b), added par. (10).
1982 - Subsec. (a)(3)(B). Pub. L. 97-248, Sec. 205(b)(1),
substituted "85 percent" for "the following percentage",
substituted a period for the colon, and struck out table of
percentages at end of subpar. (B).
Subsec. (a)(4). Pub. L. 97-354, Sec. 5(a)(4), substituted
"section 1374 (relating to tax on certain capital gains of S
corporations)" for "section 1378 (relating to tax on certain
capital gains of subchapter S corporations)".
Pub. L. 97-248, Secs. 201(d)(8)(A), formerly 201(c)(8)(A),
265(b)(2)(A), substituted "(relating to corporate minimum tax)" for
"(relating to minimum tax for tax preferences)" after "section 56",
and inserted "section 72(q)(1) (relating to 5-percent tax on
premature distributions under annuity contracts)," after
"owner-employees)".
Subsec. (a)(7). Pub. L. 97-248, Sec. 205(b)(2), redesignated par.
(9) as (7), and, in par. (7)(B), as so redesignated, substituted
reference to 85 percent for former reference to the percentage
determined under subsec. (a)(3)(B) in cl. (i), struck out former
cl. (ii), which provided that pars. (7) and (8) would not apply in
certain instances, and redesignated former cl. (iii) as (ii).
Former par. (7), which provided for alternative limitations in the
case of certain utilities, was struck out.
Subsec. (a)(8). Pub. L. 97-248, Sec. 205(b)(2)(A), struck out
par. (8) which provided for alternative limitations in the case of
certain railroads and airlines.
Subsec. (a)(9). Pub. L. 97-248, Sec. 205(b)(2)(A), redesignated
par. (9) as (7).
Subsec. (c)(8)(C). Pub. L. 97-354, Sec. 5(a)(5), substituted "S
corporation" for "electing small business corporation (within the
meaning of section 1371(b))".
Subsec. (e)(3). Pub. L. 97-354, Sec. 5(a)(6), substituted "an S
corporation" for "an electing small business corporation (as
defined in section 1371)".
1981 - Subsec. (a)(2)(A)(iv). Pub. L. 97-34, Sec. 212(a)(1),
added cl. (iv).
Subsec. (a)(2)(E). Pub. L. 97-34, Sec. 332(a), substituted
"December 31, 1982" for "December 31, 1983" in cls. (i) and (ii)
and added cl. (iii).
Subsec. (a)(2)(F). Pub. L. 97-34, Sec. 212(a)(2), added subpar.
(F).
Subsec. (b)(1). Pub. L. 97-34, Sec. 207(c)(1), inserted provision
after subpar. (D) directing that, in the case of an unused credit
for an unused credit year ending after Dec. 31, 1973, this
paragraph be applied by substituting "15" for "7" in subpar. (B)
and by substituting "18" for "10" and "17" for "9" in second
sentence.
Subsec. (c)(2). Pub. L. 97-34, Sec. 211(e)(1), inserted
references in provisions preceding table to exceptions provided in
paragraphs (3), (6), and (7).
Subsec. (c)(6)(A). Pub. L. 97-34, Sec. 211(e)(2), substituted
"Notwithstanding paragraph (2) or (3)" for "Notwithstanding
paragraph (2)" and inserted "or which is recovery property (within
the meaning of section 168)," after "3 years or more,".
Subsec. (c)(7). Pub. L. 97-34, Sec. 211(a)(1), added par. (7).
Subsec. (c)(8). Pub. L. 97-34, Sec. 211(f)(1), added par. (8).
Subsec. (c)(8)(D)(i)(I). Pub. L. 97-34, Sec. 302(c)(3), (d)(1),
provided that, applicable to taxable years beginning after Dec. 31,
1984, subsection (c)(8)(D)(i)(I) of this section (relating to
limitation to amount at risk) is amended by striking out "clause
(i), (ii), or (iii) of subparagraph (A) or subparagraph (B) of
section 128(c)(2)" and inserting in lieu thereof "subparagraph (A)
or (B) of section 128(c)(1)". Section 16(a) of Pub. L. 98-369,
repealed section 302(c) of Pub. L. 97-34, and provided that this
title shall be applied and administered as if section 302(c), and
the amendments made by section 302(c), had not been enacted.
Subsec. (c)(9). Pub. L. 97-34, Sec. 211(f)(1), added par. (9).
Subsec. (d)(1). Pub. L. 97-34, Sec. 211(b)(1), designated
existing provisions as subpar. (A), substituted "an amount equal to
the aggregate of the applicable percentage of each qualified
progress expenditure for the taxable year" for "an amount equal to
his aggregate qualified progress expenditures for the taxable year"
in subpar. (A) as so designated, and added subpar. (B).
Subsec. (d)(2)(A)(ii). Pub. L. 97-34, Sec. 211(b)(2), struck out
"having a useful life of 7 years or more" after "it is reasonable
to believe will be new section 38 property".
Subsec. (e)(3). Pub. L. 97-34, Sec. 211(d), in provisions
following subpar. (B), inserted provision that, for purposes of
subpar. (B), in the case of any recovery property (within the
meaning of section 168), the useful life be the present class life
for such property (as defined in section 168(g)(2)).
1980 - Subsec. (a)(2)(A). Pub. L. 96-222, Sec.
101(a)(7)(L)(iii)(I), substituted "employee plan" for "ESOP".
Subsec. (a)(2)(C). Pub. L. 96-223, Sec. 221(a), revised
provisions relating to energy percentage by substituting a tabular
format embracing separate coverage for solar, wind, or geothermal
property, ocean thermal property, qualified hydroelectric
generating property, and biomass property using percentages varying
between 10 and 15 percent and covering periods from Oct. 1, 1978,
to Dec. 31, 1985, with longer periods for certain long-term
projects and certain hydroelectric generating property for
provisions that had set the energy percentage at 10 percent for the
period beginning Oct. 1, 1978, and ending Dec. 31, 1982, and zero
with respect to any other period.
Subsec. (a)(2)(D). Pub. L. 96-223, Sec. 222(e)(2), inserted
provision that in the case of any qualified hydroelectric
generating property which is a fish passageway, the special rule
for certain energy property embraced in the first sentence would
not apply to any period after 1979 for which the energy percentage
for such property is greater than zero.
Subsec. (a)(2)(E). Pub. L. 96-222, Sec. 101(a)(7)(L)(v)(I),
(M)(i), substituted in heading "employee plan" for "ESOP" and in
cls. (i) and (ii) inserted "and ending on" before "December 31,
1983".
Subsec. (a)(9). Pub. L. 96-222, Sec. 103(a)(2)(B)(i),
redesignated par. (10) as (9). A former par. (9) was previously
repealed by section 312(b)(2) of Pub. L. 95-600.
Subsec. (a)(9)(A). Pub. L. 96-223, Sec. 223(b)(1)(A), inserted
"and" at end of cl. (i), substituted a period for "(other than
solar wind energy property), and" at end of cl. (ii), and struck
out cl. (iii) which had provided for the application of so much of
the credit allowed by section 38 as was attributable to the
application of the energy percentage to solar or wind energy
property.
Subsec. (a)(9)(B). Pub. L. 96-223. Sec. 223(b)(1)(B), struck out
"other than solar or wind energy property" after "energy property"
in heading.
Pub. L. 96-222, Sec. 103(a)(2)(B)(ii), (iii), substituted
"paragraph (3)(B) shall be applied by substituting '100 percent'
for the percentage determined under the table contained in such
paragraph" for "paragraph (3)(C) shall be applied by substituting
'100 percent' for '50 percent' " in cl. (i) and "(7) and (8)" for
"(7), (8), and (9)" in cl. (ii).
Subsec. (a)(9)(C). Pub. L. 96-223, Sec. 223(b)(1)(C), struck out
subpar. (C) which related to a refundable credit for solar or wind
energy property.
Subsec. (a)(10). Pub. L. 96-222, Sec. 103(a)(2)(B)(i),
redesignated par. (10) as (9).
Subsec. (c)(5)(B). Pub. L. 96-222, Sec. 103(a)(3), inserted
provisions requiring that this subparagraph not apply for purposes
of applying the energy percentage.
Subsec. (e)(3). Pub. L. 96-222, Sec. 103(a)(4)(A), inserted
provisions requiring that this paragraph not apply with respect to
any property which is treated as section 38 property by reason of
section 48(a)(1)(E).
Subsec. (f)(1), (2). Pub. L. 95-600, Sec. 312(c)(2), as amended
by Pub. L. 96-222, Sec. 103(a)(2)(A), substituted " 'described in
section 50 (as in effect before its repeal by the Revenue Act of
1978)' " for " 'described in section 50' ".
Subsec. (f)(8). Pub. L. 96-222, Sec. 107(a)(3)(A), substituted
"subsection (a)(7)(C)" for "subsection (a)(7)(D)".
Subsec. (f)(9). Pub. L. 96-222, Sec. 101(a)(7)(A), substituted in
provisions preceding subpar. (A) "subparagraph (E) of subsection
(a)(2)" for "subparagraph (B) of subsection (a)(2)" and in subpar.
(A) "a tax credit employee stock ownership plan which meets the
requirements of section 409A" for "an employee ownership plan which
meets the requirements of section 301(d) of the Tax Reduction Act
of 1975".
1978 - Subsec. (a)(2). Pub. L. 95-618, Sec. 301(a)(1), among
other changes, inserted provisions relating to an alternative
energy property tax credit which would pay for a certain percentage
of the cost of equipment which uses sources of energy other than
oil and gas and of associated pollution control, handling, and
preparation equipment.
Subsec. (a)(2)(B). Pub. L. 95-600, Sec. 311(a), made 10 percent
limitation on investment tax credit permanent.
Subsec. (a)(2)(E). Pub. L. 95-600, Sec. 141(e), (f)(2),
substituted "December 31, 1983" for "and ending on December 31,
1980" wherever appearing, "section 48(n)(1)(B)" for "section 301(e)
of the Tax Reduction Act of 1975" and "section 409A" for "section
301(d) of the Tax Reduction Act of 1975".
Subsec. (a)(3). Pub. L. 95-600, Sec. 312(a), increased the
present 50 percent tax liability limitation to 90 percent, to be
phased in at an additional 10 percentage points per year beginning
with taxable years which end in 1979.
Subsec. (a)(7). Pub. L. 95-600, Sec. 312(b)(1), in subpar. (A)
substituted "the taxable year ending in 1979" for "a taxable year
ending after calendar year 1974 and before calendar year 1981",
"subparagraph (B)" for "subparagraph (C)", and "for '60 percent'
the taxpayer's" for "for 50 percent his" and inserted "the
application of this paragraph results in a percentage higher than
60 percent," before "then subparagraph (B)"; in subpar. (B)
substituted "70 percent" for "50 percent plus the tentative
percentage for such year"; struck out former subpar. (C), which
related to the determination of the tentative percentage, and
redesignated former subpar. (D) as (C).
Subsec. (a)(8). Pub. L. 95-600, Sec. 312(b)(2), in subpar. (A)
substituted "the taxable year ending in 1979" for "a taxable year
ending after calendar year 1976, and before calendar year 1983",
"subparagraph (B)" for "subparagraph (C)", and "for '60 percent'
('70 percent' in the case of a taxable year ending in 1980) the
taxpayer's" for "for 50 percent his" and inserted reference to
airline property and "the application of this paragraph results in
a percentage higher than 60 percent (70 percent in the case of a
taxable year ending in 1980)," before "then subparagraph (B)"; in
subpar. (B) inserted reference to airline property and substituted
"90 percent (80 percent in the case of a taxable year ending in
1980)" for "50 percent plus the tentative percentage for such
year"; in subpar. (C) table struck out tentative percentage of 50
for 1977 or 1978, 20 for 1981, and 10 for 1982; and added subpar.
(E).
Subsec. (a)(9). Pub. L. 95-600, Sec. 312(b)(2), struck out par.
(9) which related to the alternative limitation in the case of
certain airlines.
Subsec. (a)(10). Pub. L. 95-618, Sec. 301(c)(1), added par. (10).
Subsec. (c)(3)(A). Pub. L. 95-618, Sec. 301(a)(2)(A), substituted
"For the period beginning on January 1, 1981, in the case of any
property" for "To the extent that subsection (a)(2)(C) applies to
property" and inserted provisions that the preceding sentence not
apply for purposes of applying the energy percentage. See
Codification note above.
Pub. L. 95-600, Sec. 311(c)(1), substituted "To the extent that
the credit allowed by section 38 with respect to any public utility
property is determined at the rate of 7 percent" for "For the
period beginning on January 1, 1981". See Codification note above.
Subsec. (c)(5). Pub. L. 95-600, Sec. 313(a), increased the
investment credit available to pollution control facilities which a
taxpayer has elected to amortize over a five-year period to a full
investment credit from a one-half investment credit.
Subsec. (c)(6). Pub. L. 95-618, Sec. 241(a), added par. (6).
Subsec. (e)(1)(C). Pub. L. 95-600, Sec. 316(b)(1), struck out
subpar. (C) which related to a cooperative organization described
in section 1381(a).
Subsec. (e)(2)(C). Pub. L. 95-600, Sec. 316(b)(2), struck out
subpar. (C) which related to a cooperative organization.
Subsec. (f)(1), (2). Pub. L. 95-600, Sec. 312(c)(2), struck out
"described in section 50" after "with respect to any property". See
1980 Amendment note above.
Subsec. (f)(8). Pub. L. 95-618, Sec. 301(a)(2)(B), substituted ",
the Tax Reform Act of 1976, and the Energy Tax Act of 1978" for
"and the Tax Reform Act of 1976". See Codification note above.
Pub. L. 95-600, Secs. 311(c)(2), 703(a)(1), substituted
"subsection (a)(7)(D)" for "subsection (a)(6)(D)" and inserted
reference to the Revenue Act of 1978. See Codification note above.
Subsec. (g)(5). Pub. L. 95-600, Sec. 703(a)(2), substituted
"Merchant Marine Act, 1936" for "Merchant Marine Act, 1970".
Subsec. (h). Pub. L. 95-600, Sec. 316(a), added subsec. (h).
1976 - Subsec. (a)(1). Pub. L. 94-455, Sec. 802(a)(2), added par.
(1) and struck out former par. (1) which related to the percentage
of allowable credit under section 38.
Subsec. (a)(2). Pub. L. 94-455, Sec. 802(a)(2), added par. (2).
Former par. (2) redesignated (3).
Subsec. (a)(3). Pub. L. 94-455, Sec. 802(a)(1), redesignated
former par. (2) as (3). Former par. (3) redesignated (4).
Subsec. (a)(4). Pub. L. 94-455, Secs. 503(b)(4), 802(a)(1),
(b)(1), 1901(a)(4)(A), (b)(1)(C), as amended by Pub. L. 95-600,
Sec. 703(j)(9), redesignated former par. (3) as (4), and in par.
(4) as so redesignated, redesignated former subpar. (C) as (B) and
substituted in provisions preceding subpar. (A) "paragraph (3)" for
"paragraph (2)", in subpar. (B) as so redesignated "credit for the
elderly" for "retirement income", and in provisions following
subpar. (B) "section 408(f)" for "section 408(e)". Former par. (4)
redesignated (5).
Subsec. (a)(5). Pub. L. 94-455, Sec. 802(a)(1), (b)(1),
redesignated former par. (4) as (5) and substituted "paragraph (3)"
for "paragraph (2)". Former par. (5) redesignated (6).
Subsec. (a)(6). Pub. L. 94-455, Secs. 802(a)(1), (b)(1),
1906(b)(13)(A), redesignated former par. (5) as (6) and substituted
"paragraph (3)" for "paragraph (2)" and struck out "or his
delegate" after "Secretary". Former par. (6) redesignated (7).
Subsec. (a)(7). Pub. L. 94-455, Sec. 802(a)(1), (b)(1),
redesignated former par. (6) as (7) and substituted "paragraph (3)"
for "paragraph (2)".
Subsec. (a)(8). Pub. L. 94-455, Sec. 1701(b), added par. (8).
Subsec. (a)(9). Pub. L. 94-455, Sec. 1703, added par. (9).
Subsec. (b). Pub. L. 94-455, Sec. 802(b)(2), among other changes,
inserted requirement that tax credits carried over are applied
first to the tax liability for that year, after which tax credits
earned currently are then applied.
Subsec. (c)(3)(A). Pub. L. 94-455, Sec. 802(b)(3), substituted
"subsection (a)(2)(C)" for "subsection (a)(1)(C)".
Subsec. (c)(3)(B)(iii). Pub. L. 94-455, Sec. 1901(a)(4)(B),
substituted "47 U.S.C. 222(a)(5)" for "47 U.S.C., sec. 222(a)(5)".
Subsec. (c)(5). Pub. L. 94-455, Sec. 2112(a)(2), added par. (5).
Subsec. (d)(4)(D), (6). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsec. (e)(1)(C). Pub. L. 94-455, Sec. 802(b)(4), substituted
"subsection (a)(3)" for "subsection (a)(2)".
Subsec. (e)(2). Pub. L. 94-455, Sec. 1607(b)(1)(B), substituted
in subpar. (B) "857(b)(2)(B)" for "857(b)(2)(C)" and inserted in
provisions following subpar. (C) reference to determine without
regard to any deduction for capital gains dividends (as defined in
section 857(b)(3)(C)) and by excluding any net capital gain.
Subsec. (f)(1)(B), (2), (3). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsec. (f)(4)(A). Pub. L. 94-455, Sec. 803(b)(1)(A), (B),
substituted "paragraphs (1), (2), and (9)" for "paragraphs (1) and
(2)" and "paragraph (1), (2), or (9)" for "paragraph (1) or (2)"
wherever appearing.
Subsec. (f)(4)(B)(ii). Pub. L. 94-455, Sec. 803(b)(1)(C),
substituted "paragraph (2) or the election described in paragraph
(9)," for "paragraph (2),".
Subsec. (f)(7). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
"or his delegate" after "Secretary".
Subsec. (f)(8). Pub. L. 94-455, Secs. 802(b)(5), 1906(b)(13)(A),
inserted reference to the Tax Reform Act of 1976 and struck out "or
his delegate" after "Secretary".
Subsec. (f)(9). Pub. L. 94-455, Sec. 803(a), added par. (9).
Subsec. (g). Pub. L. 94-455, Sec. 805(a), added subsec. (g).
1975 - Subsec. (a)(1). Pub. L. 94-12, Sec. 301(a), designated
existing provisions as subpar. (A), substituted "Except as
otherwise provided in this paragraph, in the case of a property
described in subparagraph (D), the" for "The", "10 percent" for "7
percent", and "(as determined under subsections (c) and (d))" for
"(as defined in subsection (c))" in subpar. (A) as so designated,
and added subpars. (B), (C), and (D).
Subsec. (a)(6). Pub. L. 94-12, Sec. 301(b)(2), added par. (6).
Subsec. (c)(3)(A). Pub. L. 94-12, Sec. 301(b)(1), substituted "To
the extent that subsection (a)(1)(C) applies to property which is
public utility property, the" for "In the case of section 38
property which is public utility property, the".
Subsec. (c)(4). Pub. L. 94-12, Sec. 302(b)(1), added par. (4).
Subsecs. (d), (e). Pub. L. 94-12, Sec. 302(a), added subsec. (d)
and redesignated former subsec. (d) as (e). Former subsec. (e)
redesignated (f) and amended.
Subsec. (f). Pub. L. 94-12, Secs. 301(b)(3), 302(a), redesignated
former subsec. (e) as (f) and in subsec. (f) as so redesignated
added par. (8).
1974 - Subsec. (a)(3). Pub. L. 93-406 inserted reference to
section 402(e) (relating to tax on lump sum distributions), section
72(m)(5)(B) (relating to 10 percent tax on premature distributions
to owner-employees), and section 408(e) (relating to additional tax
on income from certain retirement accounts).
1971 - Subsec. (b)(1). Pub. L. 92-178, Sec. 106(b), inserted
concluding sentence "In the case of an unused credit for an unused
credit year ending before January 1, 1971, which is an investment
credit carryover to a taxable year beginning after December 31,
1970 (determined without regard to this sentence), this paragraph
shall be applied by substituting '10 taxable years' for '7 taxable
years' in subparagraph (B) and by substituting '13 taxable years'
for '10 taxable years' and '12 taxable years' for '9 taxable years'
in the preceding sentence."
Subsec. (b)(3). Pub. L. 92-178, Sec. 106(a), added par. (3).
Subsec. (b)(5). Pub. L. 92-178, Sec. 106(c)(1), substituted
"Certain taxable years ending in 1969, 1970, or 1971" for "Taxable
years beginning after December 31, 1968, and ending after April 18,
1969" in heading; substituted "ending after April 18, 1969, and
before January 1, 1972," for "ending after April 18, 1969,"; and
provided that "In the case of a taxable year ending after August
15, 1971, and before January 1, 1972, the percentage contained in
the preceding sentence shall be increased by 6 percentage points
for each month (or portion thereof) in the taxable year after
August 15, 1971".
Subsec. (b)(6). Pub. L. 92-178, Sec. 106(c)(2), substituted
"ending after April 18, 1969, and before January 1, 1971," for
"ending after April 18, 1969," and "following the 7th taxable year
after the unused credit year" for "following the last taxable year
for which such portion may be added under paragraph (1)",
respectively.
Subsec. (c)(2). Pub. L. 92-178, Sec. 102(a)(1), (b), substituted
"3 years", "5 years", and "7 years" for "4 years" (once), "6 years"
(twice), and "8 years" (twice), respectively in tables of first
sentence and substituted in second sentence "subpart" for
"paragraph" and "useful life of any property shall be the useful
life used in computing the allowance for depreciation under section
167 for the taxable year in which the property is placed in
service" for "useful life of any property shall be determined as of
the time such property is placed in service by the taxpayer".
Subsec. (c)(3)(A). Pub. L. 92-178, Sec. 105(a), substituted the
fraction of " 4/7 " for " 3/7 ".
Subsec. (c)(3)(B). Pub. L. 92-178, Sec. 105(b)(1), (2), struck
out cl. (iii) provisions respecting telephone service, redesignated
cl. (iv) as (iii), included in cl. (iii) provision of former cl.
(iii) respecting telephone service, included other communication
services (other than international telegraph service), and defined
term "public utility property" to also mean communication property
of type used by persons engaged in providing telephone or microwave
communication services to which cl. (iii) applies, if such property
is used predominantly for communication purposes, respectively.
Subsec. (c)(3)(C). Pub. L. 92-178, Sec. 105(b)(3), added subpar.
(C).
Subsec. (c)(4). Pub. L. 92-178, Sec. 107(a)(1), struck out
provisions respecting reduction in basis or cost of certain
replacement property.
Subsec. (d)(3). Pub. L. 92-178, Sec. 108(a), added par. (3).
Subsec. (e). Pub. L. 92-178, Sec. 105(c), added subsec. (e).
1969 - Subsec. (a)(3). Pub. L. 91-172, Sec. 301(b)(4), inserted
"section 56 (relating to minimum tax for tax preference),".
Subsec. (a)(5). Pub. L. 91-172, Sec. 401(e)(1), reenacted
subsection with minor changes and substituted reference to section
1563(a) for reference to section 1504.
Subsec. (b)(5), (6). Pub. L. 91-172, Sec. 703(b), added pars. (5)
and (6).
1967 - Subsec. (b). Pub. L. 90-225 struck out par. (3) which
provided that to the extent that the excess described in par. (1)
of this subsection arises by reason of net operating loss
carryback, subpar. (A) of par. (1) of this subsection shall not
apply.
1966 - Subsec. (a)(2). Pub. L. 89-800, Sec. 3(a), inserted "for
taxable years ending on or before the last day of the suspension
period (as defined in section 48(j))," at beginning of subpar. (B),
and added subpar. (C) and provisions following subpar. (C) covering
the application of subpar. (C) and the reduction of the amount
otherwise determined under par. (2) by the credit allowable but for
the application of section 48(h)(1).
Subsec. (a)(3). Pub. L. 89-389 inserted reference to tax imposed
for the taxable year by section 1378 (relating to tax on certain
capital gains of subchapter S corporations) in the list of taxes
not to be considered tax imposed by this chapter for purposes of
par. (3).
Pub. L. 89-384 added any additional tax imposed for the taxable
year by section 1351 (relating to recoveries of foreign
expropriation losses) to the list of taxes not to be considered a
tax imposed by this chapter for purposes of par. (3).
Subsec. (b)(1). Pub. L. 89-800, Sec. 3(b), substituted "7 taxable
years" for "5 taxable years" in subpar. (B) and "10 taxable years"
and "other 9 taxable years" for "8 taxable years" and "other 7
taxable years" respectively in text following subpar. (B).
1964 - Subsec. (a)(3)(B) to (D). Pub. L. 88-272 struck out
subpar. (B) relating to section 34, and redesignated subpars. (C)
and (D) as (B) and (C), respectively.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11813(a) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7814(d) of Pub. L. 101-239 effective, except
as otherwise provided, as if included in the provision of the
Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647,
to which such amendment relates, see section 7817 of Pub. L.
101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by sections 1002(a)(4), (15), (17), (25), 1009(a)(1),
and 1013(a)(44) of Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 201(d)(7)(B) of Pub. L. 99-514 applicable to
property placed in service after Dec. 31, 1986, in taxable years
ending after such date, with exceptions, see sections 203 and 204
of Pub. L. 99-514, set out as a note under section 168 of this
title.
Section 251(d) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1002(k), Nov. 10, 1988, 102 Stat. 3371, provided
that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and section 48 of this title] shall apply to property
placed in service after December 31, 1986, in taxable years ending
after such date.
"(2) General transitional rule. - The amendments made by this
section and section 201 [amending this section and sections 48,
167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162,
6111, and 7701 of this title] shall not apply to any property
placed in service before January 1, 1994, if such property is
placed in service as part of -
"(A) a rehabilitation which was completed pursuant to a written
contract which was binding on March 1, 1986, or
"(B) a rehabilitation incurred in connection with property
(including any leasehold interest) acquired before March 2, 1986,
or acquired on or after such date pursuant to a written contract
that was binding on March 1, 1986, if -
"(i) parts 1 and 2 of the Historic Preservation Certification
Application were filed with the Department of the Interior (or
its designee) before March 2, 1986, or
"(ii) the lesser of $1,000,000 or 5 percent of the cost of
the rehabilitation is incurred before March 2, 1986, or is
required to be incurred pursuant to a written contract which
was binding on March 1, 1986.
"(3) Certain additional rehabilitations. - The amendments made by
this section and section 201 [amending this section and sections
48, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245,
4162, 6111, and 7701 of this title] shall not apply to -
"(A) the rehabilitation of 8 bathhouses within the Hot Springs
National Park or of buildings in the Central Avenue Historic
District at such Park,
"(B) the rehabilitation of the Upper Pontalba Building in New
Orleans, Louisiana,
"(C) the rehabilitation of at least 60 buildings listed on the
National Register at the Frankford Arsenal,
"(D) the rehabilitation of De Baliveriere Arcade, St. Louis
Centre, and Drake Apartments in Missouri,
"(E) the rehabilitation of The Tides in Bristol, Rhode Island,
"(F) the rehabilitation and renovation of the Outlet Company
building and garage in Providence, Rhode Island,
"(G) the rehabilitation of 10 structures in Harrisburg,
Pennsylvania, with respect to which the Harristown Development
Corporation was designated redeveloper and received an option to
acquire title to the entire project site for $1 on June 27, 1984,
"(H) the rehabilitation of a project involving the renovation
of 3 historic structures on the Minneapolis riverfront, with
respect to which the developer of the project entered into a
redevelopment agreement with a municipality dated January 4,
1985, and industrial development bonds were sold in 3 separate
issues in May, July, and October 1985,
"(I) the rehabilitation of a bank's main office facilities of
approximately 120,000 square feet, in connection with which the
bank's board of directors authorized a $3,300,000 expenditure for
the renovation and retrofit on March 20, 1984,
"(J) the rehabilitation of 10 warehouse buildings built between
1906 and 1910 and purchased under a contract dated February 17,
1986,
"(K) the rehabilitation of a facility which is customarily used
for conventions and sporting events if an analysis of operations
and recommendations of utilization of such facility was prepared
by a certified public accounting firm pursuant to an engagement
authorized on March 6, 1984, and presented on June 11, 1984, to
officials of the city in which such facility is located,
"(L) Mount Vernon Mills in Columbia, South Carolina,
"(M) the Barbara Jordan II Apartments,
"(N) the rehabilitation of the Federal Building and Post
Office, 120 Hanover Street, Manchester, New Hampshire,
"(O) the rehabilitation of the Charleston Waterfront project in
South Carolina,
"(P) the Hayes Mansion in San Jose, California,
"(Q) the renovation of a facility owned by the National
Railroad Passenger Corporation ('Amtrak') for which project
Amtrak engaged a development team by letter agreement dated
August 23, 1985, as modified by letter agreement dated September
9, 1985,
"(R) the rehabilitation of a structure or its components which
is listed in the National Register of Historic Places, is located
in Allegheny County, Pennsylvania, will be substantially
rehabilitated (as defined in section 48(g)(1)(C) prior to
amendment by this Act), prior to December 31, 1989; and was
previously utilized as a market and an auto dealership,
"(S) The Bellevue Stratford Hotel in Philadelphia,
Pennsylvania,
"(T) the Dixon Mill Housing project in Jersey City, New Jersey,
"(U) Motor Square Garden,
"(V) the Blackstone Apartments, and the Shriver-Johnson
building, in Sioux Falls, South Dakota,
"(W) the Holy Name Academy in Spokane, Washington,
"(X) the Nike/Clemson Mill in Exeter, New Hampshire,
"(Y) the Central Bank Building in Grand Rapids, Michigan, and
"(Z) the Heritage Hotel, in the City of Marquette, Michigan.
"(4) Additional rehabilitations. - The amendments made by this
section and section 201 [amending sections 46, 48, 167, 168, 178,
179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701
of this title] shall not apply to -
"(A) the Fort Worth Town Square Project in Texas,
"(B) the American Youth Hostel in New York, New York,
"(C) The Riverwest Loft Development (including all three
phases, two of which do not involve rehabilitations),
"(D) the Gaslamp Quarter Historic District in California,
"(E) the Eberhardt & Ober Brewery, in Pennsylvania,
"(F) the Captain's Walk Limited Partnership-Harris Place
Development, in Connecticut,
"(G) the Velvet Mills in Connecticut,
"(H) the Roycroft Inn, in New York,
"(I) Old Main Village, in Mankato, Minnesota,
"(J) the Washburn-Crosby A Mill, in Minneapolis, Minnesota,
"(K) the Marble Arcade office building in Lakeland, Florida,
"(L) the Willard Hotel, in Washington, D.C.,
"(M) the H. P. Lau Building in Lincoln, Nebraska,
"(N) the Starks Building, in Louisville, Kentucky,
"(O) the Bellevue High School, in Bellevue, Kentucky,
"(P) the Major Hampden Smith House, in Owensboro, Kentucky,
"(Q) the Doe Run Inn, in Brandenburg, Kentucky,
"(R) the State National Bank, in Frankfort, Kentucky,
"(S) the Captain Jack House, in Fleming, Kentucky,
"(T) the Elizabeth Arlinghaus House, in Covington, Kentucky,
"(U) Limerick Shamrock, in Louisville, Kentucky,
"(V) the Robert Mills Project, in South Carolina,
"(W) the 620 Project, consisting of 3 buildings, in Kentucky,
"(X) the Warrior Hotel, Ltd., the first two floors of the
Martin Hotel, and the 105,000 square foot warehouse constructed
in 1910, all in Sioux City, Iowa,
"(Y) the waterpark condominium residential project, to the
extent of $2 million of expenditures,
"(Z) the Bigelow-Hartford Carpet Mill in Enfield, Connecticut,
"(AA) properties abutting 125th street in New York County from
7th Avenue west to Morningside and the pier area on the Hudson
River at the end of such 125th Street,
"(BB) the City of Los Angeles Central Library project pursuant
to an agreement dated December 28, 1983,
"(CC) the Warehouse Row project in Chattanooga, Tennessee,
"(DD) any project described in section 204(a)(1)(F) of this Act
[26 U.S.C. 168 note],
"(EE) the Wood Street Commons project in Pittsburgh,
Pennsylvania,
"(FF) any project described in section 803(d)(6) of this Act
[26 U.S.C. 263A note],
"(GG) Union Station, Indianapolis, Indiana,
"(HH) the Mattress Factory project in Pittsburgh, Pennsylvania,
"(II) Union Station in Providence, Rhode Island,
"(JJ) South Pack Plaza, Asheville, North Carolina,
"(KK) Old Louisville Trust Project, Louisville, Kentucky,
"(LL) Stewarts Rehabilitation Project, Louisville, Kentucky,
"(MM) Bernheim Officenter, Louisville, Kentucky,
"(NN) Springville Mill Project, Rockville, Connecticut, and
"(OO) the D.J. Stewart Company Building, State and Main
Streets, Rockford, Illinois.
"(5) Reduction in credit for property under transitional rules. -
In the case of property placed in service after December 31, 1986,
and to which the amendments made by this section [amending this
section and sections 47 and 48 of this title] do not apply,
subparagraph (A) of section 46(b)(4) of the Internal Revenue Code
of 1954 [now 1986] (as in effect before the enactment of this Act)
shall be applied -
"(A) by substituting '10 percent' for '15 percent', and
"(B) by substituting '13 percent' for '20 percent'.
"(6) Expensing of rehabilitation expenses for the frankford
arsenal. - In the case of any expenditures paid or incurred in
connection with improvements (including repairs and maintenance) of
the Frankford Arsenal pursuant to a contract and partnership
agreement during the 8-year period specified in the contract or
agreement, all such expenditures to be made during the period 1986
through and including 1993 shall -
"(A) be treated as made (and allowable as a deduction) during
1986,
"(B) be treated as qualified rehabilitation expenditures made
during 1986, and
"(C) be allocated in accordance with the partnership agreement
regardless of when the interest in the partnership was acquired,
except that -
"(i) if the taxpayer is not the original holder of such
interest, no person (other than the taxpayer) had claimed any
benefits by reason of this paragraph,
"(ii) no interest under section 6611 of the 1986 Code on any
refund of income taxes which is solely attributable to this
paragraph shall be paid for the period -
"(I) beginning on the date which is 45 days after the later
of April 15, 1987, or the date on which the return for such
taxes was filed, and
"(II) ending on the date the taxpayer acquired the interest
in the partnership, and
"(iii) if the expenditures to be made under this provision
are not paid or incurred before January 1, 1994, then the tax
imposed by chapter 1 of such Code for the taxpayer's last
taxable year beginning in 1993 shall be increased by the amount
of the tax benefits by reason of this paragraph which are
attributable to the expenditures not so paid or incurred.
"(7) Special rule. - In the case of the rehabilitation of the
Willard Hotel in Washington, D.C., section 205(c)(1)(B)(ii) of the
Tax Equity and Fiscal Responsibility Act of 1982 [section
205(c)(1)(B)(ii) of Pub. L. 97-248, set out as a note under section
196 of this title] shall be applied by substituting '1987' for
'1986'."
Section 421(c) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section] shall apply to periods
beginning after December 31, 1985, under rules similar to rules
under section 48(m) of the Internal Revenue Code of 1986."
Amendment by sections 1802(a)(6), (8), 1844(a), (b)(3), (5),
1847(b)(11), 1848(a) of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99-514, set out as a note
under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 16 of Pub. L. 98-369 applicable to taxable
years ending after Dec. 31, 1983, see section 18(a) of Pub. L.
98-369, set out as a note under section 48 of this title.
Amendment by section 31(f) of Pub. L. 98-369 effective, except as
otherwise provided in section 31(g) of Pub. L. 98-369, as to
property placed in service by the taxpayer after Nov. 5, 1983, in
taxable years ending after such date and to property placed in
service by the taxpayer on or before Nov. 5, 1983, if the lease to
the organization described in section 593 of this title is entered
into after Nov. 5, 1983, see section 31(g)(1), (14) of Pub. L.
98-369, set out as a note under section 168 of this title.
Amendment by section 113(b)(2)(B) of Pub. L. 98-369 applicable as
if included in the amendments by sections 201(a), 211(a)(1), and
211(f)(1) of Pub. L. 97-34, which amended this section and enacted
section 168 of this title, see section 113(c)(2)(B) of Pub. L.
98-369, set out as a note under section 168 of this title.
Section 431(e) of Pub. L. 98-369 provided:
"(1) In general. - The amendments made by this section [amending
this section and sections 47 and 48 of this title] shall apply to
property placed in service after the date of the enactment of this
Act [July 18, 1984] in taxable years ending after such date; except
that such amendments shall not apply to any property to which the
amendments made by section 211(f) of the Economic Recovery Tax Act
of 1981 [section 211(f) of Pub. L. 97-34, amending sections 46 and
47 of this title] do not apply.
"(2) Amendments may be elected retroactively. - At the election
of the taxpayer, the amendments made by this section shall apply as
if included in the amendments made by section 211(f) of the
Economic Recovery Tax Act of 1981. Any election made under the
preceding sentence shall apply to all property of the taxpayer to
which the amendments made by such section 211(f) apply and shall be
made at such time and in such manner as the Secretary of the
Treasury or his delegate may by regulations prescribe."
Amendment by section 474(o)(1)-(7) of Pub. L. 98-369 applicable
to taxable years beginning after Dec. 31, 1983, and to carrybacks
from such years, see section 475(a) of Pub. L. 98-369, set out as a
note under section 21 of this title.
Amendment by section 713 of Pub. L. 98-369 effective as if
included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 715 of Pub. L. 98-369, set out as a note under
section 31 of this title.
EFFECTIVE DATE OF 1983 AMENDMENTS
Amendment by section 122(c)(1) of Pub. L. 98-21 applicable to
taxable years beginning after Dec. 31, 1983, except that if an
individual's annuity starting date was deferred under section
105(d)(6) of this title as in effect on the day before Apr. 20,
1983, such deferral shall end on the first day of such individual's
first taxable year beginning after Dec. 31, 1983, see section
122(d) of Pub. L. 98-21, set out as a note under section 22 of this
title.
Amendment by title I of Pub. L. 97-448 effective, except as
otherwise provided, as if it had been included in the provision of
the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
Amendment by section 202(f) of Pub. L. 97-448 effective, except
as otherwise provided, as if it had been included in the provision
of the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223,
to which such amendment relates, see section 203(a) of Pub. L.
97-448, set out as a note under section 6652 of this title.
Section 541(c) of Pub. L. 97-424, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) General rule. - The amendments made by subsections (a) and
(b) [amending this section and sections 167 and 168 of this title]
shall apply to taxable years beginning after December 31, 1979.
"(2) Special rule for periods beginning before march 1, 1980. -
"(A) In general. - Subject to the provisions of paragraphs (3)
and (4), notwithstanding the provisions of sections 167(l) and
46(f) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]
and of any regulations prescribed by the Secretary of the
Treasury (or his delegate) under such sections, the use for
ratemaking purposes or for reflecting operating results in the
taxpayer's regulated books of account, for any period before
March 1, 1980, of -
"(i) any estimates or projections relating to the amounts of
the taxpayer's tax expense, depreciation expense, deferred tax
reserve, credit allowable under section 38 of such code, or
rate base, or
"(ii) any adjustments to the taxpayer's rate of return,
shall not be treated as inconsistent with the requirements of
subparagraph (G) of such section 167(l)(3) nor inconsistent with
the requirements of paragraph (1) or (2) of such section 46(f),
where such estimates or projections, or such rate of return
adjustments, were included in a qualified order.
"(B) Qualified order defined. - For purposes of this
subsection, the term "qualified order" means an order -
"(i) by a public utility commission which was entered before
March 13, 1980,
"(ii) which used the estimates, projections, or rate of
return adjustments referred to in subparagraph (A) to determine
the amount of the rates to be collected by the taxpayer or the
amount of a refund with respect to rates previously collected,
and
"(iii) which ordered such rates to be collected or refunds to
be made (whether or not such order actually was implemented or
enforced).
"(3) Limitations on application of paragraph (2). -
"(A) Paragraph (2) not to apply to amounts actually flowed
through. - Paragraph (2) shall not apply to the amount of any -
"(i) rate reduction, or
"(ii) refund,
which was actually made pursuant to a qualified order.
"(B) Taxpayer must enter into closing agreement before
paragraph (2) applies. - Paragraph (2) shall not apply to any
taxpayer unless, before the later of -
"(i) July 1, 1983, or
"(ii) 6 months after the refunds or rate reductions are
actually made pursuant to a qualified order.
the taxpayer enters into a closing agreement (within the meaning
of section 7121 of the Internal Revenue Code of 1986) which
provides for the payment by the taxpayer of the amount of which
paragraph (2) does not apply by reason of subparagraph (A).
"(4) Special rules relating to payment of refunds or interest by
the united states or the taxpayer. -
"(A) Refund defined. - For purposes of this subsection, the
term "refund" shall include any credit allowed by the taxpayer
under a qualified order but shall not include interest payable
with respect to any refund (or credit) under such order.
"(B) No interest payable by united states. - No interest shall
be payable under section 6611 of the Internal Revenue Code of
1986 on any overpayment of tax which is attributable to the
application of paragraph (2).
"(C) Payments may be made in two equal installments. -
"(i) In general. - The taxpayer may make any payment required
by reason of paragraph (3) in 2 equal installments, the first
installment being due on the last date on which a taxpayer may
enter into a closing agreement under paragraph (3)(B), and the
second payment being due 1 year after the last date for the
first payment.
"(ii) Interest payments. - For purposes of section 6601 of
such Code, the last date prescribed for payment with respect to
any payment required by reason of paragraph (3) shall be the
last date on which such payment is due under clause (i).
"(5) No inference. - The application of subparagraph (G) of
section 167(l)(3) of the Internal Revenue Code of 1986, and the
application of paragraphs (1) and (2) of section 46(f) of such
Code, to taxable years beginning before January 1, 1980, shall be
determined without any inference drawn from the amendments made by
subsections (a) and (b) of this section [amending this section and
sections 167 and 168 of this title] or from the rules contained in
paragraphs (2), (3), and (4). Nothing in the preceding sentence
shall be construed to limit the relief provided by paragraphs (2),
(3), and (4)."
EFFECTIVE DATE OF 1982 AMENDMENTS
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
Amendment by section 201(d)(8)(A), formerly section 201(c)(8)(A),
of Pub. L. 97-248, applicable to taxable years beginning after Dec.
31, 1982, see section 201(e)(1) of Pub. L. 97-248, set out as a
note under section 5 of this title.
Section 205(c)(2) of Pub. L. 97-248 provided that: "The
amendments made by subsection (b) [amending this section] shall
apply to taxable years beginning after December 31, 1982."
Amendment by section 265(b)(2)(A)(i) of Pub. L. 97-248 applicable
to distributions after Dec. 31, 1982, see section 265(c)(2) of Pub.
L. 97-248, set out as a note under section 72 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 207(c)(1) of Pub. L. 97-34 applicable to
unused credit years ending after Dec. 31, 1973, see section
209(c)(2)(A) of Pub. L. 97-34, set out as an Effective Date note
under section 168 of this title.
Section 211(i) of Pub. L. 97-34 provided that:
"(1) In general. - Except as provided in this subsection, the
amendments made by this section [amending this section and sections
47 and 48 of this title] shall apply to property placed in service
after December 31, 1980.
"(2) Progress expenditures. - The amendments made by subsection
(b) [amending this section] shall apply to progress expenditures
made after December 31, 1980.
"(3) Petroleum storage facilities. - The amendments made by
subsection (c) [amending this section] shall apply to periods after
December 31, 1980, under rules similar to the rules under section
48(m).
"(4) Noncorporate lessors. - The amendments made by subsection
(d) [amending this section] shall apply to leases entered into
after June 25, 1981.
"(5) At risk rules. -
"(A) In general. - The amendment made by subsection (f)
[amending this section and section 47 of this title] shall not
apply to -
"(i) property placed in service by the taxpayer on or before
February 18, 1981, and
"(ii) property placed in service by the taxpayer after
February 18, 1981, where such property is acquired by the
taxpayer pursuant to a binding contract entered into on or
before that date.
"(B) Binding contract. - For purposes of subparagraph (A)(ii),
property acquired pursuant to a binding contract shall, under
regulations prescribed by the Secretary, include property
acquired in a manner so that it would have qualified as
pretermination property under section 49(b) (as in effect before
its repeal by the Revenue Act of 1978) [Pub. L. 95-600].
"(6) Leased rolling stock. - The amendment made by subsection (h)
[amending section 48 of this title] shall apply to taxable years
beginning after December 31, 1980."
Section 212(e) of Pub. L. 97-34, as amended by Pub. L. 97-448,
title I, Sec. 102(f)(1), Jan. 12, 1983, 96 Stat. 2371; Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
48, 57, 167, 280B, 642, 1016, 1082, 1245, and 1250 of this title
and repealing section 191 of this title] shall apply to
expenditures incurred after December 31, 1981, in taxable years
ending after such date.
"(2) Transitional rule. - The amendments made by this section
shall not apply with respect to any rehabilitation of a building if
-
"(A) the physical work on such rehabilitation began before
January 1, 1982, and
"(B) such building does not meet the requirements of paragraph
(1) of section 48(g) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] (as amended by this Act [Pub. L. 97-34])."
Section 332(c)(1) of Pub. L. 97-34 provided that: "The amendments
made by subsection (a) [amending this section] shall be effective
on the date of enactment of this Act [Aug. 13, 1981]."
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by section 222(e)(2) of Pub. L. 96-223 applicable to
periods after Dec. 31, 1979, under rules similar to the rules of
section 48(m) of this title, see section 222(j)(1) of Pub. L.
96-223, set out as a note under section 48 of this title.
Section 223(b)(3) of Pub. L. 96-223 provided that: "The
amendments made by this subsection [amending this section and
section 6401 of this title] shall apply to qualified investment for
taxable years beginning after December 31, 1979."
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 141(e), (f)(2) of Pub. L. 95-600 effective
with respect to qualified investment for taxable years beginning
after Dec. 31, 1978, see section 141(g)(1) of Pub. L. 95-600, set
out as an Effective Date note under section 409 of this title.
Section 312(d) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section and sections 48 and 167
of this title and repealing sections 49 and 50 of this title] shall
apply to taxable years ending after December 31, 1978."
Section 313(b) of Pub. L. 95-600 provided that:
"The amendment made by subsection (a) [amending this section]
shall apply to -
"(1) property acquired by the taxpayer after December 31, 1978,
and
"(2) property the construction, reconstruction, or erection of
which was completed by the taxpayer after December 31, 1978 (but
only to the extent of the basis thereof attributable to
construction, reconstruction, or erection after such date)."
Section 316(c) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section and section 1388 of
this title] shall apply to taxable years ending after October 31,
1978."
Section 703(r) of Pub. L. 95-600 provided that: "Except as
otherwise provided, the amendments made by this section [amending
this section and sections 48, 103, 447, 453, 501, 801, 911, 995,
996, 999, 1033, 1212, 1375, 1402, 1561, 4041, 4911, 6104, 6427,
6501, 6504, 6511, 7609 of this title and sections 402, 405, 410,
and 411 of Title 42, The Public Health and Welfare, enacting
provisions set out as notes under sections 103, 311, 443, 501, and
4973 of this title, and amending provisions set out as notes under
section 120, 311, 907, 995, 2011, 2501, and 4940 of this title]
shall take effect on October 4, 1976."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 503(b)(4) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1975, see section 508 of
Pub. L. 94-455, set out as a note under section 3 of this title.
Section 802(c) of Pub. L. 94-455 provided that: "The amendments
made by this section [amending this section and section 48 of this
title and provisions set out below] shall apply to taxable years
beginning after December 31, 1975."
Section 803(j) of Pub. L. 94-455 provided that:
"(1) General rule. - Except as provided in paragraph (2), the
amendments made by this section [see Tables for classification of
section 803 of Pub. L. 94-455] shall apply for taxable years
beginning after December 31, 1974.
"(2) Exceptions. -
"(A) Section 301(e) of the Tax Reduction Act of 1975 [set out
below], as added by subsection (d), shall apply for taxable
years beginning after December 31, 1976.
"(B) The amendments made by subsections (a) and (b)(1) shall
apply for taxable years beginning after December 31, 1975.
"(C) The amendments made by subsections (b)(4) and (f) shall
apply for years beginning after December 31, 1975."
Section 805(b) of Pub. L. 94-455, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as provided in subparagraph (B), the
amendment made by subsection (a) [amending this section] shall
apply to taxable years beginning after December 31, 1975, in the
case of property placed in service after such date.
"(2) Section 46(g)(4). - Section 46(g)(4) of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954] (as added by
subsection (a)) shall apply to taxable years beginning after
December 31, 1975."
Amendment by section 1607(b)(1)(B) of Pub. L. 94-455 applicable
to taxable years ending after Oct. 4, 1976, with certain
exceptions, see section 1608(c) of Pub. L. 94-455, set out as a
note under section 857 of this title.
Amendment by section 1901(a)(4)(A), (B), (b)(1)(C) of Pub. L.
94-455 applicable with respect to taxable years beginning after
Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as a
note under section 2 of this title.
Section 2112(d)(1) of Pub. L. 94-455 provided that: "The
amendments made by subsection (a) [amending this section and
section 48 of this title] shall apply to -
"(A) property acquired by the taxpayer after December 31, 1976,
and
"(B) property the construction, reconstruction, or erection of
which was completed by the taxpayer after December 31, 1976, (but
only to the extent of the basis thereof attributable to
construction, reconstruction, or erection after such date), in
taxable years beginning after such date."
EFFECTIVE DATE OF 1975 AMENDMENT
Section 301(b)(4) of Pub. L. 94-12 provided that: "The amendment
made by paragraph (1) of this subsection [amending this section]
shall apply to property placed in service after January 21, 1975,
in taxable years ending after January 21, 1975. The amendments made
by paragraphs (2) and (3) [amending this section] shall apply to
taxable years ending after December 31, 1974."
Section 305(a) of Pub. L. 94-12 provided that: "The amendments
made by section 302 [amending this section and sections 47, 48, and
50B of this title] shall apply to taxable years ending after
December 31, 1974."
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by section 2001(g)(2)(B) of Pub. L. 93-406 applicable
to distributions made in taxable years beginning after Dec. 31,
1975, see section 2001(i)(5) of Pub. L. 93-406, set out as a note
under section 72 of this title.
Amendment by section 2002(g)(2) of Pub. L. 93-406 effective on
Jan. 1, 1975, see section 2002(i)(2) of Pub. L. 93-406, set out as
an Effective Date note under section 4973 of this title.
Amendment by section 2005(c)(4) of Pub. L. 93-406 applicable only
with respect to distributions or payments made after Dec. 31, 1973,
in taxable years beginning after Dec. 31, 1973, see section 2005(d)
of Pub. L. 93-406, set out as a note under section 402 of this
title.
EFFECTIVE DATE OF 1971 AMENDMENT
Section 102(d)(1), (2) of Pub. L. 92-178, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) The amendments made by subsections (a) and (b) [amending
this section and section 48 of this title] shall apply to property
described in section 50 of the Internal Revenue Code of 1986
[formerly I.R.C. 1954].
"(2) In redetermining qualified investment for purposes of
section 47(a) of the Internal Revenue Code of 1986 in the case of
any property which ceases to be section 38 property with respect to
the taxpayer after August 15, 1971, or which becomes public utility
property after such date, section 46(c)(2) of such Code shall be
applied as amended by subsection (a)."
Section 105(d) of Pub. L. 92-178, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by this section [amending this section and enacting
provisions set out below] shall apply to property described in
section 50 of the Internal Revenue Code of 1986 [formerly I.R.C.
1954]."
Section 106(d) of Pub. L. 92-178 provided that: "The amendments
made by subsections (a), (b), and (c)(2) [amending this section]
shall apply to taxable years beginning after December 31, 1970. The
amendments made by subsection (c)(1) [amending this section] shall
apply to taxable years ending after August 15, 1971."
Section 107(a)(2) of Pub. L. 92-178 provided that: "The repeals
made by paragraph (1) [amending this section and section 47 of this
title] shall apply to casualties and thefts occurring after August
15, 1971."
Section 108(d) of Pub. L. 92-178 provided that: "The amendments
made by subsections (a) and (b) [amending this section and section
48 of this title] shall apply to leases entered into after
September 22, 1971. The amendment made by subsection (c) [amending
section 48 of this title] shall apply to leases entered into after
November 8, 1971."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 301(b)(4) of Pub. L. 91-172 applicable to
taxable years ending after Dec. 31, 1969, see section 301(c) of
Pub. L. 91-172, set out as a note under section 5 of this title.
Amendment by section 401(e)(1) of Pub. L. 91-172 applicable with
respect to taxable years ending on or after Dec. 31, 1970, see
section 401(h)(3) of Pub. L. 91-172, set out as a note under
section 1561 of this title.
EFFECTIVE DATE OF 1967 AMENDMENT
Section 2(g) of Pub. L. 90-225 provided that: "The amendments
made by this section [amending this section and sections 6411,
6501, 6511, 6601, and 6611 of this title] shall apply with respect
to investment credit carrybacks attributable to net operating loss
carrybacks from taxable years ending after July 31, 1967."
EFFECTIVE DATE OF 1966 AMENDMENTS
Section 4 of Pub. L. 89-800 provided that: "The amendments made
by this Act [amending this section and sections 48 and 167 of this
title] shall apply to taxable years ending after October 9, 1966,
except that the amendments made by section 3(b) [amending this
section] shall apply only if the fifth taxable year following the
unused credit year ends after December 31, 1966."
Section 2(c) of Pub. L. 89-389 provided that: "The amendments
made by this section [enacting section 1378 of this title and
amending this section and sections 1372, 1373, and 1375 of this
title] shall apply with respect to taxable years of electing small
business corporations beginning after the date of enactment of this
Act [Apr. 14, 1966], but such amendments shall not apply with
respect to sales or exchanges occurring before February 24, 1966."
Amendment by Pub. L. 89-384 applicable with respect to amounts
received after December 31, 1964, in respect of foreign
expropriation losses (as defined in section 1351(b) of this title)
sustained after December 31, 1958, see section 2 of Pub. L. 89-384,
set out as an Effective Date note under section 1351 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable with respect to dividends
received after Dec. 31, 1964, in taxable years ending after such
date, see section 201(e) of Pub. L. 88-272, set out as a note under
section 22 of this title.
EFFECTIVE DATE
Section 2(h) of Pub. L. 87-834 provided that: "The amendments
made by this section [enacting this section and sections 38, 47,
48, and 181 of this title, amending sections 381, 1016, 6501, 6511,
6601, and 6611 of this title, and renumbering former section 38 as
section 39 of this title] shall apply with respect to taxable years
ending after December 31, 1961."
SAVINGS PROVISION
For provisions that nothing in amendment by section 11813(a) of
Pub. L. 101-508 be construed to affect treatment of certain
transactions occurring, property acquired, or items of income,
loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
CLARIFICATION OF EFFECT OF 1984 AMENDMENT ON INVESTMENT TAX CREDIT
Section 475(c) of Pub. L. 98-369 provided that: "Nothing in the
amendments made by section 474(o) [amending this section and
sections 47 and 48 of this title] shall be construed as reducing
the amount of any credit allowable for qualified investment in
taxable years beginning before January 1, 1984."
REGULATED PUBLIC UTILITIES; SPECIAL TRANSITIONAL RULE
Section 209(d)(2) of Pub. L. 97-34, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "If, by the
terms of the applicable rate order last entered before the date of
the enactment of this Act [Aug. 13, 1981] by a regulatory
commission having appropriate jurisdiction, a regulated public
utility would (but for this provision) fail to meet the
requirements of paragraph (1) or (2) of section 46(f) of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect
to property for an accounting period ending after December 31,
1980, such regulated public utility shall not fail to meet such
requirements if, by the terms of its first rate order determining
cost of service with respect to such property which becomes
effective after the date of the enactment of this Act and on or
before January 1, 1983, such regulated public utility meets such
requirements. This provision shall not apply to any rate order
which, under the rules in effect before the date of the enactment
of this Act was inconsistent with the requirements of paragraph (1)
or (2) of section 46(f) of such Code (whichever would have been
applicable)."
PLAN REQUIREMENTS FOR TAXPAYERS ELECTING ADDITIONAL CREDITS
Section 301(d), (e), (f) of Pub. L. 94-12, as amended by Pub. L.
94-455, Secs. 802(b)(7), 803(c), (d), (e), relating to plan
requirements for taxpayers electing additional credit, was repealed
by Pub. L. 95-600, title I, Sec. 141(f)(1), Nov. 6, 1978, 92 Stat.
2795.
PUBLIC UTILITY PROPERTY SUBJECT TO SUBSEC. (E); PROVISIONS
RESPECTING TREATMENT OF INVESTMENT CREDIT BY FEDERAL REGULATORY
AGENCIES INAPPLICABLE
Section 105(e) of Pub. L. 92-178, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Section
203(e) of the Revenue Act of 1964 [set out as note under section 38
of this title] shall not apply to public utility property to which
section 46(e) of the Internal Revenue Code of 1986 [formerly I.R.C.
1954] (as added by subsection (c)) [subsec. (e) of this section]
applies."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 47, 48, 49, 50, 52,
111, 196 of this title.
-End-
-CITE-
26 USC Sec. 47 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
Sec. 47. Rehabilitation credit
-STATUTE-
(a) General rule
For purposes of section 46, the rehabilitation credit for any
taxable year is the sum of -
(1) 10 percent of the qualified rehabilitation expenditures
with respect to any qualified rehabilitated building other than a
certified historic structure, and
(2) 20 percent of the qualified rehabilitation expenditures
with respect to any certified historic structure.
(b) When expenditures taken into account
(1) In general
Qualified rehabilitation expenditures with respect to any
qualified rehabilitated building shall be taken into account for
the taxable year in which such qualified rehabilitated building
is placed in service.
(2) Coordination with subsection (d)
The amount which would (but for this paragraph) be taken into
account under paragraph (1) with respect to any qualified
rehabilitated building shall be reduced (but not below zero) by
any amount of qualified rehabilitation expenditures taken into
account under subsection (d) by the taxpayer or a predecessor of
the taxpayer (or, in the case of a sale and leaseback described
in section 50(a)(2)(C), by the lessee), to the extent any amount
so taken into account has not been required to be recaptured
under section 50(a).
(c) Definitions
For purposes of this section -
(1) Qualified rehabilitated building
(A) In general
The term "qualified rehabilitated building" means any
building (and its structural components) if -
(i) such building has been substantially rehabilitated,
(ii) such building was placed in service before the
beginning of the rehabilitation,
(iii) in the case of any building other than a certified
historic structure, in the rehabilitation process -
(I) 50 percent or more of the existing external walls of
such building are retained in place as external walls,
(II) 75 percent or more of the existing external walls of
such building are retained in place as internal or external
walls, and
(III) 75 percent or more of the existing internal
structural framework of such building is retained in place,
and
(iv) depreciation (or amortization in lieu of depreciation)
is allowable with respect to such building.
(B) Building must be first placed in service before 1936
In the case of a building other than a certified historic
structure, a building shall not be a qualified rehabilitated
building unless the building was first placed in service before
1936.
(C) Substantially rehabilitated defined
(i) In general
For purposes of subparagraph (A)(i), a building shall be
treated as having been substantially rehabilitated only if
the qualified rehabilitation expenditures during the 24-month
period selected by the taxpayer (at the time and in the
manner prescribed by regulation) and ending with or within
the taxable year exceed the greater of -
(I) the adjusted basis of such building (and its
structural components), or
(II) $5,000.
The adjusted basis of the building (and its structural
components) shall be determined as of the beginning of the
1st day of such 24-month period, or of the holding period of
the building, whichever is later. For purposes of the
preceding sentence, the determination of the beginning of the
holding period shall be made without regard to any
reconstruction by the taxpayer in connection with the
rehabilitation.
(ii) Special rule for phased rehabilitation
In the case of any rehabilitation which may reasonably be
expected to be completed in phases set forth in architectural
plans and specifications completed before the rehabilitation
begins, clause (i) shall be applied by substituting "60-month
period" for "24-month period".
(iii) Lessees
The Secretary shall prescribe by regulation rules for
applying this subparagraph to lessees.
(D) Reconstruction
Rehabilitation includes reconstruction.
(2) Qualified rehabilitation expenditure defined
(A) In general
The term "qualified rehabilitation expenditure" means any
amount properly chargeable to capital account -
(i) for property for which depreciation is allowable under
section 168 and which is -
(I) nonresidential real property,
(II) residential rental property,
(III) real property which has a class life of more than
12.5 years, or
(IV) an addition or improvement to property described in
subclause (I), (II), or (III), and
(ii) in connection with the rehabilitation of a qualified
rehabilitated building.
(B) Certain expenditures not included
The term "qualified rehabilitation expenditure" does not
include -
(i) Straight line depreciation must be used
Any expenditure with respect to which the taxpayer does not
use the straight line method over a recovery period
determined under subsection (c) or (g) of section 168. The
preceding sentence shall not apply to any expenditure to the
extent the alternative depreciation system of section 168(g)
applies to such expenditure by reason of subparagraph (B) or
(C) of section 168(g)(1).
(ii) Cost of acquisition
The cost of acquiring any building or interest therein.
(iii) Enlargements
Any expenditure attributable to the enlargement of an
existing building.
(iv) Certified historic structure, etc.
Any expenditure attributable to the rehabilitation of a
certified historic structure or a building in a registered
historic district, unless the rehabilitation is a certified
rehabilitation (within the meaning of subparagraph (C)). The
preceding sentence shall not apply to a building in a
registered historic district if -
(I) such building was not a certified historic structure,
(II) the Secretary of the Interior certified to the
Secretary that such building is not of historic
significance to the district, and
(III) if the certification referred to in subclause (II)
occurs after the beginning of the rehabilitation of such
building, the taxpayer certifies to the Secretary that, at
the beginning of such rehabilitation, he in good faith was
not aware of the requirements of subclause (II).
(v) Tax-exempt use property
(I) In general
Any expenditure in connection with the rehabilitation of
a building which is allocable to the portion of such
property which is (or may reasonably be expected to be)
tax-exempt use property (within the meaning of section
168(h)).
(II) Clause not to apply for purposes of paragraph (1)(C)
This clause shall not apply for purposes of determining
under paragraph (1)(C) whether a building has been
substantially rehabilitated.
(vi) Expenditures of lessee
Any expenditure of a lessee of a building if, on the date
the rehabilitation is completed, the remaining term of the
lease (determined without regard to any renewal periods) is
less than the recovery period determined under section
168(c).
(C) Certified rehabilitation
For purposes of subparagraph (B), the term "certified
rehabilitation" means any rehabilitation of a certified
historic structure which the Secretary of the Interior has
certified to the Secretary as being consistent with the
historic character of such property or the district in which
such property is located.
(D) Nonresidential real property; residential rental property;
class life
For purposes of subparagraph (A), the terms "nonresidential
real property," "residential rental property," and "class life"
have the respective meanings given such terms by section 168.
(3) Certified historic structure defined
(A) In general
The term "certified historic structure" means any building
(and its structural components) which -
(i) is listed in the National Register, or
(ii) is located in a registered historic district and is
certified by the Secretary of the Interior to the Secretary
as being of historic significance to the district.
(B) Registered historic district
The term "registered historic district" means -
(i) any district listed in the National Register, and
(ii) any district -
(I) which is designated under a statute of the
appropriate State or local government, if such statute is
certified by the Secretary of the Interior to the Secretary
as containing criteria which will substantially achieve the
purpose of preserving and rehabilitating buildings of
historic significance to the district, and
(II) which is certified by the Secretary of the Interior
to the Secretary as meeting substantially all of the
requirements for the listing of districts in the National
Register.
(d) Progress expenditures
(1) In general
In the case of any building to which this subsection applies,
except as provided in paragraph (3) -
(A) if such building is self-rehabilitated property, any
qualified rehabilitation expenditure with respect to such
building shall be taken into account for the taxable year for
which such expenditure is properly chargeable to capital
account with respect to such building, and
(B) if such building is not self-rehabilitated property, any
qualified rehabilitation expenditure with respect to such
building shall be taken into account for the taxable year in
which paid.
(2) Property to which subsection applies
(A) In general
This subsection shall apply to any building which is being
rehabilitated by or for the taxpayer if -
(i) the normal rehabilitation period for such building is 2
years or more, and
(ii) it is reasonable to expect that such building will be
a qualified rehabilitated building in the hands of the
taxpayer when it is placed in service.
Clauses (i) and (ii) shall be applied on the basis of facts
known as of the close of the taxable year of the taxpayer in
which the rehabilitation begins (or, if later, at the close of
the first taxable year to which an election under this
subsection applies).
(B) Normal rehabilitation period
For purposes of subparagraph (A), the term "normal
rehabilitation period" means the period reasonably expected to
be required for the rehabilitation of the building -
(i) beginning with the date on which physical work on the
rehabilitation begins (or, if later, the first day of the
first taxable year to which an election under this subsection
applies), and
(ii) ending on the date on which it is expected that the
property will be available for placing in service.
(3) Special rules for applying paragraph (1)
For purposes of paragraph (1) -
(A) Component parts, etc.
Property which is to be a component part of, or is otherwise
to be included in, any building to which this subsection
applies shall be taken into account -
(i) at a time not earlier than the time at which it becomes
irrevocably devoted to use in the building, and
(ii) as if (at the time referred to in clause (i)) the
taxpayer had expended an amount equal to that portion of the
cost to the taxpayer of such component or other property
which, for purposes of this subpart, is properly chargeable
(during such taxable year) to capital account with respect to
such building.
(B) Certain borrowing disregarded
Any amount borrowed directly or indirectly by the taxpayer
from the person rehabilitating the property for him shall not
be treated as an amount expended for such rehabilitation.
(C) Limitation for buildings which are not self-rehabilitated
(i) In general
In the case of a building which is not self-rehabilitated,
the amount taken into account under paragraph (1)(B) for any
taxable year shall not exceed the amount which represents the
portion of the overall cost to the taxpayer of the
rehabilitation which is properly attributable to the portion
of the rehabilitation which is completed during such taxable
year.
(ii) Carryover of certain amounts
In the case of a building which is not a self-rehabilitated
building, if for the taxable year -
(I) the amount which (but for clause (i)) would have been
taken into account under paragraph (1)(B) exceeds the
limitation of clause (i), then the amount of such excess
shall be taken into account under paragraph (1)(B) for the
succeeding taxable year, or
(II) the limitation of clause (i) exceeds the amount
taken into account under paragraph (1)(B), then the amount
of such excess shall increase the limitation of clause (i)
for the succeeding taxable year.
(D) Determination of percentage of completion
The determination under subparagraph (C)(i) of the portion of
the overall cost to the taxpayer of the rehabilitation which is
properly attributable to rehabilitation completed during any
taxable year shall be made, under regulations prescribed by the
Secretary, on the basis of engineering or architectural
estimates or on the basis of cost accounting records. Unless
the taxpayer establishes otherwise by clear and convincing
evidence, the rehabilitation shall be deemed to be completed
not more rapidly than ratably over the normal rehabilitation
period.
(E) No progress expenditures for certain prior periods
No qualified rehabilitation expenditures shall be taken into
account under this subsection for any period before the first
day of the first taxable year to which an election under this
subsection applies.
(F) No progress expenditures for property for year it is placed
in service, etc.
In the case of any building, no qualified rehabilitation
expenditures shall be taken into account under this subsection
for the earlier of -
(i) the taxable year in which the building is placed in
service, or
(ii) the first taxable year for which recapture is required
under section 50(a)(2) with respect to such property,
or for any taxable year thereafter.
(4) Self-rehabilitated building
For purposes of this subsection, the term "self-rehabilitated
building" means any building if it is reasonable to believe that
more than half of the qualified rehabilitation expenditures for
such building will be made directly by the taxpayer.
(5) Election
This subsection shall apply to any taxpayer only if such
taxpayer has made an election under this paragraph. Such an
election shall apply to the taxable year for which made and all
subsequent taxable years. Such an election, once made, may be
revoked only with the consent of the Secretary.
-SOURCE-
(Added Pub. L. 87-834, Sec. 2(b), Oct. 16, 1962, 76 Stat. 966;
amended Pub. L. 91-172, title VII, Sec. 703(c), Dec. 30, 1969, 83
Stat. 666; Pub. L. 91-676, Sec. 1, Jan. 12, 1971, 84 Stat. 2060;
Pub. L. 92-178, title I, Secs. 102(c), 107(a)(1), (b)(1), Dec. 10,
1971, 85 Stat. 500, 507; Mar. 29, 1975, Pub. L. 94-12, title III,
Sec. 302(b)(2)(A), (c)(1), (2), 89 Stat. 43, 44; Pub. L. 94-455,
title VIII, Sec. 804(b), title XIX, Sec. 1906(b)(13)(A), Oct. 4,
1976, 90 Stat. 1594, 1834; Pub. L. 95-600, title III, Sec. 317(a),
Nov. 6, 1978, 92 Stat. 2830; Pub. L. 95-618, title II, Sec. 241(b),
Nov. 9, 1978, 92 Stat. 3193; Pub. L. 97-34, title II, Sec.
211(f)(2), (g), Aug. 13, 1981, 95 Stat. 231, 233; Pub. L. 97-248,
title II, Sec. 208(a)(2)(B), Sept. 3, 1982, 96 Stat. 435; Pub. L.
97-448, title I, Sec. 102(e)(3), Jan. 12, 1983, 96 Stat. 2371; Pub.
L. 98-369, div. A, title IV, Secs. 421(b)(7), 431(b)(2), (d)(4),
(5), 474(o)(8), (9), July 18, 1984, 98 Stat. 794, 807, 810, 836;
Pub. L. 98-443, Sec. 9(p), Oct. 4, 1984, 98 Stat. 1708; Pub. L.
99-121, title I, Sec. 103(b)(6), Oct. 11, 1985, 99 Stat. 510; Pub.
L. 99-514, title XV, Sec. 1511(c)(2), title XVIII, Secs.
1802(a)(5)(A), 1844(b)(1), (2), (4), Oct. 22, 1986, 100 Stat. 2744,
2788, 2855; Pub. L. 100-647, title I, Secs. 1002(a)(18), (26)-(28),
1007(g)(3)(A), Nov. 10, 1988, 102 Stat. 3356, 3357, 3435; Pub. L.
101-508, title XI, Sec. 11801(c)(8)(A), 11813(a), Nov. 5, 1990, 104
Stat. 1388-524, 1388-536.)
-MISC1-
AMENDMENTS
1990 - Pub. L. 101-508, Sec. 11813(a), amended section generally,
substituting section catchline for one which read: "Certain
dispositions, etc., of section 38 property" and in text
substituting present provisions for provisions relating to general
rules regarding disposition of section 38 property,
nonapplicability of section in certain cases, the treatment of any
increase in tax under the section, increases in nonqualified
nonrecourse financing, and transfers between spouses or incident to
divorce.
Subsec. (b)(1) to (3). Pub. L. 101-508, Sec. 11801(c)(8)(A),
inserted "or" at end of par. (1), substituted a period for ", or"
at end of par. (2), and struck out par. (3) which related to
nonapplicability of subsec. (a) in the case of a transfer of
section 38 property related to exchanges under final system plan
for ConRail.
1988 - Subsec. (a)(5)(D). Pub. L. 100-647, Sec. 1002(a)(26)(B),
struck out at end "If, prior to a disposition to which this
subsection applies, any portion of any credit is not allowable with
respect to any property by reason of section 168(i)(3), such
portion shall be treated (for purposes of this subparagraph) as not
having been used to reduce tax liability."
Subsec. (a)(5)(E)(iii). Pub. L. 100-647, Sec. 1002(a)(26)(C),
substituted "168(e)" for "168(c)".
Subsec. (a)(5)(E)(v). Pub. L. 100-647, Sec. 1002(a)(26)(A), added
cl. (v).
Subsec. (a)(9)(A). Pub. L. 100-647, Sec. 1002(a)(27), substituted
"section 168(h)(2)" for "section 168(j)(4)(C)".
Subsec. (c). Pub. L. 100-647, Sec. 1007(g)(3)(A), substituted "D,
or G" for "or D".
Subsec. (d)(1). Pub. L. 100-647, Sec. 1002(a)(18), substituted
"section 46(c)(8)(C)" for "section 48(c)(8)(C)".
Subsec. (d)(3)(C)(i). Pub. L. 100-647, Sec. 1002(a)(28),
substituted "class life (as defined in section 168(i)(1))" for
"present class life (as defined in section 168(g)(2))" and "no
class life" for "no present class life".
1986 - Subsec. (a)(9). Pub. L. 99-514, Sec. 1802(a)(5)(A), added
par. (9).
Subsec. (d)(1). Pub. L. 99-514, Sec. 1844(b)(1), substituted
"reducing the credit base (as defined in section 48(c)(8)(C))" for
"reducing the qualified investment" and inserted "For purposes of
determining the amount of credit subject to the early disposition
or cessation rules of subsection (a), the net increase in the
amount of the nonqualified nonrecourse financing with respect to
the property shall be treated as reducing the property's credit
base (and correspondingly reducing the qualified investment in the
property) in the year in which the property was first placed in
service."
Subsec. (d)(3)(E)(i). Pub. L. 99-514, Sec. 1844(b)(4), inserted
"reduced by the sum of the credit recapture amounts with respect to
such property for all preceding years".
Subsec. (d)(3)(F). Pub. L. 99-514, Sec. 1844(b)(2), struck out
subpar. (F) which read as follows: "The amount of any increase in
tax under subsection (a) with respect to any property to which this
paragraph applies shall be determined by reducing the qualified
investment with respect to such property by the aggregate credit
recapture amounts for all taxable years under this paragraph."
Subsec. (d)(3)(G). Pub. L. 99-514, Sec. 1511(c)(2), substituted
"determined at the underpayment rate established under section
6621" for "determined under section 6621".
1985 - Subsec. (a)(5)(B). Pub. L. 99-121 substituted "For
property other than 3-year property" for "For 15-year, 10-year, and
5-year property" in table heading.
1984 - Subsec. (a)(5)(D), (6). Pub. L. 98-369, Sec. 474(o)(8),
substituted "under section 39" for "under section 46(b)".
Subsec. (a)(7)(C). Pub. L. 98-443 substituted "Secretary of
Transportation" for "Civil Aeronautics Board".
Subsec. (c). Pub. L. 98-369, Sec. 474(o)(9), substituted "subpart
A, B, or D" for "subpart A".
Subsec. (d). Pub. L. 98-369, Sec. 431(b)(2), substituted
"Increases in nonqualified nonrecourse financing" for "Property
ceasing to be at risk" in heading.
Subsec. (d)(1). Pub. L. 98-369, Sec. 431(b)(2), substituted
provisions relating to increases in tax liability resulting from
increases in nonqualified nonrecourse financing for provisions
relating to increases in tax liability resulting from the taxpayer
ceasing to be at risk with respect to certain property.
Subsec. (d)(2). Pub. L. 98-369, Sec. 431(b)(2), substituted
provisions that for purposes of par. (1), transfers of debt, or
agreements to transfer, occurring more than one year after the
initial borrowing shall not be treated as increasing nonqualified
nonrecourse financing with respect to the taxpayer for provisions
that for purposes of par. (1), such transfers (or agreements to
transfer) by a qualified person to a nonqualified person would not
cause the taxpayer to be treated as ceasing to be at risk.
Subsec. (d)(3)(A). Pub. L. 98-369, Sec. 431(d)(4), substituted
"increasing the amount of nonqualified nonrecourse financing
(within the meaning of section 46(c)(8))" for "ceasing to be at
risk".
Subsec. (d)(3)(B)(i). Pub. L. 98-369, Sec. 431(d)(5), struck out
"other than a loan described in section 46(c)(8)(B)(ii)" after
"section 46(c)(8)(F)(iv)".
Subsec. (e). Pub. L. 98-369, Sec. 421(b)(7), added subsec. (e).
1983 - Subsec. (d)(2). Pub. L. 97-448, Sec. 102(e)(3)(A),
substituted "section 46(c)(8)(D)" and "section 46(c)(8)(B)" for
"section 48(c)(8)(D)" and "section 48(c)(8)(B)", respectively.
Subsec. (d)(3)(A). Pub. L. 97-448, Sec. 102(e)(3)(B), substituted
"section 46(c)(8)(F)" for "section 46(c)(8)(E)".
1982 - Subsec. (a)(5)(D). Pub. L. 97-248, Sec. 208(a)(2)(B),
inserted provision that if, prior to a disposition to which this
subsection applies, any portion of any credit is not allowable with
respect to any property by reason of section 168(i)(3), such
portion shall be treated, for purposes of this subparagraph, as not
having been used to reduce tax liability.
1981 - Subsec. (a)(3)(D). Pub. L. 97-34, Sec. 211(g)(2)(A),
inserted provisions relating to disposition, cessation, or change
in expected use described in paragraph (5).
Subsec. (a)(5), (6). Pub. L. 97-34, Sec. 211(g)(1), (2)(B), added
par. (5), redesignated former par. (5) as (6) and substituted
"paragraph (1), (3), or (5)" for "paragraph (1) or (3)". Former
par. (6) redesignated (7).
Subsec. (a)(7), (8). Pub. L. 97-34, Sec. 211(g)(1), (2)(C),
redesignated former par. (6) as (7), substituted "paragraph (6)"
for "paragraph (5)", and redesignated former par. (7) as (8).
Subsec. (d). Pub. L. 97-34, Sec. 211(f)(2), added subsec. (d).
1978 - Subsec. (a)(4), (5). Pub. L. 95-618, Sec. 241(b)(1), added
par. (4), redesignated former par. (4) as (5) and substituted
"paragraph (2) or (4)" for "paragraph (2)".
Subsec. (a)(6)(B). Pub. L. 95-618, Sec. 241(b)(3), substituted
"paragraph (5)" for "paragraph (4)".
Subsec. (b)(3). Pub. L. 95-600, Sec. 317(a), added par. (3).
1976 - Subsec. (a). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out in introductory provision and in par. (3)(C) "or his delegate"
after "Secretary".
Subsec. (a)(7). Pub. L. 94-455, Sec. 804(b), added par. (7).
1975 - Subsec. (a)(3), (4). Pub. L. 94-12, Sec. 302(b)(2)(A),
(c)(1), added par. (3), redesignated former par. (3) as (4) and
substituted "paragraph (1) or (3)" for "paragraph (1)". A former
par. (4), relating to increase or adjustment of tax where property
is destroyed by casualty, etc., was repealed by Pub. L. 92-178.
Subsec. (a)(5), (6)(B). Pub. L. 94-12, Sec. 302(c)(2),
substituted "paragraph (4)" for "paragraph (3)".
1971 - Subsec. (a)(4). Pub. L. 92-178, Sec. 107(a)(1), struck out
par. (4) relating to property destroyed by casualty, etc.
Subsec. (a)(5). Pub. L. 92-178, Sec. 107(b)(1), provided for the
repeal of par. (5) with the repeal not to apply, however, in the
case of certain replacement property. See section 107(b)(2) of Pub.
L. 92-178, set out in the Effective Date of 1971 Amendment note
below.
Subsec. (a)(6)(A). Pub. L. 92-178, Sec. 102(c), substituted "3
1/2 years" for "4 years".
Subsec. (a)(6). Pub. L. 91-676 added par. (6).
1969 - Subsec. (a)(5). Pub. L. 91-172, Sec. 703(c)(2), added par.
(5).
Subsec. (a)(4). Pub. L. 91-172, Sec. 703(c)(1), inserted
provision making subpars. (B) and (C) inapplicable to any casualty
or theft occurring after April 18, 1969.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11813(a) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1511(d) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and sections 48, 167,
644, 852, 4497, 6214, 6332, 6343, 6601, 6602, 6611, 6621, 6654,
6655, and 7426 of this title and sections 1961 and 2411 of Title
28, Judiciary and Judicial Procedure, and enacting provisions set
out as a note under section 6621 of this title] shall apply for
purposes of determining interest for periods after December 31,
1986."
Amendment by sections 1802(a)(5)(A) and 1844(b)(1), (2), (4) of
Pub. L. 99-514 effective, except as otherwise provided, as if
included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881
of Pub. L. 99-514, set out as a note under section 48 of this
title.
EFFECTIVE DATE OF 1985 AMENDMENT
Amendment by Pub. L. 99-121 applicable as if included in the
amendments made by section 111 of the Tax Reform Act of 1984, Pub.
L. 98-369, see section 105(b)(4) of Pub. L. 99-121, set out as a
note under section 168 of this title, and section 111(g) of Pub. L.
98-369, set out as an Effective Date of 1984 Amendment note under
section 168 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by Pub. L. 98-443 effective Jan. 1, 1985, see section
9(v) of Pub. L. 98-443, set out as a note under section 5314 of
Title 5, Government Organization and Employees.
Amendment by section 421(b)(7) of Pub. L. 98-369 applicable to
transfers after July 18, 1984, in taxable years ending after such
date, subject to election to have amendment apply to transfers
after 1983 or to transfers pursuant to existing decrees, see
section 421(d) of Pub. L. 98-369, set out as an Effective Date note
under section 1041 of this title.
Amendment by section 431(b)(2), (d)(4), (5) of Pub. L. 98-369
applicable to property placed in service after July 18, 1984, in
taxable years ending after such date, but not applicable to
property to which subsec. (d) of this section and section 46(c)(8),
(9) of this title, as enacted by section 211(f) of Pub. L. 97-34,
do not apply, with the taxpayer having an option to elect
retroactive application of amendment by Pub. L. 98-369, see section
431(e) of Pub. L. 98-369, set out as a note under section 46 of
this title.
Amendment by section 474(o)(8), (9) of Pub. L. 98-369 applicable
to taxable years beginning after Dec. 31, 1983, and to carrybacks
from such years, see section 475(a) of Pub. L. 98-369, set out as a
note under section 21 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-248 applicable to agreements entered into
after July 1, 1982, or to property placed in service after that
date, but not to transitional safe harbor lease property, nor to
qualified leased property described in section 168(f)(8)(D)(v) of
this title which is placed in service before Jan. 1, 1988, or is
placed in service after such date pursuant to a binding contract or
commitment entered into before April 1, 1983, and solely because of
conditions which, as determined by the Secretary of the Treasury or
his delegate, are not within the control of the lessor or lessee,
see section 208(d)(1), (2)(A), (5) of Pub. L. 97-248, set out as a
note under section 168 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 211(g) of Pub. L. 97-34 applicable to
property placed in service after Dec. 31, 1980, see section
211(i)(1) of Pub. L. 97-34, set out in a note under section 46 of
this title.
Amendment by section 211(f)(2) of Pub. L. 97-34 not to apply to
property placed in service by the taxpayer on or before Feb. 18,
1981, and property placed in service by the taxpayer after Feb. 18,
1981, where such property was acquired by the taxpayer pursuant to
a binding contract entered into on or before that date, see section
211(i)(5) of Pub. L. 97-34, set out as a note under section 46 of
this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 317(b) of Pub. L. 95-600 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years ending after March 31, 1976."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 804(b) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1974, see section 804(e) of
Pub. L. 94-455, set out as a note under section 48 of this title.
EFFECTIVE DATE OF 1975 AMENDMENT
Amendment by Pub. L. 94-12 applicable to taxable years ending
after Dec. 31, 1974, see section 305(a) of Pub. L. 94-12, set out
as a note under section 46 of this title.
EFFECTIVE DATE OF 1971 AMENDMENTS
In redetermining qualified investment for purposes of subsec. (a)
of this section in the case of any property which ceases to be
section 38 property with respect to the taxpayer after Aug. 15,
1971, or which becomes public utility property after such date,
section 46(c)(2) of this title as amended by section 102(a) of Pub.
L. 92-178 as applicable, see section 102(d)(2) of Pub. L. 92-178,
set out as a note under section 46 of this title.
Amendment by section 107(a)(1) of Pub. L. 92-178 applicable to
casualties and thefts occurring after Aug. 15, 1971, see section
107(a)(2) of Pub. L. 92-178, set out as a note under section 46 of
this title.
Section 107(b)(2) of Pub. L. 92-178, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
repeal made by paragraph (1) [repealing subsec. (a)(5) of this
section] shall not apply if replacement property described in
subparagraph (B) of such section 47(a)(5) is not property described
in section 50 of the Internal Revenue Code of 1986 [formerly I.R.C.
1954]."
Section 102(d)(3) of Pub. L. 92-178 provided that: "The amendment
made by subsection (c) [amending this section] shall apply to
leases executed after April 18, 1969."
Section 2 of Pub. L. 91-676 provided that: "The amendment made by
the first section of this Act [amending this section] shall apply
to taxable years ending after April 18, 1969."
EFFECTIVE DATE
Section applicable with respect to taxable years ending after
Dec. 31, 1961, see section 2(h) of Pub. L. 87-834, set out as a
note under section 46 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
CLARIFICATION OF EFFECT OF 1984 AMENDMENT ON INVESTMENT TAX CREDIT
For provision that nothing in the amendments made by section
474(o) of Pub. L. 98-369, which amended this section, be construed
as reducing the investment tax credit in taxable years beginning
before Jan. 1, 1984, see section 475(c) of Pub. L. 98-369, set out
as a note under section 46 of this title.
-TRANS-
TRANSFER OF FUNCTIONS
Functions, powers, and duties of Federal Aviation Agency and of
Administrator and other offices and officers thereof transferred by
Pub. L. 89-670, Oct. 15, 1966, 80 Stat. 931, to Secretary of
Transportation, with functions, powers, and duties of Secretary of
Transportation pertaining to aviation safety to be exercised by
Federal Aviation Administrator in Department of Transportation, see
section 106 of Title 49, Transportation.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 49, 50, 170, 469, 772,
1400I of this title.
-End-
-CITE-
26 USC Sec. 48 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
Sec. 48. Energy credit; reforestation credit
-STATUTE-
(a) Energy credit
(1) In general
For purposes of section 46, the energy credit for any taxable
year is the energy percentage of the basis of each energy
property placed in service during such taxable year.
(2) Energy percentage
(A) In general
The energy percentage is 10 percent.
(B) Coordination with rehabilitation credit
The energy percentage shall not apply to that portion of the
basis of any property which is attributable to qualified
rehabilitation expenditures.
(3) Energy property
For purposes of this subpart, the term "energy property" means
any property -
(A) which is -
(i) equipment which uses solar energy to generate
electricity, to heat or cool (or provide hot water for use
in) a structure, or to provide solar process heat, or
(ii) equipment used to produce, distribute, or use energy
derived from a geothermal deposit (within the meaning of
section 613(e)(2)), but only, in the case of electricity
generated by geothermal power, up to (but not including) the
electrical transmission stage,
(B)(i) the construction, reconstruction, or erection of which
is completed by the taxpayer, or
(ii) which is acquired by the taxpayer if the original use of
such property commences with the taxpayer,
(C) with respect to which depreciation (or amortization in
lieu of depreciation) is allowable, and
(D) which meets the performance and quality standards (if
any) which -
(i) have been prescribed by the Secretary by regulations
(after consultation with the Secretary of Energy), and
(ii) are in effect at the time of the acquisition of the
property.
The term "energy property" shall not include any property which
is public utility property (as defined in section 46(f)(5) as in
effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990).
(4) Special rule for property financed by subsidized energy
financing or industrial development bonds
(A) Reduction of basis
For purposes of applying the energy percentage to any
property, if such property is financed in whole or in part by -
(i) subsidized energy financing, or
(ii) the proceeds of a private activity bond (within the
meaning of section 141) the interest on which is exempt from
tax under section 103,
the amount taken into account as the basis of such property
shall not exceed the amount which (but for this subparagraph)
would be so taken into account multiplied by the fraction
determined under subparagraph (B).
(B) Determination of fraction
For purposes of subparagraph (A), the fraction determined
under this subparagraph is 1 reduced by a fraction -
(i) the numerator of which is that portion of the basis of
the property which is allocable to such financing or
proceeds, and
(ii) the denominator of which is the basis of the property.
(C) Subsidized energy financing
For purposes of subparagraph (A), the term "subsidized energy
financing" means financing provided under a Federal, State, or
local program a principal purpose of which is to provide
subsidized financing for projects designed to conserve or
produce energy.
(5) Certain progress expenditure rules made applicable
Rules similar to the rules of subsections (c)(4) and (d) of
section 46 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall apply
for purposes of this subsection.
(b) Reforestation credit
(1) In general
For purposes of section 46, the reforestation credit for any
taxable year is 10 percent of the portion of the amortizable
basis of any qualified timber property which was acquired during
such taxable year and which is taken into account under section
194 (after the application of section 194(b)(1)).
(2) Definitions
For purposes of this subpart, the terms "amortizable basis" and
"qualified timber property" have the respective meanings given to
such terms by section 194.
-SOURCE-
(Added Pub. L. 87-834, Sec. 2(b), Oct. 16, 1962, 76 Stat. 967;
amended Pub. L. 88-272, title II, Sec. 203(a)(1), (3)(A), (b), (c),
Feb. 26, 1964, 78 Stat. 33, 34; Pub. L. 89-800, Sec. 1 Nov. 8,
1966, 80 Stat. 1508; Pub. L. 89-809, title II, Sec. 201(a), Nov.
13, 1966, 80 Stat. 1575; Pub. L. 90-26, Secs. 1, 2(a), 3, June 13,
1967, 81 Stat. 57, 58; Pub. L. 91-172, title I, Sec. 121(d)(2)(A),
title IV, Sec. 401(e)(2)-(4), Dec. 30, 1969, 83 Stat. 547, 603;
Pub. L. 92-178, title I, Secs. 102(a)(2), 103, 104(a)(1),
(b)-(f)(1), (g), 108(b), (c), Dec. 10, 1971, 85 Stat. 499-502, 507;
Pub. L. 94-12, title III, Secs. 301(c)(1), 302(c)(3), title VI,
Sec. 604(a), Mar. 29, 1975, 89 Stat. 38, 44, 65; Pub. L. 94-455,
title VIII, Secs. 802(b)(6), 804(a), title X, Sec. 1051(h)(1),
title XIX, Secs. 1901(a)(5), (b)(11)(A), 1906(b)(13)(A), title XXI,
Sec. 2112(a)(1), Oct. 4, 1976, 90 Stat. 1583, 1591, 1647, 1764,
1795, 1834, 1905; Pub. L. 95-473, Sec. 2(a)(2)(A), Oct. 17, 1978,
92 Stat. 1464; Pub. L. 95-600, title I, Sec. 141(b), title III,
Secs. 312(c)(1)-(3), 314(a), (b), 315(a)-(c), title VII, Sec.
703(a)(3), (4), Nov. 6, 1978, 92 Stat. 2791, 2826-2829, 2939; Pub.
L. 95-618, title III, Sec. 301(b), (d)(1), (2), Nov. 9, 1978, 92
Stat. 3195, 3199, 3200; Pub. L. 96-222, title I, Secs.
101(a)(7)(G), (H), (L)(i)(I)-(IV), (ii)(III)-(VI), (iii)(II),
(III), (v)(II)-(V), (M)(ii), (iii), 103(a)(2)(A), (4)(B),
108(c)(6), Apr. 1, 1980, 94 Stat. 198-201, 208, 209, 228; Pub. L.
96-223, title II, Secs. 221(b), 222(a)-(e)(1), (f)-(i), 223(a)(1),
(c)(1), Apr. 2, 1980, 94 Stat. 261-266; Pub. L. 96-451, title III,
Sec. 302(a), Oct. 14, 1980, 94 Stat. 1991; Pub. L. 96-605, title I,
Sec. 109(a), title II, Sec. 223(a), Dec. 28, 1980, 94 Stat. 3525,
3528; Pub. L. 97-34, title II, Secs. 211(a)(2), (c), (e)(3), (4),
(h), 212(a)(3), (b), (c), (d)(2)(A), 213(a), 214(a), (b), title
III, Sec. 332(b), Aug. 13, 1981, 95 Stat. 227-229, 235, 236, 239,
240, 296; Pub. L. 97-248, title II, Secs. 205(a)(1), (4), (5)(A),
209(c), Sept. 3, 1982, 96 Stat. 427, 429, 447; Pub. L. 97-354,
Secs. 3(d), 5(a)(7), (8), Oct. 19, 1982, 96 Stat. 1689, 1692; Pub.
L. 97-362, title I, Sec. 104(a), Oct. 25, 1982, 96 Stat. 1729; Pub.
L. 97-424, title V, Sec. 546(a), Jan. 6, 1983, 96 Stat. 2198; Pub.
L. 97-448, title I, Sec. 102(e)(2)(A), (f)(2), (3), (6), title II,
Sec. 202(c), title III, Sec. 306(a)(3), Jan. 12, 1983, 96 Stat.
2371, 2372, 2396, 2400; Pub. L. 98-369, div. A, title I, Secs. 11,
31(b), (c), 111(e)(8), 113(a)(1), (b)(3), (4), 114(a), title IV,
Secs. 431(c), 474(o)(10)-(18), title VII, Secs. 712(b), 721(x)(1),
735(c)(1), title X, Sec. 1043(a), July 18, 1984, 98 Stat. 503, 517,
518, 633, 635, 637, 638, 808, 836, 837, 946, 971, 981, 1044; Pub.
L. 99-121, title I, Sec. 103(b)(5), Oct. 11, 1985, 99 Stat. 510;
Pub. L. 99-514, title II, Sec. 251(b), (c), title VII, Sec.
701(e)(4)(C), title VIII, Sec. 803(b)(2)(B), title XII, Secs.
1272(d)(5), 1275(c)(5), title XV, Sec. 1511(c)(3), title XVIII,
Secs. 1802(a)(4)(C), (5)(B), (9)(A), (B), 1809(d)(2), (e),
1847(b)(6), 1879(j)(1), Oct. 22, 1986, 100 Stat. 2184, 2186, 2343,
2355, 2594, 2599, 2745, 2788, 2789, 2821, 2856, 2908; Pub. L.
100-647, title I, Secs. 1002(a)(14), (16)(A), (20), (29), (30),
1013(a)(41), Nov. 10, 1988, 102 Stat. 3355-3357, 3544; Pub. L.
101-508, title XI, Secs. 11801(c)(6)(A), 11813(a), Nov. 5, 1990,
104 Stat. 1388-523, 1388-541; Pub. L. 102-227, title I, Sec. 106,
Dec. 11, 1991, 105 Stat. 1687; Pub. L. 102-486, title XIX, Sec.
1916(a), Oct. 24, 1992, 106 Stat. 3024.)
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsec. (a)(3), (5), is the date of enactment
of Pub. L. 101-508, which was approved Nov. 5, 1990.
-MISC1-
AMENDMENTS
1992 - Subsec. (a)(2). Pub. L. 102-486 substituted "The" for
"Except as provided in subparagraph (B), the" in subpar. (A),
redesignated subpar. (C) as (B), and struck out former subpar. (B)
which read as follows: "(B) Termination. - Effective with respect
to periods after June 30, 1992, the energy percentage is zero. For
purposes of the preceding sentence, rules similar to the rules of
section 48(m) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall apply."
1991 - Subsec. (a)(2)(B). Pub. L. 102-227 substituted "June 30,
1992" for "December 31, 1991".
1990 - Pub. L. 101-508, Sec. 11813(a), amended section generally,
substituting section catchline for one which read: "Definitions;
special rules" and in text substituting present provisions for
provisions defining section 38 property, new section 38 property,
used section 38 property, provisions relating to certain leased
property, estates and trusts, special rules for qualified
rehabilitated buildings, credit for movie and television films,
treatment of energy property, application of certain transitional
rules, definitions of certain credits, definition of single purpose
agricultural or horticultural structure, basis adjustment to
section 38 property, certain section 501(d) organizations, special
rules relating to sound recordings, and a cross reference to
section 381 of this title.
Subsec. (a)(8). Pub. L. 101-508, Sec. 11801(c)(6)(A), struck out
par. (8) "Amortized property" which read as follows: "Any property
with respect to which an election under section 167(k), 184, or 188
applies shall not be treated as section 38 property."
1988 - Subsec. (a)(1). Pub. L. 100-647, Sec. 1002(a)(29), which
directed amendment of par. (1) by substituting "property to which
section 168 applies" for "recovery property (within the meaning of
section 168)" in penultimate sentence, was executed by making the
substitution for "recovery property (within the meaning of section
168", which results in retaining remaining parenthetical material
and closing parenthesis.
Subsec. (a)(5)(A)(ii). Pub. L. 100-647, Sec. 1002(a)(14)(A)-(C),
substituted "168(h)(2)(C)" for "168(j)(4)(C)", "168(h)(2)(A)(iii)"
for "168(j)(4)(A)(iii)", and "168(h)(2)(B)" for "168(j)(4)(B)".
Subsec. (a)(5)(B)(i). Pub. L. 100-647, Sec. 1002(a)(14)(D),
substituted "168(i)(3)" for "168(j)(6)".
Subsec. (a)(5)(B)(ii). Pub. L. 100-647, Sec. 1002(a)(14)(E),
substituted "168(h)(1)(C)(ii)" for "168(j)(3)(C)(ii)".
Subsec. (a)(5)(D). Pub. L. 100-647, Sec. 1002(a)(14)(F),
substituted "paragraphs (5) and (6) of section 168(h)" for
"paragraphs (8) and (9) of section 168(j)".
Subsec. (a)(5)(E). Pub. L. 100-647, Sec. 1002(a)(14)(G), amended
subpar. (E) generally, substituting "provision" for "provisions"
and "168(h)" for "168(j)".
Subsec. (l)(2)(C). Pub. L. 100-647, Sec. 1002(a)(30), substituted
"to which section 168 applies" for "which is recovery property
(within the meaning of section 168)".
Subsec. (l)(11)(A)(ii). Pub. L. 100-647, Sec. 1013(a)(41),
substituted "a private activity bond (within the meaning of section
141)" for "an industrial development bond (within the meaning of
section 103(b)(2))".
Subsec. (s). Pub. L. 100-647, Sec. 1002(a)(20), redesignated
subsec. (s), relating to cross reference, as (t).
Subsec. (s)(9). Pub. L. 100-647, Sec. 1002(a)(16)(A), added par.
(9).
Subsec. (t). Pub. L. 100-647, Sec. 1002(a)(20), redesignated
subsec. (s), relating to cross reference, as (t).
1986 - Subsec. (a)(2)(B)(vii). Pub. L. 99-514, Secs. 1272(d)(5),
1275(c)(5), struck out "932," after "931," and "or which is
entitled to the benefits of section 934(b)" after "in effect under
section 936", and substituted "or 933" for ", 933, or 934(c)".
Subsec. (a)(4). Pub. L. 99-514, Sec. 1802(a)(9)(A), substituted
"514(b)" for "514(c)" and "514(a)" for "514(b)".
Subsec. (a)(5)(B)(iii). Pub. L. 99-514, Sec. 1802(a)(5)(B),
struck out cl. (iii) which provided that (I) in the case of any
aircraft used under a qualifying lease (as defined in section
47(a)(7)(C)) and which is leased to a foreign person or entity
before January 1, 1990, clause (i) shall be applied by substituting
"3 years" for "6 months" and that (II) for purposes of applying
section 47(a)(1) and (5)(B) there shall not be taken into account
any period of a lease to which subclause (I) applies.
Subsec. (a)(5)(D), (E). Pub. L. 99-514, Sec. 1802(a)(4)(C), added
subpar. (D) and redesignated former subpar. (D) as (E).
Subsec. (b)(1). Pub. L. 99-514, Sec. 1809(e)(1), inserted "Such
term includes any section 38 property the reconstruction of which
is completed by the taxpayer, but only with respect to that portion
of the basis which is properly attributable to such
reconstruction."
Subsec. (b)(2). Pub. L. 99-514, Sec. 1809(e)(2), in introductory
provisions substituted "the first sentence of paragraph (1)" for
"paragraph (1)", in subpar. (B) substituted "3 months after" for "3
months of", in closing provisions substituted "used under the
leaseback (or lease) referred to in subparagraph (B)" for "used
under the lease" and inserted "The preceding sentence shall not
apply to any property if the lessee and lessor of such property
make an election under this sentence. Such an election, once made,
may be revoked only with the consent of the Secretary."
Subsec. (d)(4)(D). Pub. L. 99-514, Sec. 701(e)(4)(C), inserted
"(as in effect on the day before the date of the enactment of the
Tax Reform Act of 1986)".
Subsec. (d)(6)(C)(ii). Pub. L. 99-514, Sec. 1511(c)(3),
substituted "the underpayment rate" for "the rate" in closing
provisions.
Subsec. (g)(1). Pub. L. 99-514, Sec. 251(b), amended par. (1)
generally, restating in subpars. (A) to (D) provisions relating to
qualified rehabilitated buildings which had in subpar. (A) provided
general definition of qualified rehabilitated building, in subpar.
(B) directed that 30 years must have elapsed since construction, in
subpar. (C) provided general definition of substantially
rehabilitated with special rule for phased rehabilitation and
application of provision to lessees, and in subpar. (D) provided
that rehabilitation included reconstruction, and striking out
former subpar. (E) which had provided an alternative test for
definition of qualified rehabilitated building.
Subsec. (g)(2). Pub. L. 99-514, Sec. 251(b), amended par. (2)
generally, in subpar. (A) striking out reference to amounts
"incurred after December 31, 1981" in introductory provision, and
in cl. (i) substituting subcls. (I) to (IV) for "for real property
(or additions or improvements to real property) which have a
recovery period (within the meaning of section 168) of 19 (15 years
in the case of low-income housing) years,", in subpar. (B), in cl.
(i), substituting provision relating to use of straight line
depreciation for provision relating to use of accelerated methods
of depreciation, redesignating former cl. (vi) as (v) and
substituting "section 168(h)" for "section 168(j)", redesignating
former cl. (v) as (vi) and substituting "less than the recovery
period determined under section 168(c)" for "less than 19 years (15
years in the case of low-income housing", restating subpar. (C)
without change, and in subpar. (D) substituting provisions defining
nonresidential real property, residential rental property and class
life for provisions defining low-income housing.
Subsec. (g)(2)(B)(vi)(I). Pub. L. 99-514, Sec. 1802(a)(9)(B),
substituted "section 168(j)" for "section 168(j)(3)".
Subsec. (g)(3). Pub. L. 99-514, Sec. 251(b), in amending par. (3)
generally, inserted introductory phrase "For purposes of this
subsection - ".
Subsec. (g)(4). Pub. L. 99-514, Sec. 251(b), in amending subsec.
(g) generally, reenacted par. (4) without change.
Subsec. (l)(5). Pub. L. 99-514, Sec. 1847(b)(6), substituted
"section 23(c)" for "section 44C(c)" and "section
23(c)(4)(A)(viii)" for "section 44C(c)(4)(A)(viii)".
Subsec. (q)(3). Pub. L. 99-514, Sec. 251(c), struck out "other
than a certified historic structure" after "qualified rehabilitated
building".
Subsec. (q)(7). Pub. L. 99-514, Sec. 1809(d)(2), renumbered par.
(6), relating to special rule for qualified films, as (7).
Subsec. (r). Pub. L. 99-514, Sec. 1879(j)(1), added subsec. (r).
Former subsec. (r) redesignated (s).
Subsec. (s). Pub. L. 99-514, Sec. 1879(j)(1), redesignated former
subsec. (r) as (s).
Subsec. (s)(5). Pub. L. 99-514, Sec. 803(b)(2)(B), which directed
the general amendment of par. (5) of subsec. (r), was executed by
amending par. (5) of subsec. (s) to reflect the probable intent of
Congress and the intervening redesignation of subsec. (r) as (s) by
Pub. L. 99-514, Sec. 1879(j)(1), see note above. Prior to
amendment, par. (5) read as follows: "For purposes of this
subsection, the term "sound recording" means any sound recording
described in section 280(c)(2)."
1985 - Subsec. (g)(2)(A)(i), (B)(v). Pub. L. 99-121 substituted
"19" for "18".
1984 - Subsec. (a)(5). Pub. L. 98-369, Sec. 31(b), amended par.
(5) generally, to extend its scope to encompass property used by
foreign persons or entities and to create an exception for
short-term leases by substituting provisions covered by subpars.
(A) to (D) for former provisions which had directed that property
used by the United States, any State or political subdivision
thereof, any international organization, or any agency or
instrumentality of any of the foregoing not be treated as section
38 property, that for purposes of that prohibition the
International Telecommunications Satellite Consortium, the
International Maritime Satellite Organization, and any successor
organization of such Consortium or Organization not be treated as
an international organization, and that if any qualified
rehabilitated building were used by the governmental unit pursuant
to a lease, this paragraph would not apply to that portion of the
basis of such building attributable to qualified rehabilitation
expenditures.
Subsec. (b). Pub. L. 98-369, Sec. 114(a), amended subsec. (b)
generally, substituting a general definition of "new section 38
property" for definitions which made reference to property
constructed, reconstructed or erected after December 31, 1961, and
adding pars. (2) and (3).
Subsec. (c)(2)(A). Pub. L. 98-369, Sec. 11(a), substituted
"$125,000 ($150,000 for taxable years beginning after 1987)" for
"$150,000 ($125,000 for taxable years beginning in 1981, 1982,
1983, or 1984)" in first sentence, and "$125,000 (or $150,000" for
"$150,000 (or $125,000" in two places in second sentence.
Subsec. (c)(2)(B). Pub. L. 98-369, Sec. 11(b), substituted
"$62,500 ($75,000 for taxable years beginning after 1987)" for
"$75,000 ($62,500 for taxable years beginning in 1981, 1982, 1983,
or 1984)".
Subsec. (c)(3)(B). Pub. L. 98-369, Sec. 474(o)(10), substituted
"section 39" for "section 46(b)".
Subsec. (d)(1)(B). Pub. L. 98-369, Sec. 474(o)(11), substituted
"section 38(c)(3)(B)" for "section 46(a)(6)".
Subsec. (d)(6). Pub. L. 98-369, Sec. 431(c), added par. (6).
Subsec. (f)(3). Pub. L. 98-369, Sec. 474(o)(12), struck out par.
(3) which provided that the $25,000 amount specified under
subparagraphs (A) and (B) of section 46(a)(3) applicable to an
estate or trust be reduced to an amount which bore the same ratio
to $25,000 as the amount of the qualified investment allocated to
the estate or trust under paragraph (1) to the entire amount of the
qualified investment.
Subsec. (g)(1)(E). Pub. L. 98-369, Sec. 1043(a), added subpar.
(E).
Subsec. (g)(2)(A)(i). Pub. L. 98-369, Sec. 111(e)(8)(A), (B),
substituted "real property" for "property" in two places, and "18
(15 years in the case of low-income housing)" for "15".
Subsec. (g)(2)(B)(i). Pub. L. 98-369, Sec. 31(c)(2), inserted
"The preceding sentence shall not apply to any expenditure to the
extent subsection (f)(12) or (j) of section 168 applies to such
expenditure."
Subsec. (g)(2)(B)(v). Pub. L. 98-369, Sec. 111(e)(8)(C),
substituted "18 years (15 years in the case of low-income housing)"
for "15 years".
Subsec. (g)(2)(B)(vi). Pub. L. 98-369, Sec. 31(c)(1), added cl.
(vi).
Subsec. (g)(2)(D). Pub. L. 98-369, Sec. 111(e)(8)(D), added
subpar. (D).
Subsec. (k)(4). Pub. L. 98-369, Sec. 113(b)(3)(B), inserted "or
at-risk rules" after "test" in heading.
Subsec. (k)(4)(A). Pub. L. 98-369, Sec. 113(b)(3)(A), inserted ",
section 46(c)(8), or section 46(c)(9)".
Subsec. (k)(4)(B). Pub. L. 98-369, Sec. 113(b)(3)(C), substituted
"used" for "issued".
Subsec. (k)(5)(D)(i). Pub. L. 98-369, Sec. 721(x)(1), substituted
"S corporation" for "electing small business corporation".
Subsec. (l)(1). Pub. L. 98-369, Sec. 474(o)(13), substituted
"section 46(b)(2)" for "section 46(a)(2)(C)".
Subsec. (l)(16)(B)(i). Pub. L. 98-369, Sec. 735(c)(1),
substituted "the chassis of which is an automobile bus chassis and
the body of which is an automobile bus body" for "the chassis and
body of which is exempt under section 4063(a)(6) from the tax
imposed by section 4061(a)".
Subsec. (m). Pub. L. 98-369, Sec. 474(o)(14), substituted
"subsection (b)" for "subsection (a)(2)".
Subsec. (n). Pub. L. 98-369, Sec. 474(o)(15), repealed subsec.
(n). For continuing applicability of par. (4) of subsec. (n), see
section 474(o)(15) of Pub. L. 98-369, set out in Effective Date of
1984 Amendment note below.
Subsec. (o)(3) to (8). Pub. L. 98-369, Sec. 474(o)(16),
redesignated par. (8) as (3) and struck out former pars. (3) to (7)
which defined "employee plan credit", "basic employee plan credit",
"matching employee plan credit", "basic employee plan percentage",
and "matching employee plan percentage", respectively.
Subsec. (q)(1), (3). Pub. L. 98-369, Sec. 474(o)(17)(A),
substituted "section 46(a)" for "section 46(a)(2)".
Subsec. (q)(4)(A)(i). Pub. L. 98-369, Sec. 474(o)(17),
substituted "section 46(a)" for "section 46(a)(2)" and "section
46(b)(1)" for "section 46(a)(2)(B)".
Subsec. (q)(4)(B)(ii). Pub. L. 98-369, Sec. 474(o)(17)(B),
substituted "section 46(b)(1)" for "section 46(a)(2)(B)".
Subsec. (q)(6). Pub. L. 98-369, Sec. 712(b), added par. (6)
relating to adjustment in basis of interest in partnership or S
corporation.
Pub. L. 98-369, Sec. 113(b)(4), added par. (6) relating to
special rule for qualified films.
Subsec. (r). Pub. L. 98-369, Sec. 113(a)(1), added subsec. (r).
Former subsec. (r) redesignated (s).
Pub. L. 98-369, Sec. 474(o)(18), substituted "section 381(c)(26)"
for "section 381(c)(23)".
Subsec. (s). Pub. L. 98-369, Sec. 113(a)(1), redesignated former
subsec. (r) as (s).
1983 - Subsec. (a)(1)(G). Pub. L. 97-448, Sec. 102(e)(2)(A),
inserted "(not including a building and its structural components)
used in connection" after "storage facility".
Subsec. (a)(10). Pub. L. 97-448, Sec. 202(c), amended directory
language of Pub. L. 96-223, Sec. 223(a)(1), to correct an error,
and did not involve any change in text. See 1980 Amendment note
below.
Subsec. (g)(1)(C)(i). Pub. L. 97-448, Sec. 102(f)(2), (6),
substituted "the 24-month period selected by the taxpayer (at the
time and in the manner prescribed by regulation) and ending with or
within the taxable year" for "the 24-month period ending on the
last day of the taxable year" in provisions preceding subcl. (I),
substituted "adjusted basis of such building (and its structural
components)" for "adjusted basis of such property" both in subcl.
(I) and in provision following subcl. (II), and, in provisions
following subcl. (II), substituted "holding period of the building"
for "holding period of the property" and inserted provision that,
for purposes of the preceding sentence, the determination of the
beginning of the holding period shall be made without regard to any
reconstruction by the taxpayer in connection with the
rehabilitation.
Subsec. (g)(5)(A). Pub. L. 97-448, Sec. 102(f)(3), substituted "a
credit is determined under section 46(a)(2)" for "a credit is
allowed under this section" and "the credit so determined" for "the
credit so allowed". See 1982 Amendment note for subsec. (g)(5)
below and see Effective Date of 1982 and 1983 Amendment notes set
out under sections 1 and 196 of this title.
Subsec. (l)(5). Pub. L. 97-424, Sec. 546(a)(3), substituted
reference to subpar. (N) for reference to subpar. (M) in provision
following subparagraphs.
Subsec. (l)(5)(M), (N). Pub. L. 97-424, Sec. 546(a)(1), (2),
added subpar. (M) and redesignated former subpar. (M) as (N).
Subsec. (q)(3). Pub. L. 97-448, Sec. 306(a)(3), substituted
"paragraphs (1) and (2) of this subsection and paragraph (5) of
subsection (d)" for "paragraphs (1) and (2)".
1982 - Subsec. (b). Pub. L. 97-248, Sec. 209(c), inserted
provision that for purposes of determining whether section 38
property subject to a lease is new section 38 property, such
property shall be treated as originally placed in service not
earlier than the date such property is used under the lease, but
only if such property is leased within 3 months after such property
is placed in service.
Subsec. (c)(2)(D). Pub. L. 97-354 substituted "Partnerships and S
corporations" for "Partnerships" in subpar. heading, and inserted
"A similar rule shall apply in the case of an S corporation and its
shareholders".
Subsec. (d)(5). Pub. L. 97-248, Sec. 205(a)(4), added par. (5).
Subsec. (e). Pub. L. 97-354, Sec. 5(a)(7), struck out subsec. (e)
relating to apportionment among shareholders of qualified
investments by an electing small business corporation.
Subsec. (g)(5). Pub. L. 97-248, Sec. 205(a)(5)(A), struck out
par. (5) which, as amended by Sec. 102(f)(3) of Pub. L. 97-448, had
provided that for purposes of this subtitle, if a credit were
determined under section 46(a)(2) for any qualified rehabilitation
expenditure in connection with a qualified rehabilitated building
other than a certified historic structure, the increase in basis of
such property which would (but for this paragraph) have resulted
from such expenditure had to be reduced by the amount of the credit
so determined, that if during any taxable year there was a
recapture amount determined with respect to any qualified
rehabilitated building the basis of which was reduced under subpar.
(A), the basis of such building (immediately before the event
resulting in such recapture), had to be increased by an amount
equal to such recapture amount, and that for purposes of this
paragraph "recapture amount" was defined as any increase in tax (or
adjustment in carrybacks or carryovers) determined under section
47(a)(5). See 1983 Amendment note for subsec. (g)(5) above and see
Effective Date of 1982 and 1983 Amendment notes set out under
sections 1 and 196 of this title.
Subsec. (k)(5)(D)(i). Pub. L. 97-354, Sec. 5(a)(8), substituted
"an S corporation" for "an electing small business corporation
(within the meaning of section 1371)".
Subsec. (l)(7). Pub. L. 97-362, Sec. 104(a), temporarily
substituted the qualification that such term does not include
equipment for hydrogenation, refining, or other process subsequent
to retorting other than hydrogenation or other process which is
applied in the vicinity of the property from which the shale was
extracted and which is applied to bring the shale oil to a grade
and quality suitable for transportation to and processing in a
refinery, for the qualification that such equipment did not include
equipment for hydrogenation, refining, or other processes
subsequent to retorting. See Effective and Termination Dates of
1982 Amendment note below.
Subsecs. (q), (r). Pub. L. 97-248, Sec. 205(a)(1), added subsec.
(q) and redesignated former subsec. (q) as (r).
1981 - Subsec. (a)(1). Pub. L. 97-34, Sec. 211(e)(4), in
provisions following subpar. (G), substituted "Such term includes
only recovery property (within the meaning of section 168 without
regard to any useful life) and any other property" for "Such term
includes only property".
Subsec. (a)(1)(G). Pub. L. 97-34, Sec. 211(c), added subpar. (G).
Subsec. (a)(2)(B)(ii). Pub. L. 97-34, Sec. 211(h), designated
existing provisions as subcl. (I) and added subcl. (II).
Subsec. (a)(3)(D). Pub. L. 97-34, Sec. 212(c), added subpar. (D).
Subsec. (a)(4). Pub. L. 97-34, Sec. 214(a), inserted provision
that, if any qualified rehabilitated building is used by the
tax-exempt organization pursuant to a lease, this paragraph shall
not apply to that portion of the basis of such building which is
attributable to qualified rehabilitation expenditures.
Subsec. (a)(5). Pub. L. 97-34, Sec. 214(b), inserted provision
that, if any qualified rehabilitated building is used by the
governmental unit pursuant to a lease, this paragraph shall not
apply to that portion of the basis of such building which is
attributable to qualified rehabilitation expenditures.
Subsec. (a)(8). Pub. L. 97-34, Sec. 212(d)(2)(A), substituted "or
188" for "188, or 191".
Subsec. (a)(9). Pub. L. 97-34, Sec. 211(a)(2), struck out par.
(9) which set out a special rule for the depreciation of railroad
track.
Subsec. (c)(2)(A) to (C). Pub. L. 97-34, Sec. 213(a), amended
subpars. (A) to (C) generally raising in subpar. (A) the existing
$100,000 dollar limitation to $125,000 in 1981 and to $150,000 in
1985 and in subpar. (B) the existing $50,000 dollar limitation to
$62,500 in 1981 and to $75,000 in 1985.
Subsec. (g). Pub. L. 97-34, Sec. 212(b), in amending subsec. (c)
generally incorporated the concept of "substantial rehabilitation"
into par. (1)(A), substituted "30 years" for "20 years" as the
requisite period in par. (1)(B), substituted a definition of
"substantially rehabilitated" for former provisions that a major
portion could be treated as a separate building in certain cases in
par. (1)(C), reenacted par. (1)(D) without change, substituted
"December 31, 1981" for "October 31, 1978" in provisions of par.
(2)(A) preceding cl. (i), substituted provisions for a recovery
period of 15 years for provisions that had provided for a useful
life of 5 years or more in cl. (i) of par. (2)(A), reenacted cl.
(ii) without change, substituted provisions that accelerated
methods of depreciation may not be used for provisions relating to
property otherwise section 38 property in cl. (i) of par. (2)(B),
reenacted cls. (ii) and (iii) without change, revised the
provisions of cl. (iv) relating to certified historic structures,
and added cl. (v) relating to expenditures of lessees, added par.
(3), redesignated former par. (3) as (4), and added par. (5).
Subsec. (l)(2)(C). Pub. L. 97-34, Sec. 211(e)(3), inserted "or
which is recovery property (within the meaning of section 168)"
after "3 years or more".
Subsec. (n)(1)(A)(i). Pub. L. 97-34, Sec. 332(b), substituted
"which does not exceed" for "equal to".
Subsec. (o)(8). Pub. L. 97-34, Sec. 212(a)(3), added par. (8).
1980 - Subsec. (a)(1). Pub. L. 96-451 added subpar. (F) and
provision for treatment of the useful life of subpar. (F) property
as its normal growing period.
Subsec. (a)(2)(B)(xi). Pub. L. 96-223, Sec. 222(i)(2), added cl.
(xi).
Subsec. (a)(5). Pub. L. 96-605, Sec. 109(a), included the
International Maritime Satellite Organization or any successor
organization within organizations not to be treated as
international organizations.
Subsec. (a)(7)(B). Pub. L. 95-600, Sec. 312(c)(2), as amended by
Pub. L. 96-222, Sec. 103(a)(2)(A), substituted " 'described in
section 50 (as in effect before its repeal by the Revenue Act of
1978' " for " 'described in section 50' ".
Subsec. (a)(10)(A). Pub. L. 96-223, Sec. 223(a)(1), as amended by
Pub. L. 97-448, Sec. 202(c), provided that "petroleum or petroleum
products" does not include petroleum coke or petroleum pitch.
Subsec. (a)(10)(B). Pub. L. 96-222, Sec. 108(c)(6), substituted
"5" for "51".
Subsec. (g)(2)(B)(i). Pub. L. 96-222, Sec. 103(a)(4)(B),
substituted "subsections (a)(1)(E) and (l)" for "subsection
(a)(1)(E)".
Subsec. (l)(1). Pub. L. 96-223, Sec. 221(b)(1), substituted "For
any period for which the energy percentage determined under section
46(a)(2)(C) for any energy property is greater than zero" for "For
the period beginning on October 1, 1978, and ending on December 31,
1982" in provisions preceding subpar. (A) and, in subpars. (A) and
(B), substituted "such energy property" and "such property" for
"any energy property".
Subsec. (l)(2)(A). Pub. L. 96-223, Sec. 222(a), added cls. (vii),
(viii), and (ix).
Subsec. (l)(3)(A). Pub. L. 96-223, Sec. 222(b), (g)(2), struck
out "(other than coke or coke gas)" after "solid fuel" in cl. (iii)
and, in cl. (v), substituted provisions relating to equipment which
converts coal into a substitute for a petroleum or natural gas
derived feedstock for the manufacture of chemicals or other
products and equipment which converts coal into methanol, ammonia,
or hydroprocessed coal liquid or solid for provisions which had
related simply to equipment which used coal as feedstock for the
manufacture of chemicals or other products other than coke or coke
gas, added cl. (ix), and, following cl. (ix), inserted provision
that the equipment described in cl. (vii) includes equipment used
for the storage of fuel derived from garbage at the site at which
such fuel was produced from garbage.
Subsec. (l)(3)(B). Pub. L. 96-223, Sec. 222(i)(1)(A),
redesignated subpar. (C) as (B). Former subpar. (B), which excluded
public utility property from the terms "alternative energy
property", "solar or wind energy property", or "recycling
equipment", was struck out.
Subsec. (l)(3)(C), (D). Pub. L. 96-223, Sec. 222(i)(1)(A), (3),
redesignated subpar. (D) as (C) and inserted following cl. (ii)
provision that, for the purposes of the preceding sentence, in the
case of property which is alternative energy property solely by
reason of the amendments made by section 222(b) of the Crude Oil
Windfall Profit Tax Act of 1980, "January 1, 1980" was to be
substituted for "October 1, 1978". Former subpar. (C) redesignated
(B).
Subsec. (l)(4)(C). Pub. L. 96-223, Sec. 222(c), added subpar.
(C).
Subsec. (l)(5). Pub. L. 96-223, Sec. 222(d), added subpar. (L),
redesignated former subpar. (L) as (M), and inserted provision that
the Secretary shall not specify any property under subpar. (M)
unless he determines that such specification meets the requirements
of par. (9) of section 44C(c) for specification of items under
section 44C(c)(4)(A)(viii).
Subsec. (l)(11). Pub. L. 96-223, Sec. 221(b)(2), substituted
"one-half of the energy percentage determined under section
46(a)(2)(C)" for "5 percent".
Pub. L. 96-223, Sec. 223(c)(1), completely revised par. (11) to
incorporate property financed by subsidized energy financing,
effective with regard to periods after Dec. 31, 1982. Prior to the
revision par. (11) read as follows: "In the case of property which
is financed in whole or in part by the proceeds of an industrial
development bond (within the meaning of section 103(b)(2)) the
interest on which is exempt from tax under section 103, the energy
percentage shall be one-half of the energy percentage determined
under section 46(a)(2)(C)."
Subsec. (l)(13). Pub. L. 96-223, Sec. 222(e)(1), added par. (13).
Subsec. (l)(14). Pub. L. 96-223, Sec. 222(f), added par. (14).
Subsec. (l)(15). Pub. L. 96-223, Sec. 222(g)(1), added par. (15).
Subsec. (l)(16). Pub. L. 96-223, Sec. 222(h), added par. (16).
Subsec. (l)(17). Pub. L. 96-223, Sec. 222(i)(1)(B), added par.
(17).
Subsec. (n). Pub. L. 96-222, Sec. 101(a)(7)(G), (H),
(L)(i)(I)-(IV), (ii)(III)-(VI), (iii)(II), (v)(II)-(IV), (M)(ii),
amended subsec. (n) generally to reflect the renaming of an
investment tax credit ESOP to a tax credit employee stock ownership
plan and a leveraged employee stock ownership plan (commonly
referred to as an ESOP) to an employee stock ownership plan.
Subsec. (n)(6)(B)(i). Pub. L. 96-605, Sec. 223(a), substituted
"the date on which the securities are contributed to the plan" for
"the due date for filing the return for the taxable year
(determined with regard to extensions)".
Subsec. (o). Pub. L. 96-222, Sec. 101(a)(7)(L)(iii)(III),
(v)(IV), (V), (M)(iii), substituted "employee plan" for "ESOP"
wherever appearing and inserted "percentage" after "attributable to
the matching employee plan" in par. (5).
1978 - Subsec. (a)(1)(A). Pub. L. 95-618, Sec. 301(d)(1),
inserted "(other than an air conditioning or heating unit)" after
"personal property".
Subsec. (a)(1)(D). Pub. L. 95-600, Sec. 314(a), added par. (D).
Subsec. (a)(1)(E). Pub. L. 95-600, Sec. 315(a), added par. (E).
Subsec. (a)(2)(B)(ii). Pub. L. 95-473, Sec. 2(a)(2)(A),
substituted "providing transportation subject to subchapter I of
chapter 105 of title 49" for "subject to part I of the Interstate
Commerce Act".
Subsec. (a)(7)(A). Pub. L. 95-600, Sec. 312(c)(3), struck out
"(other than pretermination property)" after "Property".
Subsec. (a)(7)(B). Pub. L. 95-600, Sec. 312(c)(2), struck out
"described in section 50" after "with respect to property". See
1980 Amendment note above.
Subsec. (a)(8). Pub. L. 95-600, Sec. 315(c), substituted "188, or
191" for "or 188".
Subsec. (a)(10). Pub. L. 95-618, Sec. 301(d)(2), added par. (10).
Subsec. (d)(1)(B). Pub. L. 95-600, Sec. 703(a)(3), substituted
"section 46(a)(6)" for "section 46(a)(5)".
Subsec. (d)(4)(D). Pub. L. 95-600, Sec. 703(a)(4), substituted
"section 57(c)(1)(B)" for "section 57(c)(2)".
Subsec. (g). Pub. L. 95-600, Sec. 315(b), added subsec. (g).
Subsec. (h). Pub. L. 95-600, Sec. 312(c)(1), struck out subsec.
(h) which related to suspension of investment credit.
Subsec. (i). Pub. L. 95-600, Sec. 312(c)(1), struck out subsec.
(i) which related to an exemption from suspension of $20,000 of
investment.
Subsec. (j). Pub. L. 95-600, Sec. 312(c)(1), struck out subsec.
(j) which defined "suspension period".
Subsecs. (l), (m). Pub. L. 95-618, Sec. 301(b), added subsecs.
(l) and (m) and redesignated former subsec. (l) as (n).
Subsec. (n). Pub. L. 95-618, Sec. 301(b), redesignated former
subsec. (l) as (n).
Pub. L. 95-600, Sec. 141(b), added subsec. (n). Former subsec.
(n) redesignated (p).
Subsec. (o). Pub. L. 95-600, Sec. 141(b), added subsec. (o).
Subsecs. (p), (q). Pub. L. 95-600, Secs. 141(b), 314(b), added
subsec. (p). Former subsec. (n) redesignated (p) and subsequently
as (q).
1976 - Subsec. (a)(2)(B)(vi). Pub. L. 94-455, Sec. 1901(a)(5)(A),
substituted "(43 U.S.C. 1331))" for "; 43 U.S.C., sec. 1331)".
Subsec. (a)(2)(B)(vii). Pub. L. 94-455, Sec. 1051(h)(1),
substituted "(other than a corporation which has an election in
effect under section 936 or which is entitled to the benefits of
section 934(b))" for "(other than a corporation entitled to the
benefits of section 931 or 934(b))".
Subsec. (a)(2)(B)(viii). Pub. L. 94-455, Sec. 1901(a)(5)(B),
substituted "47 U.S.C. 702" for "47 U.S.C., sec. 702".
Subsec. (a)(8). Pub. L. 94-455, Secs. 1901(b)(11)(A), 2112(a)(1),
struck out "169," after "section 167(k),", "187," before "or 188
applies", and provisions relating to the limitation of the
applicability of this paragraph on property to which section 169
applies.
Subsecs. (c)(2)(A), (d)(1), (2)(A). Pub. L. 94-455, Sec.
1906(b)(13)(A), struck out "or his delegate" after "Secretary".
Subsec. (f). Pub. L. 94-455, Sec. 802(b)(6), substituted "section
46(a)(3)" for "section 46(a)(2)".
Subsec. (i)(2). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
"or his delegate" after "Secretary".
Subsecs. (k), (l). Pub. L. 94-455, Sec. 804(a), added subsec. (k)
and redesignated former subsec. (k) as subsec. (l).
1975 - Subsec. (a)(2)(B). Pub. L. 94-12, Sec. 604(a), substituted
"territorial waters within the northern portion of the Western
Hemisphere" for "territorial waters" in cl. (x) and inserted
definition of "northern portion of the Western Hemisphere"
following cl. (x).
Subsec. (c)(2)(A). Pub. L. 94-12 Sec. 301(c)(1)(A), substituted
"$100,000" for "$50,000".
Subsec. (c)(2)(B). Pub. L. 94-12, Sec. 301(c)(1)(A), (B),
substituted "$50,000" for "$25,000" and "$100,000" for "$50,000".
Subsec. (c)(2)(C). Pub. L. 94-12, Sec. 301(c)(1)(A), substituted
"$100,000" for "$50,000".
Subsec. (d)(1), (2)(A). Pub. L. 94-12, Sec. 302(c)(3),
substituted "section 46(e)(1)" for "section 46(d)(1)".
1971 - Subsec. (a)(1). Pub. L. 92-178, Sec. 102(a)(2),
substituted "3 years" for "4 years" in second sentence.
Subsec. (a)(1)(B)(ii), (iii). Pub. L. 92-178, Sec. 104(a)(1),
substituted "research facility" for "research or storage facility"
in cl. (ii) and added cl. (iii).
Subsec. (a)(2)(B). Pub. L. 92-178, Sec. 104(c)(2), (3), (d),
added cls. (viii) to (x), respectively.
Subsec. (a)(3)(C). Pub. L. 92-178, Sec. 104(b), added subpar.
(C).
Subsec. (a)(5). Pub. L. 92-178, Sec. 104(c)(1), inserted "(other
than the International Telecommunications Satellite Consortium or
any successor organization)" after "international organization".
Subsec. (a)(6). Pub. L. 92-178, Sec. 104(e), substituted
provisions for treatment of livestock (other than horses) acquired
by the taxpayer as section 38 property, with exception provision
for reduction of acquisition cost by amount equal to amount
realized on sale or other disposition under certain circumstances,
and for nontreatment of horses as section 38 property for former
provision that livestock shall not be treated as section 38
property.
Subsec. (a)(7) to (9). Pub. L. 92-178, Secs. 103, 104(f)(1), (g),
added pars. (7) to (9), respectively.
Subsec. (d). Pub. L. 92-178, Sec. 108(b) and (c), substituted
"section 46(d)(1)" for "section 46(d)"; and designated as par. (1)
the present first sentence, redesignated as subpars. (A) and (B)
provisions formerly designated cls. (1) and (2), again substituted
"section 46(d)(1)" for "section 46(d)" in par. (1) and inserted
"(other than property described in paragraph (4))" in par. (1),
added pars. (2) and (4), incorporated provisions of former second,
third, and fourth sentences in provisions designated as par. (3),
substituted in par. (3) "the lessee shall be treated for all
purposes of this subpart as having acquired a fractional portion of
such property equal to the fraction determined under paragraph
(2)(B) with respect to such property" for "the lessee shall be
treated for all purposes of this subpart as having acquired such
property", and struck out former fifth and sixth sentences
respecting election regarding treatment of leases of suspension
period property and section 38 property. See Effective Date of 1971
Amendment note below.
1969 - Subsec. (a)(4). Pub. L. 91-172, Sec. 121(d)(2)(A),
inserted provision relating to the percentage of the basis or cost
of debt-financed property that may be considered in computing
qualified investment under section 46(c) of this title.
Subsec. (c)(2)(C). Pub. L. 91-172, Sec. 401(e)(2), reenacted
subpar. (C) with minor changes and substituted reference to
controlled group for reference to affiliated group.
Subsec. (c)(3)(C). Pub. L. 91-172, Sec. 401(e)(3), substituted
definition of controlled group for definition of affiliated group.
Subsec. (d)(2). Pub. L. 91-172, Sec. 401(e)(4), substituted
reference to a component member of a controlled group for reference
to a member of an affiliated group.
1967 - Subsec. (a)(2)(B)(i). Pub. L. 90-26, Sec. 3, inserted "or
is operated under contract with the United States" after "the
United States".
Subsec. (h)(2). Pub. L. 90-26, Sec. 2(a), limited definition of
suspension period property to section 38 property where the
physical construction, reconstruction or erection was begun before
May 24, 1967, pursuant to an order placed during the suspension
period, subject to the proviso that in applying the definition to
property the physical construction, reconstruction or erection of
which was begun before May 24, 1967, only that portion of the basis
properly attributable to construction, reconstruction or erection
before May 24, 1967 be taken into account.
Subsec. (j). Pub. L. 90-26, Sec. 1, substituted "March 9, 1967"
for "December 31, 1967".
1966 - Subsec. (a)(2)(B). Pub. L. 89-809 added cl. (vii).
Subsec. (d). Pub. L. 89-800, Sec. 1(b), inserted provisions
covering the treatment of suspension period property, and the
elections to be deemed made in connection therewith.
Subsecs. (h) to (k). Pub. L. 89-800, Sec. 1(a), added subsecs.
(h) to (j) and redesignated former subsec. (h) as (k).
1964 - Subsec. (a)(1)(C). Pub. L. 88-272, Sec. 203(c)(2), added
subpar. (C).
Subsec. (d). Pub. L. 88-272, Sec. 203(a)(3)(A), (b), substituted
"except as provided in paragraph (2)" for "if such property was
constructed by the lessor (or by a corporation which controls or is
controlled by the lessor within the meaning of section 368(c))" in
par. (1), "if such property is leased by a corporation which is a
member of an affiliated group (within the meaning of section
46(a)(5) to another corporation which is a member of the same
affiliated group" for "if paragraph (1) does not apply" in par.
(2), and deleted provisions which stated that if a lessor made an
election under this subsection, subsec. (g) would not apply with
respect to such property, and deductions otherwise allowable under
section 162 to the lessee for amounts paid the lessor would be
adjusted consistent with subsec. (g).
Subsec. (g). Pub. L. 88-272, Sec. 203(a)(1), repealed subsec. (g)
which required that the basis of section 38 property be reduced by
7 percent of the qualified investment.
EFFECTIVE DATE OF 1992 AMENDMENT
Section 1916(b) of Pub. L. 102-486 provided that: "The amendments
made by this section [amending this section] shall take effect on
June 30, 1992."
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11813(a) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
If any interest costs incurred after Dec. 31, 1986, are
attributable to costs incurred before Jan. 1, 1987, the amendment
by section 803(b)(2)(B) of Pub. L. 99-514 is applicable to such
interest costs only to the extent such interest costs are
attributable to costs which were required to be capitalized under
section 263 of the Internal Revenue Code of 1954 and which would
have been taken into account in applying section 189 of the
Internal Revenue Code of 1954 (as in effect before its repeal by
section 803 of Pub. L. 99-514) or, if applicable, section 266 of
such Code, see section 7831(d)(2) of Pub. L. 101-239, set out as an
Effective Date note under section 263A of this title.
Amendment by section 251(b), (c) of Pub. L. 99-514 applicable to
property placed in service after Dec. 31, 1986, in taxable years
ending after such date, except as otherwise provided for certain
rehabilitations, see section 251(d) of Pub. L. 99-514, set out as a
note under section 46 of this title.
Amendment by section 701(e)(4)(C) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
Amendment by section 803(b)(2)(B) of Pub. L. 99-514 applicable to
costs incurred after Dec. 31, 1986, in taxable years ending after
such date, except as otherwise provided, see section 803(d) of Pub.
L. 99-514, set out as an Effective Date note under section 263A of
this title.
Amendment by sections 1272(d)(5) and 1275(c)(5) of Pub. L. 99-514
applicable to taxable years beginning after Dec. 31, 1986, with
certain exceptions and qualifications, see section 1277 of Pub. L.
99-514, set out as a note under section 931 of this title.
Amendment by section 1511(c)(3) of Pub. L. 99-514 applicable for
purposes of determining interest for periods after Dec. 31, 1986,
see section 1511(d) of Pub. L. 99-514, set out as a note under
section 47 of this title.
Section 1879(j)(2) of Pub. L. 99-514 provided that: "The
amendments made by this subsection [amending this section] shall
apply to periods after December 31, 1978 (under rules similar to
the rules of section 48(m) of the Internal Revenue Code of 1954
[now 1986]), in taxable years ending after such date."
Section 1881 of title XVIII of Pub. L. 99-514 provided that:
"Except as otherwise provided in this subtitle, any amendment made
by this subtitle [subtitle A (Secs. 1801-1881) of title XVIII of
Pub. L. 99-514, see Tables for classification] shall take effect as
if included in the provision of the Tax Reform Act of 1984 [Pub. L.
98-369, div. A] to which such amendment relates."
EFFECTIVE DATE OF 1985 AMENDMENT
Amendment by Pub. L. 99-121 applicable with respect to property
placed in service by the taxpayer after May 8, 1985, with specified
exceptions, but amendment of subsec. (g)(2)(B)(v) not applicable to
leases entered into before May 22, 1985, if the lessee signed the
lease before May 17, 1985, see section 105(b)(1), (5) of Pub. L.
99-121, set out as a note under section 168 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Section 18 of Pub. L. 98-369 provided that:
"(a) General Rule. - The amendments made by this part [part I
(Secs. 11-18) of subtitle A of title I of div. A of Pub. L. 98-369,
amending this section and sections 41, 46, 57, 128, 168, 179, 265,
415, 854, 857, and 911 of this title, enacting provisions set out
as a note under section 168 of this title, and amending provisions
set out as notes under sections 128 and 168 of this title] shall
apply to taxable years ending after December 31, 1983.
"(b) Special Rule for Section 14. - The amendment made by section
14 [amending section 41 of this title] shall not apply in the case
of a tax credit employee stock ownership plan if -
"(1) such plan was favorably approved on September 23, 1983, by
employees, and
"(2) not later than January 11, 1984, the employer of such
employees was 100 percent owned by such plan."
Amendment by section 31(b), (c)(1) of Pub. L. 98-369 effective,
except as otherwise provided in section 31(g) of Pub. L. 98-369, as
to property placed in service by the taxpayer after May 23, 1983,
in taxable years ending after such date and to property placed in
service by the taxpayer on or before May 23, 1983, if the lease to
the tax-exempt entity is entered into after May 23, 1983, and
amendment by section 31(c)(2) of Pub. L. 98-369, to the extent it
relates to section 168(f)(12) of this title, effective as if it had
been included in the amendments to section 168 of this title by
section 216(a) of Pub. L. 97-248, see section 31(g)(1), (12) of
Pub. L. 98-369, set out as a note under section 168 of this title.
Amendment by section 111(e)(8) of Pub. L. 98-369 applicable with
respect to property placed in service by the taxpayer after Mar.
15, 1984, subject to certain exceptions, see section 111(g) of Pub.
L. 98-369, set out as a note under section 168 of this title.
Amendment by section 113(b)(3) of Pub. L. 98-369 applicable as if
included in the amendments made by sections 201(a), 211(a)(1), and
211(f)(1) of Pub. L. 97-34, which enacted section 168 and amended
section 46 of this title, see section 113(c)(2)(B) of Pub. L.
98-369, set out as a note under section 168 of this title.
Amendment by section 113(b)(4) of Pub. L. 98-369 applicable as if
included in the amendments made by section 205(a)(1) of Pub. L.
97-248, see section 113(c)(2)(C) of Pub. L. 98-369, set out as a
note under section 168 of this title.
Section 113(c)(1) of Pub. L. 98-369 provided that: "The
amendments made by subsection (a) [amending this section and
section 168 of this title] shall apply to property placed in
service after March 15, 1984, in taxable years ending after such
date."
Section 114(b) of Pub. L. 98-369 provided that: "The amendment
made by this section [amending this section] shall apply to
property originally placed in service after April 11, 1984
(determined without regard to such amendment)."
Amendment by section 431(c) of Pub. L. 98-369 applicable to
property placed in service after July 18, 1984, in taxable years
ending after such date, but not applicable to property to which
sections 46(c)(8), (9) and 47(d) of this title, as enacted by
section 211(f) of Pub. L. 97-34, do not apply, with the taxpayer
having an option to elect retroactive application of amendment by
Pub. L. 98-369, see section 431(e) of Pub. L. 98-369, set out as a
note under section 46 of this title.
Amendment by section 474(o)(10)-(18) of Pub. L. 98-369 applicable
to taxable years beginning after Dec. 31, 1983, and to carrybacks
from such years, see section 475(a) of Pub. L. 98-369, set out as a
note under section 21 of this title.
Section 474(o)(15) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"Subsection (n) of section 48 (relating to requirements for
allowance of employee plan percentage) is hereby repealed; except
that paragraph (4) of section 48(n) of the Internal Revenue Code of
1986 [formerly I.R.C. 1954] (as in effect before its repeal by this
paragraph) shall continue to apply in the case of any recapture
under section 47(f) of such Code of a credit allowable for a
taxable year beginning before January 1, 1984."
Amendment by section 712(b) of Pub. L. 98-369 effective as if
included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 715 of Pub. L. 98-369, set out as a note under
section 31 of this title.
Amendment by section 721(x)(1) of Pub. L. 98-369 effective as if
included in the Subchapter S Revision Act of 1982, Pub. L. 97-354,
see section 721(y)(1) of Pub. L. 98-369, set out as a note under
section 1361 of this title.
Amendment by section 735(c)(1) of Pub. L. 98-369 effective,
except as otherwise provided, as if included in the provisions of
the Highway Revenue Act of 1982, title V of Pub. L. 97-424, to
which such amendment relates, see section 736 of Pub. L. 98-369,
set out as a note under section 4051 of this title.
Section 1043(b) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending this section] shall apply to
expenditures incurred after December 31, 1983, in taxable years
ending after such date."
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by title I of Pub. L. 97-448 effective, except as
otherwise provided, as if it had been included in the provision of
the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
Amendment by section 202(c) of Pub. L. 97-448 effective, except
as otherwise provided, as if it had been included in the provision
of the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223 to
which such amendment relates, see section 203(a) of Pub. L. 97-448,
set out as a note under section 6652 of this title.
Amendment by section 306(a)(3) of Pub. L. 97-448 effective as if
included in the provisions of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 311(d) of Pub. L. 97-448, set out as a note
under section 31 of this title.
EFFECTIVE AND TERMINATION DATES OF 1982 AMENDMENTS
Section 104(b) of Pub. L. 97-362, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendment made by this section [amending this section] shall apply
to periods beginning after December 31, 1980, and before January 1,
1983, under rules similar to the rules of section 48(m) of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954]."
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
Amendment by section 205(a)(1), (4), (5)(A) of Pub. L. 97-248,
applicable to periods after Dec. 31, 1982, under rules similar to
the rules of subsec. (m) of this section, with certain exceptions
and qualifications, see section 205(c)(1) of Pub. L. 97-248, set
out as an Effective Date note under section 196 of this title.
Amendment by section 209(c) of Pub. L. 97-248 applicable to
property placed in service after Dec. 31, 1983, but not to
qualified leased property described in section 168(f)(8)(D)(v) of
this title which is placed in service before Jan. 1, 1988, or is
placed in service after such date pursuant to a binding contract or
commitment entered into before April 1, 1983, and solely because of
conditions which, as determined by the Secretary of the Treasury or
his delegate, are not within the control of the lessor or lessee,
see sections 208(d)(5) and 209(d)(2) of Pub. L. 97-248, set out as
notes under section 168 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 213(b) of Pub. L. 97-34, as amended by Pub. L. 97-448,
title I, Sec. 102(g), Jan. 12, 1983, 96 Stat. 2372, provided that:
"The amendment made by this section [amending this section] shall
apply to taxable years beginning after December 31, 1980."
Section 214(c) of Pub. L. 97-34 provided that: "The amendments
made by this section [amending this section] shall apply to uses
after July 29, 1980, in taxable years ending after such date."
Section 332(c)(2) of Pub. L. 97-34 provided that: "The amendment
made by subsection (b) [amending this section] shall apply to
qualified investments made after December 31, 1981."
Amendment by section 211(a)(2), (e)(3), (4) of Pub. L. 97-34
applicable to property placed in service after Dec. 31, 1980, see
section 211(i)(1) of Pub. L. 97-34, set out as a note under section
46 of this title.
Amendment by section 211(c) of Pub. L. 97-34 applicable to
periods after Dec. 31, 1980, under rules similar to the rules under
subsec. (m) of this section, see section 211(i)(3) of Pub. L.
97-34, set out as a note under section 46 of this title.
Amendment by section 211(h) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1980, see section 211(i)(6)
of Pub. L. 97-34, set out as a note under section 46 of this title.
Amendment by section 212(a)(3), (b), (c), (d)(2)(A) of Pub. L.
97-34 applicable to expenditures incurred after Dec. 31, 1981, in
taxable years ending after such date, see section 212(e) of Pub. L.
97-34, set out as a note under section 46 of this title.
EFFECTIVE DATE OF 1980 AMENDMENTS
Section 109(b) of Pub. L. 96-605 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1979."
Section 223(b) of Pub. L. 96-605 provided that: "The amendments
made by subsection (a) [amending this section] shall apply with
respect to taxable years beginning after December 31, 1980."
Section 302(b) of Pub. L. 96-451 provided that: "The amendments
made by this section [amending this section] shall apply with
respect to additions to capital account made after December 31,
1979."
Section 222(j) of Pub. L. 96-223, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and section
46 of this title] shall apply to periods after December 31, 1979,
under rules similar to the rules of section 48(m) of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954].
"(2) Alumina electrolytic cells. - The amendments made by
subsection (d)(1) [amending this section] shall apply to periods
after September 30, 1978, under rules similar to the rules of
section 48(m) of such Code."
Section 223(a)(2) of Pub. L. 96-223, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to periods after December 31, 1979, under rules similar to the
rules of section 48(m) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954]."
Section 223(c)(2) of Pub. L. 96-223, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(A) In general. - Except as provided in subparagraph (B), the
amendment made by paragraph (1) [amending this section] shall apply
to periods after December 31, 1982, under rules similar to the
rules of section 48(m) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954]."
"(B) Earlier application for certain property. - In the case of
property which is -
"(i) qualified hydroelectric generating property (described in
section 48(l)(2)(A)(vii) of such Code),
"(ii) cogeneration equipment (described in section
48(l)(2)(A)(viii) of such Code),
"(iii) qualified intercity buses (described in section
48(l)(2)(A)(ix) of such Code),
"(iv) ocean thermal property (described in section
48(l)(3)(A)(ix) of such Code), or
"(v) expanded energy credit property,
the amendment made by paragraph (1) shall apply to periods after
December 31, 1979, under rules similar to the rules of section
48(m) of the Internal Revenue Code of 1986.
"(C) Expanded energy credit property. - For purposes of
subparagraph (B), the term 'expanded energy credit property' means
-
"(i) property to which section 48(l)(3)(A) of such Code applies
because of the amendments made by paragraphs (1) and (2) of
section 222(b) [amending this section],
"(ii) property described in section 48(l)(4)(C) of such Code
(relating to solar process heat),
"(iii) property described in section 48(l)(5)(L) of such Code
(relating to alumina electrolytic cells), and
"(iv) property described in the last sentence of section
48(l)(3)(A) of such Code (relating to storage equipment for
refuse-derived fuel).
"(D) Financing taken into account. - For the purpose of applying
the provisions of section 48(l)(11) of such Code in the case of
property financed in whole or in part by subsidized energy
financing (within the meaning of section 48(l)(11)(C) of such
Code), no financing made before January 1, 1980, shall be taken
into account. The preceding sentence shall not apply to financing
provided from the proceeds of any tax exempt industrial development
bond (within the meaning of section 103(b)(2) of such Code)."
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
Section 108(c)(7) of Pub. L. 96-222 provided that: "Any amendment
made by this subsection [amending sections 4071, 4221, 6416, and
6421 of this title] shall take effect as if included in the
provision of the Energy Tax Act of 1978 [See Short Title of 1978
Amendment note set out under section 1 of this title] to which such
amendment relates; except that the amendment made by paragraph (6)
[amending this section] shall take effect on the first day of the
first calendar month which begins more than 10 days after the date
of the enactment of this Act [Apr. 1, 1980]."
EFFECTIVE DATE OF 1978 AMENDMENTS
Section 301(d)(4) of Pub. L. 95-618 provided that:
"(A) In general. - The amendments made by this subsection
[amending this section and section 167 of this title] shall apply
to property which is placed in service after September 30, 1978.
"(B) Binding contracts. - The amendments made by this subsection
[amending this section and section 167 of this title] shall not
apply to property which is constructed, reconstructed, erected, or
acquired pursuant to a contract which, on October 1, 1978, and at
all times thereafter, was binding on the taxpayer."
Amendment by section 141(b) of Pub. L. 95-600 effective with
respect to qualified investment for taxable years beginning after
Dec. 31, 1978, see section 141(g)(1) of Pub. L. 95-600, set out as
an Effective Date note under section 409 of this title.
Amendment by section 312(c)(1), (2), (3) of Pub. L. 95-600
applicable to taxable years ending after Dec. 31, 1978, see section
312(d) of Pub. L. 95-600, set out as a note under section 46 of
this title.
Section 314(c) of Pub. L. 95-600 provided that: "The amendments
made by subsections (a) and (b) [amending this section] shall apply
to taxable years ending after August 15, 1971."
Section 315(d) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section] shall apply to taxable
years ending after October 31, 1978; except that the amendment made
by subsection (c) shall only apply with respect to property placed
in service after such date."
Amendment by section 703(a)(3), (4) of Pub. L. 95-600 effective
on Oct. 4, 1976, see section 703(r) of Pub. L. 95-600, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 802(b)(6) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1975, see section 802(c) of
Pub. L. 94-455, set out as a note under section 46 of this title.
Section 804(e) of Pub. L. 94-455, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - The amendments made by subsections (a) and
(b) [amending this section and section 47 of this title] shall
apply to taxable years beginning after December 31, 1974.
"(2) Election may also apply to property described in section
50(a). - At the election of the taxpayer, made within 1 year
after the date of the enactment of this Act [Oct. 4, 1976] in
such manner as the Secretary of the Treasury or his delegate may
by regulations prescribe, the amendments made by subsections (a)
and (b) shall also apply to property which is property described
in section 50(a) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954] and which is placed in service in taxable years
beginning before January 1, 1975."
Amendment by section 1051(h)(1) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1975 with certain
exceptions, see section 1051(i) of Pub. L. 94-455, set out as a
note under section 27 of this title.
Amendment by section 1901(a)(5), (b)(11)(A) of Pub. L. 94-455
applicable with respect to taxable years beginning after Dec. 31,
1976, see section 1901(d) of Pub. L. 94-455, set out as a note
under section 2 of this title.
Amendment by section 2112(a) of Pub. L. 94-455 applicable to
property acquired by the taxpayer after Dec. 31, 1976, and
property, the construction, reconstruction, or erection of which
was completed by the taxpayer after Dec. 31, 1976, (but only to the
extent of the basis thereof attributable to construction,
reconstruction, or erection after such date), in taxable years
beginning after such date, see section 2112(d)(1) of Pub. L.
94-455, set out as a note under section 46 of this title.
EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT
Section 301(c)(2) of Pub. L. 94-12, as amended by Pub. L. 94-455,
title VIII, Sec. 801, Oct. 4, 1976, 90 Stat. 1580; Pub. L. 95-600,
title III, Sec. 311(b), Nov. 6, 1978, 92 Stat. 2824, provided that:
"The amendments made by paragraph (1) [amending this section] shall
apply only to taxable years beginning after December 31, 1974."
Amendment by section 302(c)(3) of Pub. L. 94-12 applicable to
taxable years ending after Dec. 31, 1974, see section 305(a) of
Pub. L. 94-12, set out as an Effective Date of 1975 Amendment note
under section 46 of this title.
Section 604(b) of Pub. L. 94-12, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - The amendments made by subsection (a)
[amending this section] shall apply to property, the
construction, reconstruction, or erection of which was completed
after March 18, 1975, or the acquisition of which by the taxpayer
occurred after such date.
"(2) Binding contract. - The amendments made by subsection (a)
[amending this section] shall not apply to property constructed,
reconstructed, erected, or acquired pursuant to a contract which
was on April 1, 1974, and at all times thereafter, binding on the
taxpayer.
"(3) Certain lease-back transactions, etc. - Where a person who
is a party to a binding contract described in paragraph (2)
transfers rights in such contract (or in the property to which
such contract relates) to another person but a party to such
contract retains a right to use the property under a lease with
such other person, then to the extent of the transferred rights
such other person shall, for purposes of paragraph (2), succeed
to the position of the transferor with respect to such binding
contract and such property. The preceding sentence shall apply,
in any case in which the lessor does not make an election under
section 48(d) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954], only if a party to such contract retains a right to
use the property under a long-term lease."
EFFECTIVE DATE OF 1971 AMENDMENT
Section 104(h) of Pub. L. 92-178, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by this section [amending this section and sections
169 and 1245 of this title] (other than by subsections (c)(1),
(c)(2), and (g) [amending this section]) shall apply to property
described in section 50 of the Internal Revenue Code of 1986
[formerly I.R.C. 1954]. The amendments made by subsections (c)(1),
(c)(2), and (g) [amending this section] shall apply to taxable
years ending after December 31, 1961."
Amendment by section 108(b), (c) of Pub. L. 92-178, applicable to
leases entered into after Sept. 22, 1971, and after Nov. 8, 1971,
respectively, see section 108(d) of Pub. L. 92-178, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 121(d)(2)(A) of Pub. L. 91-172 applicable to
taxable years beginning after Dec. 31, 1969, see section 121(g) of
Pub. L. 91-172, set out as a note under section 511 of this title.
Amendment by section 401(e)(2)-(4) of Pub. L. 91-172 applicable
with respect to taxable years ending on or after Dec. 31, 1970, see
section 401(h)(3) of Pub. L. 91-172, set out as a note under
section 1561 of this title.
EFFECTIVE DATE OF 1967 AMENDMENT
Section 4 of Pub. L. 90-26 provided that: "The amendments made by
the first three sections of this Act [amending this section and
section 167 of this title] shall apply to taxable years ending
after March 9, 1967."
EFFECTIVE DATE OF 1966 AMENDMENTS
Section 201(b) of Pub. L. 89-809, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by subsection (a) [amending this section] shall
apply to taxable years ending after December 31, 1965, but only
with respect to property placed in service after such date. In
applying section 46(b) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] (relating to carryback and carryover of
unused credits), the amount of any investment credit carryback to
any taxable year ending on or before December 31, 1965, shall be
determined without regard to the amendments made by this section."
Amendment by Pub. L. 89-800 applicable to taxable years ending
after Oct. 9, 1966, see section 4 of Pub. L. 89-800, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Section 203(a)(4) of Pub. L. 88-272 provided that: "Paragraphs
(1) [amending this section] and (3) [amending this section and
section 1016 of this title and repealing section 181 of this title]
of this subsection shall apply -
"(A) in the case of property placed in service after December
31, 1963, with respect to taxable years ending after such date,
and
"(B) in the case of property placed in service before January
1, 1964, with respect to taxable years beginning after December
31, 1963."
Section 203(f) of Pub. L. 88-272 provided that:
"(1) The amendments made by subsection (b) [amending this
section] shall apply with respect to property possession of which
is transferred to a lessee on or after the date of enactment of
this Act [Feb. 26, 1964].
"(2) The amendments made by subsection (c) [amending this
section] shall apply with respect to taxable years ending after
June 30, 1963.
"(3) The amendments made by subsection (d) [amending section 1245
of this title] shall apply with respect to dispositions after
December 31, 1963, in taxable years ending after such date."
EFFECTIVE DATE
Section applicable with respect to taxable years ending after
Dec. 31, 1961, see section 2(h) of Pub. L. 87-834, set out as a
note under section 46 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
-TRANS-
TRANSFER OF FUNCTIONS
Functions, powers, and duties of Federal Aviation Agency and of
Administrator and other offices and officers thereof transferred by
Pub. L. 89-670, Oct. 15, 1966, 80 Stat. 931, to Secretary of
Transportation, with functions, powers, and duties of Secretary of
Transportation pertaining to aviation safety to be exercised by
Federal Aviation Administrator in Department of Transportation, see
section 106 of Title 49, Transportation.
-MISC2-
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(e)(4)(C) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had
been included in the provision of Pub. L. 99-514 to which such
amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,
set out as a note under section 861 of this title.
SPECIAL RULE
Section 1879(j)(3) of Pub. L. 99-514 provided that: "If refund or
credit of any overpayment of tax resulting from the application of
this subsection [amending this section] is prevented at any time
before the close of the date which is 1 year after the date of the
enactment of this Act [Oct. 22, 1986] by operation of any law or
rule of law (including res judicata), refund or credit of such
overpayment (to the extent attributable to the application of the
amendments made by this subsection [amending this section]) may,
nevertheless, be made or allowed if claim therefor is filed before
the close of such 1-year period."
CLARIFICATION OF EFFECT OF 1984 AMENDMENT ON INVESTMENT TAX CREDIT
For provision that nothing in the amendments made by section
474(o) of Pub. L. 98-369, which amended this section, be construed
as reducing the investment tax credit in taxable years beginning
before Jan. 1, 1984, see section 475(c) of Pub. L. 98-369, set out
as a note under section 46 of this title.
ALTERNATIVE METHODS OF COMPUTING CREDIT FOR PAST PERIODS
Section 804(c) of Pub. L. 94-455, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) General rule for determining useful life, predominant
foreign use, etc. - In the case of a qualified film (within the
meaning of section 48(k)(1)(B) of the Internal Revenue Code of
1986 [formerly I.R.C. 1954]) placed in service in a taxable year
beginning before January 1, 1975, with respect to which neither
an election under paragraph (2) of this subsection nor an
election under subsection (e)(2) applies -
"(A) the applicable percentage under section 46(c)(2) of such
Code shall be determined as if the useful life of the film
would have expired at the close of the first taxable year by
the close of which the aggregate amount allowable as a
deduction under section 167 of such Code would equal or exceed
90 percent of the basis of such property (adjusted for any
partial dispositions),
"(B) for purposes of section 46(c)(1) of such Code, the basis
of the property shall be determined by taking into account the
total production costs (within the meaning of section
48(k)(5)(B) of such Code),
"(C) for purposes of section 48(a)(2) of such Code, such film
shall be considered to be used predominantly outside the United
States in the first taxable year for which 50 percent or more
of the gross revenues received or accrued during the taxable
year from showing the film were received or accrued from
showing the film outside the United States, and
"(D) Section 47(a)(7) of such Code shall apply.
"(2) Election of 40-percent method. -
"(A) In general. - A taxpayer may elect to have this
paragraph apply to all qualified films placed in service during
taxable years beginning before January 1, 1975 (other than
films to which an election under subsection (e)(2) of this
section applies).
"(B) Effect of election. - If the taxpayer makes an election
under this paragraph, then section 48(k) of the Internal
Revenue Code of 1986 shall apply to all qualified films
described in subparagraph (A) with the following modifications:
"(i) subparagraph (B) of paragraph (4) shall not apply, but
in determining qualified investment under section 46(c)(1) of
such Code there shall be used (in lieu of the basis of such
property) an amount equal to 40 percent of the aggregate
production costs (within the meaning of paragraph (5)(B) of
such section 48(k)),
"(ii) paragraph (2) shall be applied by substituting '100
percent' for '66 2/3 percent', and
"(iii) paragraph (3) and paragraph (5) (other than
subparagraph (B)) shall not apply.
"(C) Rules relating to elections. - An election under this
paragraph shall be made not later than the day which is 6
months after the date of the enactment of this Act [Oct. 4,
1976] and shall be made in such manner as the Secretary of the
Treasury or his delegate shall by regulations prescribe. Such
an election may be revoked only with the consent of the
Secretary of the Treasury or his delegate.
"(D) The taxpayer must consent to join in certain
proceedings. - No election may be made under this paragraph or
subsection (e)(2) by any taxpayer unless he consents, under
regulations prescribed by the Secretary of the Treasury or his
delegate, to treat the determination of the investment credit
allowable on each film subject to an election as a separate
cause of action, and to join in any judicial proceeding for
determining the person entitled to, and the amount of, the
credit allowable under section 38 of the Internal Revenue Code
of 1986 with respect to any film covered by such election.
"(3) Election to have credit determined in accordance with
previous litigation. -
"(A) In general. - A taxpayer described in subparagraph (B)
may elect to have this paragraph apply to all films (whether or
not qualified) placed in service in taxable years beginning
before January 1, 1975, and with respect to which an election
under subsection (e)(2) is not made.
"(B) Who may elect. - A taxpayer may make an election under
this paragraph if he has filed an action in any court of
competent jurisdiction, before January 1, 1976, for a
determination of such taxpayer's rights to the allowance of a
credit against tax under section 38 of the Internal Revenue
Code of 1986 for any taxable year beginning before January 1,
1975, with respect to any film.
"(C) Effect of election. - If the taxpayer makes an election
under this paragraph -
"(i) paragraphs (1) and (2) of this subsection, and
subsection (d) shall not apply to any film placed in service
by the taxpayer, and
"(ii) subsection 48(k) of the Internal Revenue Code of 1986
shall not apply to any film placed in service by the taxpayer
in any taxable year beginning before January 1, 1975, and
with respect to which an election under subsection (e)(2) is
not made,
and the right of the taxpayer to the allowance of a credit
against tax under section 38 of such Code with respect to any
film placed in service in any taxable year beginning before
January 1, 1975, and as to which an election under subsection
(e)(2) is not made, shall be determined as though this section
(other than this paragraph) has not been enacted.
"(D) Rules relating to elections. - An election under this
paragraph shall be made not later than the day which is 90 days
after the date of the enactment of this Act [Oct. 4, 1976], by
filing a notification of such election with the national office
of the Internal Revenue Service. Such an election, once made,
shall be irrevocable."
ENTITLEMENT TO CREDIT
Section 804(d) of Pub. L. 94-455, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Paragraph
(1) of section 48(k) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954] (relating to entitlement to credit) shall apply to any
motion picture film or video tape placed in service in any taxable
year beginning before January 1, 1975."
INCREASE IN BASIS OF PROPERTY PLACED IN SERVICE BEFORE JANUARY 1,
1964
Section 203(a)(2) of Pub. L. 88-272, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(A) The basis of any section 38 property (as defined in section
48(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954])
placed in service before January 1, 1964, shall be increased, under
regulations prescribed by the Secretary of the Treasury or his
delegate, by an amount equal to 7 percent of the qualified
investment with respect to such property under section 46(c) of the
Internal Revenue Code of 1986. If there has been any increase with
respect to such property under section 48(g)(2) of such Code, the
increase under the preceding sentence shall be appropriately
reduced therefor.
"(B) If a lessor made the election provided by section 48(d) of
the Internal Revenue Code of 1986 with respect to property placed
in service before January 1, 1964 -
"(i) subparagraph (A) shall not apply with respect to such
property, but
"(ii) under regulations prescribed by the Secretary of the
Treasury or his delegate, the deductions otherwise allowable
under section 162 of such Code to the lessee for amounts paid to
the lessor under the lease (or, if such lessee has purchased such
property, the basis of such property) shall be adjusted in a
manner consistent with subparagraph (A).
"(C) The adjustments under this paragraph shall be made as of the
first day of the taxpayer's first taxable year which begins after
December 31, 1963."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 29, 50, 168, 409, 1274A
of this title.
-End-
-CITE-
26 USC Sec. 49 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
Sec. 49. At-risk rules
-STATUTE-
(a) General rule
(1) Certain nonrecourse financing excluded from credit base
(A) Limitation
The credit base of any property to which this paragraph
applies shall be reduced by the nonqualified nonrecourse
financing with respect to such credit base (as of the close of
the taxable year in which placed in service).
(B) Property to which paragraph applies
This paragraph applies to any property which -
(i) is placed in service during the taxable year by a
taxpayer described in section 465(a)(1), and
(ii) is used in connection with an activity with respect to
which any loss is subject to limitation under section 465.
(C) Credit base defined
For purposes of this paragraph, the term "credit base" means
-
(i) the portion of the basis of any qualified rehabilitated
building attributable to qualified rehabilitation
expenditures,
(ii) the basis of any energy property, and
(iii) the amortizable basis of any qualified timber
property.
(D) Nonqualified nonrecourse financing
(i) In general
For purposes of this paragraph and paragraph (2), the term
"nonqualified nonrecourse financing" means any nonrecourse
financing which is not qualified commercial financing.
(ii) Qualified commercial financing
For purposes of this paragraph, the term "qualified
commercial financing" means any financing with respect to any
property if -
(I) such property is acquired by the taxpayer from a
person who is not a related person,
(II) the amount of the nonrecourse financing with respect
to such property does not exceed 80 percent of the credit
base of such property, and
(III) such financing is borrowed from a qualified person
or represents a loan from any Federal, State, or local
government or instrumentality thereof, or is guaranteed by
any Federal, State, or local government.
Such term shall not include any convertible debt.
(iii) Nonrecourse financing
For purposes of this subparagraph, the term "nonrecourse
financing" includes -
(I) any amount with respect to which the taxpayer is
protected against loss through guarantees, stop-loss
agreements, or other similar arrangements, and
(II) except to the extent provided in regulations, any
amount borrowed from a person who has an interest (other
than as a creditor) in the activity in which the property
is used or from a related person to a person (other than
the taxpayer) having such an interest.
In the case of amounts borrowed by a corporation from a
shareholder, subclause (II) shall not apply to an interest as
a share-holder.(!1)
(iv) Qualified person
For purposes of this paragraph, the term "qualified person"
means any person which is actively and regularly engaged in
the business of lending money and which is not -
(I) a related person with respect to the taxpayer,
(II) a person from which the taxpayer acquired the
property (or a related person to such person), or
(III) a person who receives a fee with respect to the
taxpayer's investment in the property (or a related person
to such person).
(v) Related person
For purposes of this subparagraph, the term "related
person" has the meaning given such term by section
465(b)(3)(C). Except as otherwise provided in regulations
prescribed by the Secretary, the determination of whether a
person is a related person shall be made as of the close of
the taxable year in which the property is placed in service.
(E) Application to partnerships and S corporations
For purposes of this paragraph and paragraph (2) -
(i) In general
Except as otherwise provided in this subparagraph, in the
case of any partnership or S corporation, the determination
of whether a partner's or shareholder's allocable share of
any financing is nonqualified nonrecourse financing shall be
made at the partner or shareholder level.
(ii) Special rule for certain recourse financing of S
corporation
A shareholder of an S corporation shall be treated as
liable for his allocable share of any financing provided by a
qualified person to such corporation if -
(I) such financing is recourse financing (determined at
the corporate level), and
(II) such financing is provided with respect to qualified
business property of such corporation.
(iii) Qualified business property
For purposes of clause (ii), the term "qualified business
property" means any property if -
(I) such property is used by the corporation in the
active conduct of a trade or business,
(II) during the entire 12-month period ending on the last
day of the taxable year, such corporation had at least 3
full-time employees who were not owner-employees (as
defined in section 465(c)(7)(E)(i)) and substantially all
the services of whom were services directly related to such
trade or business, and
(III) during the entire 12-month period ending on the
last day of such taxable year, such corporation had at
least 1 full-time employee substantially all of the
services of whom were in the active management of the trade
or business.
(iv) Determination of allocable share
The determination of any partner's or shareholder's
allocable share of any financing shall be made in the same
manner as the credit allowable by section 38 with respect to
such property.
(F) Special rules for energy property
Rules similar to the rules of subparagraph (F) of section
46(c)(8) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall
apply for purposes of this paragraph.
(2) Subsequent decreases in nonqualified nonrecourse financing
with respect to the property
(A) In general
If, at the close of a taxable year following the taxable year
in which the property was placed in service, there is a net
decrease in the amount of nonqualified nonrecourse financing
with respect to such property, such net decrease shall be taken
into account as an increase in the credit base for such
property in accordance with subparagraph (C).
(B) Certain transactions not taken into account
For purposes of this paragraph, nonqualified nonrecourse
financing shall not be treated as decreased through the
surrender or other use of property financed by nonqualified
nonrecourse financing.
(C) Manner in which taken into account
(i) Credit determined by reference to taxable year property
placed in service
For purposes of determining the amount of credit allowable
under section 38 and the amount of credit subject to the
early disposition or cessation rules under section 50(a), any
increase in a taxpayer's credit base for any property by
reason of this paragraph shall be taken into account as if it
were property placed in service by the taxpayer in the
taxable year in which the property referred to in
subparagraph (A) was first placed in service.
(ii) Credit allowed for year of decrease in nonqualified
nonrecourse financing
Any credit allowable under this subpart for any increase in
qualified investment by reason of this paragraph shall be
treated as earned during the taxable year of the decrease in
the amount of nonqualified nonrecourse financing.
(b) Increases in nonqualified nonrecourse financing
(1) In general
If, as of the close of the taxable year, there is a net
increase with respect to the taxpayer in the amount of
nonqualified nonrecourse financing (within the meaning of
subsection (a)(1)) with respect to any property to which
subsection (a)(1) applied, then the tax under this chapter for
such taxable year shall be increased by an amount equal to the
aggregate decrease in credits allowed under section 38 for all
prior taxable years which would have resulted from reducing the
credit base (as defined in subsection (a)(1)(C)) taken into
account with respect to such property by the amount of such net
increase. For purposes of determining the amount of credit
subject to the early disposition or cessation rules of section
50(a), the net increase in the amount of the nonqualified
nonrecourse financing with respect to the property shall be
treated as reducing the property's credit base in the year in
which the property was first placed in service.
(2) Transfers of debt more than 1 year after initial borrowing
not treated as increasing nonqualified nonrecourse financing
For purposes of paragraph (1), the amount of nonqualified
nonrecourse financing (within the meaning of subsection
(a)(1)(D)) with respect to the taxpayer shall not be treated as
increased by reason of a transfer of (or agreement to transfer)
any evidence of any indebtedness if such transfer occurs (or such
agreement is entered into) more than 1 year after the date such
indebtedness was incurred.
(3) Special rules for certain energy property
Rules similar to the rules of section 47(d)(3) (as in effect on
the day before the date of the enactment of the Revenue
Reconciliation Act of 1990) shall apply for purposes of this
subsection.
(4) Special rule
Any increase in tax under paragraph (1) shall not be treated as
tax imposed by this chapter for purposes of determining the
amount of any credit allowable under this chapter.
-SOURCE-
(Added Pub. L. 99-514, title II, Sec. 211(a), Oct. 22, 1986, 100
Stat. 2166; amended Pub. L. 100-647, title I, Sec. 1002(e)(1)-(3),
(8)(B), Nov. 10, 1988, 102 Stat. 3367, 3369; Pub. L. 101-508, title
XI, Sec. 11813(a), Nov. 5, 1990, 104 Stat. 1388-543; Pub. L.
105-206, title VI, Sec. 6004(g)(6), July 22, 1998, 112 Stat. 796.)
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsecs. (a)(1)(F) and (b)(3), is the date of
enactment of Pub. L. 101-508, which was approved Nov. 5, 1990.
-MISC1-
PRIOR PROVISIONS
A prior section 49, Pub. L. 91-172, title VII, Sec. 703(a), Dec.
30, 1969, 83 Stat. 660; Pub. L. 92-178, title I, Sec.
101(b)(1)-(4), Dec. 10, 1971, 85 Stat. 498, 499, related to
termination of rules for computing credit for investment in certain
depreciable property for period beginning Apr. 19, 1969, and ending
during 1971, prior to repeal by Pub. L. 95-600, title III, Sec.
312(c)(1), Nov. 6, 1978, 92 Stat. 2826, applicable to taxable years
ending after Dec. 31, 1978.
AMENDMENTS
1998 - Subsec. (b)(4). Pub. L. 105-206 substituted "this chapter"
for "subpart A, B, D, or G".
1990 - Pub. L. 101-508, Sec. 11813(a), amended section generally,
substituting section catchline for one which read: "Termination of
regular percentage" and in text substituting present provisions for
provisions relating to the nonapplicability of the regular
percentage to any property placed in service after Dec. 31, 1985,
for purposes of determining the investment tax credit, exceptions
to such rule, the 35 percent reduction in credit for taxable years
after 1986, the full basis adjustment in determining investment tax
credit, and the definition of transition property and treatment of
progress expenditures.
1988 - Subsec. (c)(4)(B). Pub. L. 100-647, Sec. 1002(e)(2),
substituted "years" for "year" in heading and amended text
generally. Prior to amendment, text read as follows: "The amount of
the reduction of the regular investment credit under paragraph (3)
-
"(i) may not be carried back to any taxable year, but
"(ii) shall be added to the carryforwards from the taxable year
before applying paragraph (2)."
Subsec. (c)(5)(B)(i). Pub. L. 100-647, Sec. 1002(e)(3), amended
cl. (i) generally. Prior to amendment, cl. (i) read as follows:
"The term 'regular investment credit' has the meaning given such
term by section 48(o)".
Subsec. (c)(5)(C). Pub. L. 100-647, Sec. 1002(e)(8)(B), struck
out subpar. (C) which related to portion of credits attributable to
regular investment credit.
Subsec. (d)(1). Pub. L. 100-647, Sec. 1002(e)(1), amended par.
(1) generally. Prior to amendment, par. (1) read as follows: "In
the case of periods after December 31, 1985, section 48(q)
(relating to basis adjustment to section 38 property) shall be
applied with respect to transaction property -
"(A) by substituting '100 percent' for '50 percent' in
paragraph (1), and
"(B) without regard to paragraph (4) thereof (relating to
election of reduced credit in lieu of basis adjustment)."
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 applicable to property placed in
service after Dec. 31, 1990, but not applicable to any transition
property (as defined in section 49(e) of this title), any property
with respect to which qualified progress expenditures were
previously taken into account under section 46(d) of this title,
and any property described in section 46(b)(2)(C) of this title, as
such sections were in effect on Nov. 4, 1990, see section 11813(c)
of Pub. L. 101-508, set out as a note under section 29 of this
title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1002(e)(1)-(3) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Amendment by section 1002(e)(8)(B) of Pub. L. 100-647 applicable
to taxable years beginning after Dec. 31, 1983, and to carrybacks
from such years, see section 1002(e)(8)(C) of Pub. L. 100-647, set
out as a note under section 38 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 211(e) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1002(e)(4)-(7), Nov. 10, 1988, 102 Stat. 3367, 3368,
provided that:
"(1) In general. - Except as provided in this subsection, the
amendments made by this section [enacting this section and
provisions set out below] shall apply to property placed in service
after December 31, 1985, in taxable years ending after such date.
Section 49(c) of the Internal Revenue Code of 1986 (as added by
subsection (a)) shall apply to taxable years ending after June 30,
1987, and to amounts carried to such taxable years.
"(2) Exceptions for certain films. - For purposes of determining
whether any property is transition property within the meaning of
section 49(e) of the Internal Revenue Code of 1986 -
"(A) in the case of any motion picture or television film,
construction shall be treated as including production for
purposes of section 203(b)(1) of this Act [enacting provisions
set out as a note under section 168 of this title], and written
contemporary evidence of an agreement (in accordance with
industry practice) shall be treated as a written binding contract
for such purposes,
"(B) in the case of any television film, a license agreement or
agreement for production services between a television network
and a producer shall be treated as a binding contract for
purposes of section 203(b)(1)(A) of this Act, and
"(C) a motion picture film shall be treated as described in
section 203(b)(1)(A) of this Act if -
"(i) funds were raised pursuant to a public offering before
September 26, 1985, for the production of such film,
"(ii) 40 percent of the funds raised pursuant to such public
offering are being spent on films the production of which
commenced before such date, and
"(iii) all of the films funded by such public offering are
required to be distributed pursuant to distribution agreements
entered into before September 26, 1985.
"(3) Normalization rules. - The provisions of subsection (b) [see
Normalization Rules note below] shall apply to any violation of the
normalization requirements under paragraph (1) or (2) of section
46(f) of the Internal Revenue Code of 1986 occurring in taxable
years ending after December 31, 1985.
"(4) Additional exceptions. -
"(A) Subsections (c) and (d) of section 49 of the Internal
Revenue Code of 1986 shall not apply to any continuous caster
facility for slabs and blooms which is subject to a lease and
which is part of a project the second phase of which is a
continuous slab caster which was placed in service before
December 31, 1985.
"(B) For purposes of determining whether an automobile
manufacturing facility (including equipment and incidental
appurtenances) is transition property within the meaning of
section 49(e), property with respect to which the Board of
Directors of an automobile manufacturer formally approved the
plan for the project on January 7, 1985 shall be treated as
transition property and subsections (c) and (d) of section 49 of
such Code shall not apply to such property, but only with respect
to $70,000,000 of regular investment tax credits.
"(C) Any solid waste disposal facility which will process and
incinerate solid waste of one or more public or private entities
including Dakota County, Minnesota, and with respect to which a
bond carryforward from 1985 was elected in an amount equal to
$12,500,000 shall be treated as transition property within the
meaning of section 49(e) of the Internal Revenue Code of 1986.
"(D) For purposes of section 49 of such Code, the following
property shall be treated as transition property:
"(i) 2 catamarans built by a shipbuilder incorporated in the
State of Washington in 1964, the contracts for which were
signed on April 22, 1986 and November 12, 1985, and 1 barge
built by such shipbuilder the contract for which was signed on
August 7, 1985.
"(ii) 2 large passenger ocean-going United States flag cruise
ships with a passenger rated capacity of up to 250 which are
built by the shipbuilder described in clause (i), which are the
first such ships built in the United States since 1952, and
which were designed at the request of a Pacific Coast cruise
line pursuant to a contract entered into in October 1985. This
clause shall apply only to that portion of the cost of each
ship which does not exceed $40,000,000.
"(iii) Property placed in service during 1986 by Satellite
Industries, Inc., with headquarters in Minneapolis, Minnesota,
to the extent that the cost of such property does not exceed
$1,950,000.
"(E) Subsections (c) and (d) of section 49 of such Code shall
not apply to property described in section 204(a)(4) of this Act
[enacting provisions set out as a note under section 168 of this
title]."
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
NORMALIZATION RULES
Section 211(b) of Pub. L. 99-514 provided that: "If, for any
taxable year beginning after December 31, 1985, the requirements of
paragraph (1) or (2) of section 46(f) of the Internal Revenue Code
of 1986 are not met with respect to public utility property to
which the regular percentage applied for purposes of determining
the amount of the investment tax credit -
"(1) all credits for open taxable years as of the time of the
final determination referred to in section 46(f)(4)(A) of such
Code shall be recaptured, and
"(2) if the amount of the taxpayer's unamortized credits (or
the credits not previously restored to rate base) with respect to
such property (whether or not for open years) exceeds the amount
referred to in paragraph (1), the taxpayer's tax for the taxable
year shall be increased by the amount of such excess.
If any portion of the excess described in paragraph (2) is
attributable to a credit which is allowable as a carryover to a
taxable year beginning after December 31, 1985, in lieu of applying
paragraph (2) with respect to such portion, the amount of such
carryover shall be reduced by the amount of such portion. Rules
similar to the rules of this subsection shall apply in the case of
any property with respect to which the requirements of section
46(f)(9) of such Code are met."
EXCEPTION FOR CERTAIN AIRCRAFT USED IN ALASKA
Section 211(d) of Pub. L. 99-514 provided that:
"(1) The amendments made by subsection (a) [enacting this section
and provisions set out above] shall not apply to property
originally placed in service after December 29, 1982, and before
August 1, 1985, by a corporation incorporated in Alaska on May 21,
1953, and used by it -
"(A) in part, for the transportation of mail for the United
States Postal Service in the State of Alaska, and
"(B) in part, to provide air service in the State of Alaska on
routes which had previously been served by an air carrier that
received compensation from the Civil Aeronautics Board for
providing service.
"(2) In the case of property described in subparagraph (A) -
"(A) such property shall be treated as recovery property
described in section 208(d)(5) of the Tax Equity and Fiscal
Responsibility Act of 1982 ('TEFRA') [section 208(d)(5) of Pub.
L. 97-248, enacting provisions set out as a note under section
168 of this title];
"(B) '48 months' shall be substituted for '3 months' each place
it appears in applying -
"(i) section 48(b)(2)(B) of the Code [26 U.S.C. 48(b)(2)(B)],
and
"(ii) section 168(f)(8)(D) of the Code [26 U.S.C.
168(f)(8)(D)] (as in effect after the amendments made by the
Technical Corrections Act of 1982 [Pub. L. 97-448] but before
the amendments made by TEFRA); and
"(C) the limitation of section 168(f)(8)(D)(ii)(III) (as then
in effect) shall be read by substituting 'the lessee's original
cost basis.', for 'the adjusted basis of the lessee at the time
of the lease.'
"(3) The aggregate amount of property to which this paragraph
shall apply shall not exceed $60,000,000."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 29, 42, 43, 465, 773,
1371 of this title.
-FOOTNOTE-
(!1) So in original. Probably should not be hyphenated.
-End-
-CITE-
26 USC Sec. 50 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
Sec. 50. Other special rules
-STATUTE-
(a) Recapture in case of dispositions, etc.
Under regulations prescribed by the Secretary -
(1) Early disposition, etc.
(A) General rule
If, during any taxable year, investment credit property is
disposed of, or otherwise ceases to be investment credit
property with respect to the taxpayer, before the close of the
recapture period, then the tax under this chapter for such
taxable year shall be increased by the recapture percentage of
the aggregate decrease in the credits allowed under section 38
for all prior taxable years which would have resulted solely
from reducing to zero any credit determined under this subpart
with respect to such property.
(B) Recapture percentage
For purposes of subparagraph (A), the recapture percentage
shall be determined in accordance with the following table:
If the property ceases to be 2The recapture
investment credit property within -
percentage is:
--------------------------------------------------------------------
(i) One full year after placed in service 100
(ii) One full year after the close of the 80
period described in clause (i)
(iii) One full year after the close of the 60
period described in clause (ii)
(iv) One full year after the close of the 40
period described in clause (iii)
(v) One full year after the close of the 20
period described in clause (iv)
--------------------------------------------------------------------
(2) Property ceases to qualify for progress expenditures
(A) In general
If during any taxable year any building to which section
47(d) applied ceases (by reason of sale or other disposition,
cancellation or abandonment of contract, or otherwise) to be,
with respect to the taxpayer, property which, when placed in
service, will be a qualified rehabilitated building, then the
tax under this chapter for such taxable year shall be increased
by an amount equal to the aggregate decrease in the credits
allowed under section 38 for all prior taxable years which
would have resulted solely from reducing to zero the credit
determined under this subpart with respect to such building.
(B) Certain excess credit recaptured
Any amount which would have been applied as a reduction under
paragraph (2) of section 47(b) but for the fact that a
reduction under such paragraph cannot reduce the amount taken
into account under section 47(b)(1) below zero shall be treated
as an amount required to be recaptured under subparagraph (A)
for the taxable year during which the building is placed in
service.
(C) Certain sales and leasebacks
Under regulations prescribed by the Secretary, a sale by, and
leaseback to, a taxpayer who, when the property is placed in
service, will be a lessee to whom the rules referred to in
subsection (d)(5) apply shall not be treated as a cessation
described in subparagraph (A) to the extent that the amount
which will be passed through to the lessee under such rules
with respect to such property is not less than the qualified
rehabilitation expenditures properly taken into account by the
lessee under section 47(d) with respect to such property.
(D) Coordination with paragraph (1)
If, after property is placed in service, there is a
disposition or other cessation described in paragraph (1), then
paragraph (1) shall be applied as if any credit which was
allowable by reason of section 47(d) and which has not been
required to be recaptured before such disposition, cessation,
or change in use were allowable for the taxable year the
property was placed in service.
(E) Special rules
Rules similar to the rules of this paragraph shall apply in
cases where qualified progress expenditures were taken into
account under the rules referred to in section 48(a)(5).
(3) Carrybacks and carryovers adjusted
In the case of any cessation described in paragraph (1) or (2),
the carrybacks and carryovers under section 39 shall be adjusted
by reason of such cessation.
(4) Subsection not to apply in certain cases
Paragraphs (1) and (2) shall not apply to -
(A) a transfer by reason of death, or
(B) a transaction to which section 381(a) applies.
For purposes of this subsection, property shall not be treated as
ceasing to be investment credit property with respect to the
taxpayer by reason of a mere change in the form of conducting the
trade or business so long as the property is retained in such
trade or business as investment credit property and the taxpayer
retains a substantial interest in such trade or business.
(5) Definitions and special rules
(A) Investment credit property
For purposes of this subsection, the term "investment credit
property" means any property eligible for a credit determined
under this subpart.
(B) Transfer between spouses or incident to divorce
In the case of any transfer described in subsection (a) of
section 1041 -
(i) the foregoing provisions of this subsection shall not
apply, and
(ii) the same tax treatment under this subsection with
respect to the transferred property shall apply to the
transferee as would have applied to the transferor.
(C) Special rule
Any increase in tax under paragraph (1) or (2) shall not be
treated as tax imposed by this chapter for purposes of
determining the amount of any credit allowable under this
chapter.
(b) Certain property not eligible
No credit shall be determined under this subpart with respect to
-
(1) Property used outside United States
(A) In general
Except as provided in subparagraph (B), no credit shall be
determined under this subpart with respect to any property
which is used predominantly outside the United States.
(B) Exceptions
Subparagraph (A) shall not apply to any property described in
section 168(g)(4).
(2) Property used for lodging
No credit shall be determined under this subpart with respect
to any property which is used predominantly to furnish lodging or
in connection with the furnishing of lodging. The preceding
sentence shall not apply to -
(A) nonlodging commercial facilities which are available to
persons not using the lodging facilities on the same basis as
they are available to persons using the lodging facilities.(!1)
(B) property used by a hotel or motel in connection with the
trade or business of furnishing lodging where the predominant
portion of the accommodations is used by transients;
(C) a certified historic structure to the extent of that
portion of the basis which is attributable to qualified
rehabilitation expenditures; and
(D) any energy property.
(3) Property used by certain tax-exempt organization
No credit shall be determined under this subpart with respect
to any property used by an organization (other than a cooperative
described in section 521) which is exempt from the tax imposed by
this chapter unless such property is used predominantly in an
unrelated trade or business the income of which is subject to tax
under section 511. If the property is debt-financed property (as
defined in section 514(b)), the amount taken into account for
purposes of determining the amount of the credit under this
subpart with respect to such property shall be that percentage of
the amount (which but for this paragraph would be so taken into
account) which is the same percentage as is used under section
514(a), for the year the property is placed in service, in
computing the amount of gross income to be taken into account
during such taxable year with respect to such property. If any
qualified rehabilitated building is used by the tax-exempt
organization pursuant to a lease, this paragraph shall not apply
for purposes of determining the amount of the rehabilitation
credit.
(4) Property used by governmental units or foreign persons or
entities
(A) In general
No credit shall be determined under this subpart with respect
to any property used -
(i) by the United States, any State or political
subdivision thereof, any possession of the United States, or
any agency or instrumentality of any of the foregoing, or
(ii) by any foreign person or entity (as defined in section
168(h)(2)(C)), but only with respect to property to which
section 168(h)(2)(A)(iii) applies (determined after the
application of section 168(h)(2)(B)).
(B) Exception for short-term leases
This paragraph and paragraph (3) shall not apply to any
property by reason of use under a lease with a term of less
than 6 months (determined under section 168(i)(3)).
(C) Exception for qualified rehabilitated buildings leased to
governments, etc.
If any qualified rehabilitated building is leased to a
governmental unit (or a foreign person or entity) this
paragraph shall not apply for purposes of determining the
rehabilitation credit with respect to such building.
(D) Special rules for partnerships, etc.
For purposes of this paragraph and paragraph (3), rules
similar to the rules of paragraphs (5) and (6) of section
168(h) shall apply.
(E) Cross reference
For special rules for the application of this paragraph and
paragraph (3), see section 168(h).
(c) Basis adjustment to investment credit property
(1) In general
For purposes of this subtitle, if a credit is determined under
this subpart with respect to any property, the basis of such
property shall be reduced by the amount of the credit so
determined.
(2) Certain dispositions
If during any taxable year there is a recapture amount
determined with respect to any property the basis of which was
reduced under paragraph (1), the basis of such property
(immediately before the event resulting in such recapture) shall
be increased by an amount equal to such recapture amount. For
purposes of the preceding sentence, the term "recapture amount"
means any increase in tax (or adjustment in carrybacks or
carryovers) determined under subsection (a).
(3) Special rule
In the case of any energy credit or reforestation credit -
(A) only 50 percent of such credit shall be taken into
account under paragraph (1), and
(B) only 50 percent of any recapture amount attributable to
such credit shall be taken into account under paragraph (2).
(4) Recapture of reductions
(A) In general
For purposes of sections 1245 and 1250, any reduction under
this subsection shall be treated as a deduction allowed for
depreciation.
(B) Special rule for section 1250
For purposes of section 1250(b), the determination of what
would have been the depreciation adjustments under the straight
line method shall be made as if there had been no reduction
under this section.
(5) Adjustment in basis of interest in partnership or S
corporation
The adjusted basis of -
(A) a partner's interest in a partnership, and
(B) stock in an S corporation,
shall be appropriately adjusted to take into account adjustments
made under this subsection in the basis of property held by the
partnership or S corporation (as the case may be).
(d) Certain rules made applicable
For purposes of this subpart, rules similar to the rules of the
following provisions (as in effect on the day before the date of
the enactment of the Revenue Reconciliation Act of 1990) shall
apply:
(1) Section 46(e) (relating to limitations with respect to
certain persons).
(2) Section 46(f) (relating to limitation in case of certain
regulated companies).
(3) Section 46(h) (relating to special rules for cooperatives).
(4) Paragraphs (2) and (3) of section 48(b) (relating to
special rule for sale-leasebacks).
(5) Section 48(d) (relating to certain leased property).
(6) Section 48(f) (relating to estates and trusts).
(7) Section 48(r) (relating to certain 501(d) organizations).
Paragraphs (1)(A), (2)(A), and (4) of the section 46(e) referred to
in paragraph (1) of this subsection shall not apply to any taxable
year beginning after December 31, 1995.
-SOURCE-
(Added Pub. L. 101-508, title XI, Sec. 11813(a), Nov. 5, 1990, 104
Stat. 1388-546; amended Pub. L. 104-188, title I, Secs. 1616(b)(1),
1702(h)(11), 1704(t)(29), Aug. 20, 1996, 110 Stat. 1856, 1874,
1889; Pub. L. 105-206, title VI, Sec. 6004(g)(7), July 22, 1998,
112 Stat. 796.)
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsec. (d), is the date of enactment of Pub.
L. 101-508, which was approved Nov. 5, 1990.
-MISC1-
PRIOR PROVISIONS
A prior section 50, Pub. L. 92-178, title I, Sec. 101(a), Dec.
10, 1971, 85 Stat. 498, related to restoration of credit for
investment in certain depreciable property, prior to repeal by Pub.
L. 95-600, title III, Sec. 312(c)(1), Nov. 6, 1978, 92 Stat. 2826,
applicable to taxable years ending after Dec. 31, 1978.
AMENDMENTS
1998 - Subsec. (a)(5)(C). Pub. L. 105-206 substituted "this
chapter" for "subpart A, B, D, or G".
1996 - Subsec. (a)(2)(C). Pub. L. 104-188, Sec. 1704(t)(29),
substituted "subsection (d)(5)" for "subsection (c)(4)".
Subsec. (a)(2)(E). Pub. L. 104-188, Sec. 1702(h)(11), substituted
"48(a)(5)" for "48(a)(5)(A)".
Subsec. (d). Pub. L. 104-188, Sec. 1616(b)(1), inserted closing
provisions.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1616(b)(1) of Pub. L. 104-188 applicable to
taxable years beginning after Dec. 31, 1995, see section 1616(c) of
Pub. L. 104-188, set out as a note under section 593 of this title.
Amendment by section 1702(h)(11) of Pub. L. 104-188 effective,
except as otherwise expressly provided, as if included in the
provision of the Revenue Reconciliation Act of 1990, Pub. L.
101-508, title XI, to which such amendment relates, see section
1702(i) of Pub. L. 104-188, set out as a note under section 38 of
this title.
EFFECTIVE DATE
Section applicable to property placed in service after Dec. 31,
1990, but not applicable to any transition property (as defined in
section 49(e) of this title), any property with respect to which
qualified progress expenditures were previously taken into account
under section 46(d) of this title, and any property described in
section 46(b)(2)(C) of this title, as such sections were in effect
on Nov. 4, 1990, see section 11813(c) of Pub. L. 101-508, set out
as an Effective Date of 1990 Amendment note under section 29 of
this title.
SAVINGS PROVISION
For provisions that nothing in this section be construed to
affect treatment of certain transactions occurring, property
acquired, or items of income, loss, deduction, or credit taken into
account prior to Nov. 5, 1990, for purposes of determining
liability for tax for periods ending after Nov. 5, 1990, see
section 11821(b) of Pub. L. 101-508, set out as a note under
section 29 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 29, 30, 47, 49, 55, 179,
179A, 196, 312, 774, 1371, 1503 of this title.
-FOOTNOTE-
(!1) So in original. The period probably should be a semicolon.
-End-
-CITE-
26 USC Secs. 50A, 50B 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart E - Rules for Computing Investment Credit
-HEAD-
[Secs. 50A, 50B. Repealed. Pub. L. 98-369, div. A, title IV, Sec.
474(m)(2), July 18, 1984, 98 Stat. 833]
-MISC1-
Section 50A, added Pub. L. 92-178, title VI, Sec. 601(b), Dec.
10, 1971, 85 Stat. 554; amended Pub. L. 93-406, title II, Secs.
2001(g)(2)(B), 2002(g)(2), 2005(c)(4), Sept. 2, 1974, 88 Stat. 957,
968, 991; Pub. L. 94-12, title IV, Sec. 401(a)(1), (2), Mar. 29,
1975, 89 Stat. 45; Pub. L. 94-401, Sec. 4(a), Sept. 7, 1976, 90
Stat. 1217; Pub. L. 94-455, title V, Sec. 503(b)(4), title XIX,
Secs. 1901(a)(6), (b)(1)(D), 1906(b)(13)(A), title XXI, Sec.
2107(a)(1)-(3), (b), (c), Oct. 4, 1976, 90 Stat. 1562, 1765, 1790,
1834, 1903, 1904; Pub. L. 95-600, title III, Sec. 322(a)-(c), Nov.
6, 1978, 92 Stat. 2836, 2837; Pub. L. 96-178, Sec. 6(c)(1), Jan. 2,
1980, 93 Stat. 1298; Pub. L. 96-222, title I, Sec. 103(a)(7)(D)(i),
Apr. 1, 1980, 94 Stat. 211; Pub. L. 97-34, title II, Sec.
207(c)(1), Aug. 13, 1981, 95 Stat. 225; Pub. L. 97-248, title I,
Sec. 265(b)(2)(A)(ii), Sept. 3, 1982, 96 Stat. 547; Pub. L. 97-354,
Sec. 5(a)(9), Oct. 19, 1982, 96 Stat. 1693, provided for a credit
for expenses of work incentive programs, for the determination of
the amount of that credit, and for the carryover and carryback of
unused credit.
Section 50B, added Pub. L. 92-178, title VI, Sec. 601(b), Dec.
10, 1971, 85 Stat. 556; amended Pub. L. 94-12, title III, Sec.
302(c)(4), title IV, Sec. 401(a)(3)-(5), Mar. 29, 1975, 89 Stat.
44, 46; Pub. L. 94-401, Sec. 4(b), Sept. 7, 1976, 90 Stat. 1218;
Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), title XXI, Sec.
2107(a)(4), (d)-(f), Oct. 4, 1976, 90 Stat. 1834, 1903, 1904; Pub.
L. 95-171, Sec. 1(e), Nov. 12, 1977, 91 Stat. 1353; Pub. L. 95-600,
title III, Sec. 322(d), Nov. 6, 1978, 92 Stat. 2837; Pub. L.
96-178, Secs. 3(a)(1), (3), 6(c)(2), (3), Jan. 2, 1980, 93 Stat.
1295, 1298; Pub. L. 96-222, title I, Sec. 103(a)(5), (7)(C),
(D)(ii), (iii), Apr. 1, 1980, 94 Stat. 209, 211; Pub. L. 96-272,
title II, Sec. 208(b)(1), (2), June 17, 1980, 94 Stat. 526, 527;
Pub. L. 97-34, title II, Sec. 261(b)(2)(B)(i), Aug. 13, 1981, 95
Stat. 261; Pub. L. 97-354, Sec. 5(a)(10), Oct. 19, 1982, 96 Stat.
1693; Pub. L. 101-239, title VII, Sec. 7644, Dec. 19, 1989, 103
Stat. 2381, provided for the definition of terms related to the
expenses of work incentive programs, limitations on such expenses,
and special rules to be applied in connection with the computation
of the credit.
Subsequent to repeal, Pub. L. 101-239, title VII, Sec. 7644(a),
Dec. 19, 1989, 103 Stat. 2381, provided that:
"(a) In General. - So much of subparagraph (A) of section
50B(h)(1) of the Internal Revenue Code of 1954 (as in effect for
taxable years beginning before January 1, 1982) as precedes clause
(i) thereof is amended to read as follows:
" '(A) who has been certified (or for whom a written request
for certification has been made) on or before the day the
individual began work for the taxpayer by the Secretary of Labor
or by the appropriate agency of State or local government as - '.
"(b) Effective Date. - The amendment made by subsection (a) shall
apply for purposes of credits first claimed after March 11, 1987."
EFFECTIVE DATE OF REPEAL
Repeal applicable to taxable years beginning after Dec. 31, 1983,
and to carrybacks from such years, see section 475(a) of Pub. L.
98-369, set out as an Effective Date of 1984 Amendment note under
section 21 of this title.
-End-
-CITE-
26 USC Subpart F - Rules for Computing Work Opportunity
Credit 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart F - Rules for Computing Work Opportunity Credit
-HEAD-
SUBPART F - RULES FOR COMPUTING WORK OPPORTUNITY CREDIT
-MISC1-
Sec.
51. Amount of credit.
51A. Temporary incentives for employing long-term family
assistance recipients.
52. Special rules.
AMENDMENTS
1997 - Pub. L. 105-34, title VIII, Sec. 801(b), Aug. 5, 1997, 111
Stat. 871, added item 51A.
1996 - Pub. L. 104-188, title I, Sec. 1201(e)(2), Aug. 20, 1996,
110 Stat. 1772, substituted "Work Opportunity Credit" for "Targeted
Jobs Credit" in subpart heading.
1984 - Pub. L. 98-369, div. A, title IV, Sec. 474(n)(1), (2),
(p)(9), July 18, 1984, 98 Stat. 833, 838, substituted "F" for "D"
as subpart designation, substituted "Rules for Computing Targeted
Jobs Credit" for "Rules for Computing Credit for Employment of
Certain New Employees" in heading, and struck out item 53
"Limitation based on amount of tax".
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 53, 1400L of this title.
-End-
-CITE-
26 USC Sec. 51 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart F - Rules for Computing Work Opportunity Credit
-HEAD-
Sec. 51. Amount of credit
-STATUTE-
(a) Determination of amount
For purposes of section 38, the amount of the work opportunity
credit determined under this section for the taxable year shall be
equal to 40 percent of the qualified first-year wages for such
year.
(b) Qualified wages defined
For purposes of this subpart -
(1) In general
The term "qualified wages" means the wages paid or incurred by
the employer during the taxable year to individuals who are
members of a targeted group.
(2) Qualified first-year wages
The term "qualified first-year wages" means, with respect to
any individual, qualified wages attributable to service rendered
during the 1-year period beginning with the day the individual
begins work for the employer.
(3) Only first $6,000 of wages per year taken into account
The amount of the qualified first-year wages which may be taken
into account with respect to any individual shall not exceed
$6,000 per year.
(c) Wages defined
For purposes of this subpart -
(1) In general
Except as otherwise provided in this subsection and subsection
(h)(2), the term "wages" has the meaning given to such term by
subsection (b) of section 3306 (determined without regard to any
dollar limitation contained in such section).
(2) On-the-job training and work supplementation payments
(A) Exclusion for employers receiving on-the-job training
payments
The term "wages" shall not include any amounts paid or
incurred by an employer for any period to any individual for
whom the employer receives federally funded payments for
on-the-job training of such individual for such period.
(B) Reduction for work supplementation payments to employers
The amount of wages which would (but for this subparagraph)
be qualified wages under this section for an employer with
respect to an individual for a taxable year shall be reduced by
an amount equal to the amount of the payments made to such
employer (however utilized by such employer) with respect to
such individual for such taxable year under a program
established under section 482(e) (!1) of the Social Security
Act.
(3) Payments for services during labor disputes
If -
(A) the principal place of employment of an individual with
the employer is at a plant or facility, and
(B) there is a strike or lockout involving employees at such
plant or facility,
the term "wages" shall not include any amount paid or incurred by
the employer to such individual for services which are the same
as, or substantially similar to, those services performed by
employees participating in, or affected by, the strike or lockout
during the period of such strike or lockout.
(4) Termination
The term "wages" shall not include any amount paid or incurred
to an individual who begins work for the employer -
(A) after December 31, 1994, and before October 1, 1996, or
(B) after December 31, 2003.
(d) Members of targeted groups
For purposes of this subpart -
(1) In general
An individual is a member of a targeted group if such
individual is -
(A) a qualified IV-A recipient,
(B) a qualified veteran,
(C) a qualified ex-felon,
(D) a high-risk youth,
(E) a vocational rehabilitation referral,
(F) a qualified summer youth employee,
(G) a qualified food stamp recipient, or
(H) a qualified SSI recipient.
(2) Qualified IV-A recipient
(A) In general
The term "qualified IV-A recipient" means any individual who
is certified by the designated local agency as being a member
of a family receiving assistance under a IV-A program for any 9
months during the 18-month period ending on the hiring date.
(B) IV-A program
For purposes of this paragraph, the term "IV-A program" means
any program providing assistance under a State program funded
under part A of title IV of the Social Security Act and any
successor of such program.
(3) Qualified veteran
(A) In general
The term "qualified veteran" means any veteran who is
certified by the designated local agency as being a member of a
family receiving assistance under a food stamp program under
the Food Stamp Act of 1977 for at least a 3-month period ending
during the 12-month period ending on the hiring date.
(B) Veteran
For purposes of subparagraph (A), the term "veteran" means
any individual who is certified by the designated local agency
as -
(i)(I) having served on active duty (other than active duty
for training) in the Armed Forces of the United States for a
period of more than 180 days, or
(II) having been discharged or released from active duty in
the Armed Forces of the United States for a service-connected
disability, and
(ii) not having any day during the 60-day period ending on
the hiring date which was a day of extended active duty in
the Armed Forces of the United States.
For purposes of clause (ii), the term "extended active duty"
means a period of more than 90 days during which the individual
was on active duty (other than active duty for training).
(4) Qualified ex-felon
The term "qualified ex-felon" means any individual who is
certified by the designated local agency -
(A) as having been convicted of a felony under any statute of
the United States or any State,
(B) as having a hiring date which is not more than 1 year
after the last date on which such individual was so convicted
or was released from prison, and
(C) as being a member of a family which had an income during
the 6 months immediately preceding the earlier of the month in
which such income determination occurs or the month in which
the hiring date occurs, which, on an annual basis, would be 70
percent or less of the Bureau of Labor Statistics lower living
standard.
Any determination under subparagraph (C) shall be valid for the
45-day period beginning on the date such determination is made.
(5) High-risk youth
(A) In general
The term "high-risk youth" means any individual who is
certified by the designated local agency -
(i) as having attained age 18 but not age 25 on the hiring
date, and
(ii) as having his principal place of abode within an
empowerment zone, enterprise community, or renewal community.
(B) Youth must continue to reside in zone or community
In the case of a high-risk youth, the term "qualified wages"
shall not include wages paid or incurred for services performed
while such youth's principal place of abode is outside an
empowerment zone, enterprise community, or renewal community.
(6) Vocational rehabilitation referral
The term "vocational rehabilitation referral" means any
individual who is certified by the designated local agency as -
(A) having a physical or mental disability which, for such
individual, constitutes or results in a substantial handicap to
employment, and
(B) having been referred to the employer upon completion of
(or while receiving) rehabilitative services pursuant to -
(i) an individualized written plan for employment under a
State plan for vocational rehabilitation services approved
under the Rehabilitation Act of 1973, or
(ii) a program of vocational rehabilitation carried out
under chapter 31 of title 38, United States Code.
(7) Qualified summer youth employee
(A) In general
The term "qualified summer youth employee" means any
individual -
(i) who performs services for the employer between May 1
and September 15,
(ii) who is certified by the designated local agency as
having attained age 16 but not 18 on the hiring date (or if
later, on May 1 of the calendar year involved),
(iii) who has not been an employee of the employer during
any period prior to the 90-day period described in
subparagraph (B)(i), and
(iv) who is certified by the designated local agency as
having his principal place of abode within an empowerment
zone, enterprise community, or renewal community.
(B) Special rules for determining amount of credit
For purposes of applying this subpart to wages paid or
incurred to any qualified summer youth employee -
(i) subsection (b)(2) shall be applied by substituting "any
90-day period between May 1 and September 15" for "the 1-year
period beginning with the day the individual begins work for
the employer", and
(ii) subsection (b)(3) shall be applied by substituting
"$3,000" for "$6,000".
The preceding sentence shall not apply to an individual who,
with respect to the same employer, is certified as a member of
another targeted group after such individual has been a
qualified summer youth employee.
(C) Youth must continue to reside in zone or community
Paragraph (5)(B) shall apply for purposes of subparagraph
(A)(iv).
(8) Qualified food stamp recipient
(A) In general
The term "qualified food stamp recipient" means any
individual who is certified by the designated local agency -
(i) as having attained age 18 but not age 25 on the hiring
date, and
(ii) as being a member of a family -
(I) receiving assistance under a food stamp program under
the Food Stamp Act of 1977 for the 6-month period ending on
the hiring date, or
(II) receiving such assistance for at least 3 months of
the 5-month period ending on the hiring date, in the case
of a member of a family who ceases to be eligible for such
assistance under section 6(o) of the Food Stamp Act of
1977.
(B) Participation information
Notwithstanding any other provision of law, the Secretary of
the Treasury and the Secretary of Agriculture shall enter into
an agreement to provide information to designated local
agencies with respect to participation in the food stamp
program.
(9) Qualified SSI recipient
The term "qualified SSI recipient" means any individual who is
certified by the designated local agency as receiving
supplemental security income benefits under title XVI of the
Social Security Act (including supplemental security income
benefits of the type described in section 1616 of such Act or
section 212 of Public Law 93-66) for any month ending within the
60-day period ending on the hiring date.
(10) Hiring date
The term "hiring date" means the day the individual is hired by
the employer.
(11) Designated local agency
The term "designated local agency" means a State employment
security agency established in accordance with the Act of June 6,
1933, as amended (29 U.S.C. 49-49n).
(12) Special rules for certifications
(A) In general
An individual shall not be treated as a member of a targeted
group unless -
(i) on or before the day on which such individual begins
work for the employer, the employer has received a
certification from a designated local agency that such
individual is a member of a targeted group, or
(ii)(I) on or before the day the individual is offered
employment with the employer, a pre-screening notice is
completed by the employer with respect to such individual,
and
(II) not later than the 21st day after the individual
begins work for the employer, the employer submits such
notice, signed by the employer and the individual under
penalties of perjury, to the designated local agency as part
of a written request for such a certification from such
agency.
For purposes of this paragraph, the term "pre-screening notice"
means a document (in such form as the Secretary shall
prescribe) which contains information provided by the
individual on the basis of which the employer believes that the
individual is a member of a targeted group.
(B) Incorrect certifications
If -
(i) an individual has been certified by a designated local
agency as a member of a targeted group, and
(ii) such certification is incorrect because it was based
on false information provided by such individual,
the certification shall be revoked and wages paid by the
employer after the date on which notice of revocation is
received by the employer shall not be treated as qualified
wages.
(C) Explanation of denial of request
If a designated local agency denies a request for
certification of membership in a targeted group, such agency
shall provide to the person making such request a written
explanation of the reasons for such denial.
[(e) Repealed. Pub. L. 97-34, title II, Sec. 261(e)(1), Aug. 13,
1981, 95 Stat. 262]
(f) Remuneration must be for trade or business employment
(1) In general
For purposes of this subpart, remuneration paid by an employer
to an employee during any taxable year shall be taken into
account only if more than one-half of the remuneration so paid is
for services performed in a trade or business of the employer.
(2) Special rule for certain determination
Any determination as to whether paragraph (1), or subparagraph
(A) or (B) of subsection (h)(1), applies with respect to any
employee for any taxable year shall be made without regard to
subsections (a) and (b) of section 52.
(g) United States Employment Service to notify employers of
availability of credit
The United States Employment Service, in consultation with the
Internal Revenue Service, shall take such steps as may be necessary
or appropriate to keep employers apprised of the availability of
the work opportunity credit determined under this subpart.
(h) Special rules for agricultural labor and railway labor
For purposes of this subpart -
(1) Unemployment insurance wages
(A) Agricultural labor
If the services performed by any employee for an employer
during more than one-half of any pay period (within the meaning
of section 3306(d)) taken into account with respect to any year
constitute agricultural labor (within the meaning of section
3306(k)), the term "unemployment insurance wages" means, with
respect to the remuneration paid by the employer to such
employee for such year, an amount equal to so much of such
remuneration as constitutes "wages" within the meaning of
section 3121(a), except that the contribution and benefit base
for each calendar year shall be deemed to be $6,000.
(B) Railway labor
If more than one-half of remuneration paid by an employer to
an employee during any year is remuneration for service
described in section 3306(c)(9), the term "unemployment
insurance wages" means, with respect to such employee for such
year, an amount equal to so much of the remuneration paid to
such employee during such year which would be subject to
contributions under section 8(a) of the Railroad Unemployment
Insurance Act (45 U.S.C. 358(a)) if the maximum amount subject
to such contributions were $500 per month.
(2) Wages
In any case to which subparagraph (A) or (B) of paragraph (1)
applies, the term "wages" means unemployment insurance wages
(determined without regard to any dollar limitation).
(i) Certain individuals ineligible
(1) Related individuals
No wages shall be taken into account under subsection (a) with
respect to an individual who -
(A) bears any of the relationships described in paragraphs
(1) through (8) of section 152(a) to the taxpayer, or, if the
taxpayer is a corporation, to an individual who owns, directly
or indirectly, more than 50 percent in value of the outstanding
stock of the corporation, or, if the taxpayer is an entity
other than a corporation, to any individual who owns, directly
or indirectly, more than 50 percent of the capital and profits
interests in the entity,(!2) (determined with the application
of section 267(c)),
(B) if the taxpayer is an estate or trust, is a grantor,
beneficiary, or fiduciary of the estate or trust, or is an
individual who bears any of the relationships described in
paragraphs (1) through (8) of section 152(a) to a grantor,
beneficiary, or fiduciary of the estate or trust, or
(C) is a dependent (described in section 152(a)(9)) of the
taxpayer, or, if the taxpayer is a corporation, of an
individual described in subparagraph (A), or, if the taxpayer
is an estate or trust, of a grantor, beneficiary, or fiduciary
of the estate or trust.
(2) Nonqualifying rehires
No wages shall be taken into account under subsection (a) with
respect to any individual if, prior to the hiring date of such
individual, such individual had been employed by the employer at
any time.
(3) Individuals not meeting minimum employment periods
(A) Reduction of credit for individuals performing fewer than
400 hours of service
In the case of an individual who has performed at least 120
hours, but less than 400 hours, of service for the employer,
subsection (a) shall be applied by substituting "25 percent"
for "40 percent".
(B) Denial of credit for individuals performing fewer than 120
hours of service
No wages shall be taken into account under subsection (a)
with respect to any individual unless such individual has
performed at least 120 hours of service for the employer.
(j) Election to have work opportunity credit not apply
(1) In general
A taxpayer may elect to have this section not apply for any
taxable year.
(2) Time for making election
An election under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration of the 3-year
period beginning on the last date prescribed by law for filing
the return for such taxable year (determined without regard to
extensions).
(3) Manner of making election
An election under paragraph (1) (or revocation thereof) shall
be made in such manner as the Secretary may by regulations
prescribe.
(k) Treatment of successor employers; treatment of employees
performing services for other persons
(1) Treatment of successor employers
Under regulations prescribed by the Secretary, in the case of a
successor employer referred to in section 3306(b)(1), the
determination of the amount of the credit under this section with
respect to wages paid by such successor employer shall be made in
the same manner as if such wages were paid by the predecessor
employer referred to in such section.
(2) Treatment of employees performing services for other persons
No credit shall be determined under this section with respect
to remuneration paid by an employer to an employee for services
performed by such employee for another person unless the amount
reasonably expected to be received by the employer for such
services from such other person exceeds the remuneration paid by
the employer to such employee for such services.
-SOURCE-
(Added Pub. L. 95-30, title II, Sec. 202(b), May 23, 1977, 91 Stat.
141; amended Pub. L. 95-600, title III, Sec. 321(a), Nov. 6, 1978,
92 Stat. 2830; Pub. L. 96-222, title I, Sec. 103(a)(6)(A), (E),
(F), (G)(iii)-(ix), Apr. 1, 1980, 94 Stat. 209, 210; Pub. L. 97-34,
title II, Sec. 261(a)-(b)(2)(A), (B)(ii)-(f)(1), Aug. 13, 1981, 95
Stat. 260-262; Pub. L. 97-248, title II, Sec. 233(a)-(d), (f),
Sept. 3, 1982, 96 Stat. 501, 502; Pub. L. 97-448, title I, Sec.
102(l)(1), (3), (4), Jan. 12, 1983, 96 Stat. 2374; Pub. L. 98-369,
div. A, title IV, Sec. 474(p)(1)-(3), title VII, Sec. 712(n), title
X, Sec. 1041(a), (c)(1)-(4), div. B, title VI, Secs. 2638(b),
2663(j)(5)(A), July 18, 1984, 98 Stat. 837, 955, 1042, 1043, 1144,
1171; Pub. L. 99-514, title XVII, Sec. 1701(a)-(c), title XVIII,
Sec. 1878(f)(1), Oct. 22, 1986, 100 Stat. 2772, 2904; Pub. L.
100-203, title X, Sec. 10601(a), Dec. 22, 1987, 101 Stat. 1330-451;
Pub. L. 100-485, title II, Sec. 202(c)(6), Oct. 13, 1988, 102 Stat.
2378; Pub. L. 100-647, title I, Sec. 1017(a), title IV, Sec.
4010(a), (c)(1), (d)(1), Nov. 10, 1988, 102 Stat. 3575, 3655; Pub.
L. 101-239, title VII, Sec. 7103(a), (c)(1), Dec. 19, 1989, 103
Stat. 2305; Pub. L. 101-508, title XI, Sec. 11405(a), Nov. 5, 1990,
104 Stat. 1388-473; Pub. L. 102-227, title I, Sec. 105(a), Dec. 11,
1991, 105 Stat. 1687; Pub. L. 103-66, title XIII, Secs. 13102(a),
13302(d), Aug. 10, 1993, 107 Stat. 420, 556; Pub. L. 104-188, title
I, Sec. 1201(a)-(e)(1), (5), (f), Aug. 20, 1996, 110 Stat.
1768-1772; Pub. L. 104-193, title I, Sec. 110(l)(1), Aug. 22, 1996,
110 Stat. 2173; Pub. L. 105-33, title V, Sec. 5514(a)(1), Aug. 5,
1997, 111 Stat. 620; Pub. L. 105-34, title VI, Sec. 603(a)-(d),
Aug. 5, 1997, 111 Stat. 862; Pub. L. 105-277, div. J, title I, Sec.
1002(a), title IV, Sec. 4006(c)(1), Oct. 21, 1998, 112 Stat.
2681-888, 2681-912; Pub. L. 106-170, title V, Sec. 505(a), (b),
Dec. 17, 1999, 113 Stat. 1921; Pub. L. 106-554, Sec. 1(a)(7) [title
I, Sec. 102(a)-(c), title III, Sec. 316(a)], Dec. 21, 2000, 114
Stat. 2763, 2763A-600, 2763A-644; Pub. L. 107-147, title VI, Sec.
604(a), Mar. 9, 2002, 116 Stat. 59.)
-REFTEXT-
REFERENCES IN TEXT
The Social Security Act, referred to in subsecs. (c)(2)(B) and
(d)(2)(B), (9), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as
amended. Part A of title IV of the Act is classified generally to
part A (Sec. 601 et seq.) of subchapter IV of chapter 7 of Title
42, The Public Health and Welfare. Title XVI of the Act is
classified generally to subchapter XVI (Sec. 1381 et seq.) of
chapter 7 of Title 42. Section 482 of the Act, which was classified
to section 682 of Title 42, was repealed by Pub. L. 104-193, title
I, Sec. 108(e), Aug. 22, 1996, 110 Stat. 2167. Section 1616 of the
Act is classified to section 1382e of Title 42. For complete
classification of this Act to the Code, see section 1305 of Title
42 and Tables.
The Food Stamp Act of 1977, referred to in subsec. (d)(3)(A),
(8)(A)(ii), is Pub. L. 88-525, Aug. 31, 1964, 78 Stat. 703, as
amended, which is classified generally to chapter 51 (Sec. 2011 et
seq.) of Title 7, Agriculture. Section 6(o) of the Act is
classified to section 2015(o) of Title 7. For complete
classification of this Act to the Code, see Short Title note set
out under section 2011 of Title 7 and Tables.
The Rehabilitation Act of 1973, referred to in subsec.
(d)(6)(B)(i), is Pub. L. 93-112, Sept. 26, 1973, 87 Stat. 355, as
amended, which is classified generally to chapter 16 (Sec. 701 et
seq.) of Title 29, Labor. For complete classification of this Act
to the Code, see Short Title note set out under section 701 of
Title 29 and Tables.
Section 212 of Public Law 93-66, referred to in subsec. (d)(9),
is set out as a note under section 1382 of Title 42, The Public
Health and Welfare.
Act of June 6, 1933, referred to in subsec. (d)(11), is act June
6, 1933, ch. 49, 48 Stat. 113, as amended, popularly known as the
Wagner-Peyser Act, which is classified generally to chapter 4B
(Sec. 49 et seq.) of Title 29, Labor. For complete classification
of this Act to the Code, see Short Title note set out under section
49 of Title 29 and Tables.
-MISC1-
PRIOR PROVISIONS
A prior section 51, added Pub. L. 90-364, title I, Sec. 102(a),
June 28, 1968, 82 Stat. 252; amended Pub. L. 91-53, Sec. 5(a), Aug.
7, 1969, 83 Stat. 93; Pub. L. 91-172, title III, Sec. 301(b)(5),
title VII, Sec. 701(a), Dec. 30, 1969, 83 Stat. 585, 657, related
to the imposition of a tax surcharge, prior to repeal by Pub. L.
94-455, title XIX, Sec. 1901(a)(7), Oct. 4, 1976, 90 Stat. 1765.
AMENDMENTS
2002 - Subsec. (c)(4)(B). Pub. L. 107-147 substituted "2003" for
"2001".
2000 - Subsec. (d)(2)(B). Pub. L. 106-554, Sec. 1(a)(7) [title
III, Sec. 316(a)], substituted "program funded" for "plan approved"
and struck out "(relating to assistance for needy families with
minor children)" after "Social Security Act".
Subsec. (d)(5)(A)(ii). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 102(a)], substituted "empowerment zone, enterprise community,
or renewal community" for "empowerment zone or enterprise
community".
Subsec. (d)(5)(B). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
102(a), (c)], inserted "or community" after "zone" in heading and
substituted "empowerment zone, enterprise community, or renewal
community" for "empowerment zone or enterprise community" in text.
Subsec. (d)(7)(A)(iv). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 102(b)], substituted "empowerment zone, enterprise community,
or renewal community" for "empowerment zone or enterprise
community".
Subsec. (d)(7)(C). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec.
102(c)], inserted "or community" after "zone" in heading.
1999 - Subsec. (c)(4)(B). Pub. L. 106-170, Sec. 505(a),
substituted "December 31, 2001" for "June 30, 1999".
Subsec. (i)(2). Pub. L. 106-170, Sec. 505(b), struck out "during
which he was not a member of a targeted group" before period at
end.
1998 - Subsec. (c)(4)(B). Pub. L. 105-277, Sec. 1002(a),
substituted "June 30, 1999" for "June 30, 1998".
Subsec. (d)(6)(B)(i). Pub. L. 105-277, Sec. 4006(c)(1),
substituted "plan for employment" for "rehabilitation plan".
1997 - Subsec. (a). Pub. L. 105-34, Sec. 603(d)(1), substituted
"40 percent" for "35 percent".
Subsec. (c)(4)(B). Pub. L. 105-34, Sec. 603(a), substituted "June
30, 1998" for "September 30, 1997".
Subsec. (d)(1)(H). Pub. L. 105-34, Sec. 603(c)(1), added subpar.
(H).
Subsec. (d)(2)(A). Pub. L. 105-34, Sec. 603(b)(1), substituted
"for any 9 months during the 18-month period ending on the hiring
date" for "for at least a 9-month period ending during the 9-month
period ending on the hiring date".
Subsec. (d)(3)(A). Pub. L. 105-34, Sec. 603(b)(2), amended
heading and text of subpar. (A) generally. Prior to amendment, text
read as follows: "The term 'qualified veteran' means any veteran
who is certified by the designated local agency as being -
"(i) a member of a family receiving assistance under a IV-A
program (as defined in paragraph (2)(B)) for at least a 9-month
period ending during the 12-month period ending on the hiring
date, or
"(ii) a member of a family receiving assistance under a food
stamp program under the Food Stamp Act of 1977 for at least a
3-month period ending during the 12-month period ending on the
hiring date."
Subsec. (d)(9). Pub. L. 105-34, Sec. 603(c)(2), added par. (9).
Former par. (9) redesignated (10).
Pub. L. 105-33 repealed Pub. L. 104-193, Sec. 110(l)(1). See 1996
Amendment note below.
Subsec. (d)(10) to (12). Pub. L. 105-34, Sec. 603(c)(2),
redesignated pars. (9) to (11) as (10) to (12), respectively.
Subsec. (i)(3). Pub. L. 105-34, Sec. 603(d)(2), amended heading
and text of par. (3) generally. Prior to amendment, text read as
follows: "No wages shall be taken into account under subsection (a)
with respect to any individual unless such individual either -
"(A) is employed by the employer at least 180 days (20 days in
the case of a qualified summer youth employee), or
"(B) has completed at least 400 hours (120 hours in the case of
a qualified summer youth employee) of services performed for the
employer."
1996 - Subsec. (a). Pub. L. 104-188, Sec. 1201(a), (e)(1),
substituted "work opportunity credit" for "targeted jobs credit"
and "35 percent" for "40 percent".
Subsec. (c)(1). Pub. L. 104-188, Sec. 1201(f), struck out ",
subsection (d)(8)(D)," after "this subsection".
Subsec. (c)(4). Pub. L. 104-188, Sec. 1201(d), amended par. (4)
generally. Prior to amendment, par. (4) read as follows:
"Termination. - The term 'wages' shall not include any amount paid
or incurred to an individual who begins work for the employer after
December 31, 1994."
Subsec. (d). Pub. L. 104-188, Sec. 1201(b), reenacted heading
without change and amended text generally, revising and restating
as pars. (1) to (11) provisions formerly contained in pars. (1) to
(16).
Subsec. (d)(9). Pub. L. 104-193, Sec. 110(l)(1), which directed
amendment of par. (9) by striking all that follows "agency as" and
inserting "being eligible for financial assistance under part A of
title IV of the Social Security Act and as having continually
received such financial assistance during the 90-day period which
immediately precedes the date on which such individual is hired by
the employer.", was repealed by Pub. L. 105-33.
Subsec. (g). Pub. L. 104-188, Sec. 1201(e)(1), substituted "work
opportunity credit" for "targeted jobs credit".
Subsec. (i)(3). Pub. L. 104-188, Sec. 1201(c), amended par. (3)
generally. Prior to amendment, par. (3) read as follows:
"Individuals not meeting minimum employment period. - No wages
shall be taken into account under subsection (a) with respect to
any individual unless such individual either -
"(A) is employed by the employer at least 90 days (14 days in
the case of an individual described in subsection (d)(12)), or
"(B) has completed at least 120 hours (20 hours in the case of
an individual described in subsection (d)(12)) of services
performed for the employer."
Subsec. (j). Pub. L. 104-188, Sec. 1201(e)(5), substituted "Work
opportunity credit" for "Targeted jobs credit" in heading.
1993 - Subsec. (c)(4). Pub. L. 103-66, Sec. 13102(a), substituted
"December 31, 1994" for "June 30, 1992".
Subsec. (i)(1)(A). Pub. L. 103-66, Sec. 13302(d), inserted ", or,
if the taxpayer is an entity other than a corporation, to any
individual who owns, directly or indirectly, more than 50 percent
of the capital and profits interests in the entity," after "of the
corporation".
1991 - Subsec. (c)(4). Pub. L. 102-227 substituted "June 30,
1992" for "December 31, 1991".
1990 - Subsec. (c)(4). Pub. L. 101-508 substituted "December 31,
1991" for "September 30, 1990".
1989 - Subsec. (c)(4). Pub. L. 101-239, Sec. 7103(a), substituted
"September 30, 1990" for "December 31, 1989".
Subsec. (d)(16)(C). Pub. L. 101-239, Sec. 7103(c)(1), added
subpar. (C).
1988 - Subsec. (c)(2)(B). Pub. L. 100-485 substituted "section
482(e)" for "section 414".
Subsec. (c)(4). Pub. L. 100-647, Sec. 4010(a), substituted "1989"
for "1988".
Subsec. (d)(3)(B). Pub. L. 100-647, Sec. 4010(c)(1), substituted
"age 23" for "age 25".
Subsec. (d)(12)(B). Pub. L. 100-647, Sec. 4010(d)(1),
redesignated former cls. (ii) and (iii) as (i) and (ii),
respectively, and struck out former cl. (i) which provided that
subsection (a) shall be applied by substituting "85 percent" for
"40 percent".
Pub. L. 100-647, Sec. 1017(a), substituted "subsection (a)" for
"subsection (a)(1)" in cl. (i).
1987 - Subsec. (c)(3), (4). Pub. L. 100-203 added par. (3) and
redesignated former par. (3) as (4).
1986 - Subsec. (a). Pub. L. 99-514, Sec. 1701(b)(1), amended
subsec. (a) generally. Prior to amendment, subsec. (a) read as
follows: "For purposes of section 38, the amount of the targeted
jobs credit determined under this section for the taxable year
shall be the sum of -
"(1) 50 percent of the qualified first-year wages for such
year, and
"(2) 25 percent of the qualified second-year wages for such
year."
Subsec. (b)(3), (4). Pub. L. 99-514, Sec. 1701(b)(2)(A),
redesignated par. (4) as (3) and struck out ", and the amount of
the qualified second-year wages," after "first-year wages" and
struck out par. (3) which defined "qualified second-year wages".
Subsec. (c)(3). Pub. L. 99-514, Sec. 1701(a), substituted
"December 31, 1988" for "December 31, 1985".
Subsec. (d)(12)(B). Pub. L. 99-514, Sec. 1701(b)(2)(B), in cl.
(i), substituted "40 percent" for "50 percent", struck out cl. (ii)
which directed that subsecs. (a)(2) and (b)(3) were not to apply,
redesignated cl. (iii) as cl. (ii), redesignated cl. (iv) as cl.
(iii), and in cl. (iii) as so redesignated substituted "subsection
(b)(3)" for "subsection (b)(4)".
Subsec. (i)(3). Pub. L. 99-514, Sec. 1701(c), added par. (3).
Subsec. (k). Pub. L. 99-514, Sec. 1878(f)(1), redesignated
subsec. (j) added by section 1041(c)(1) of Pub. L. 98-369 and
relating to treatment of successor employers, and employees
performing services for other persons, as subsec. (k).
1984 - Subsec. (a). Pub. L. 98-369, Sec. 474(p)(1), substituted
"For purposes of section 38, the amount of the targeted jobs credit
determined under this section" for "The amount of the credit
allowable by section 44B" in introductory provisions.
Subsec. (b)(2). Pub. L. 98-369, Sec. 1041(c)(4), struck out "(or,
in the case of a vocational rehabilitation referral, the day the
individual begins work for the employer on or after the beginning
of such individual's rehabilitation plan)" after "begins work for
the employer".
Subsec. (c)(2). Pub. L. 98-369, Sec. 2638(b), designated existing
provisions as subpar. (A), inserted par. (2) heading, and added
subpar. (B).
Subsec. (c)(3). Pub. L. 98-369, Sec. 1041(a), substituted
"December 31, 1985" for "December 31, 1984".
Subsec. (d)(6)(B)(ii). Pub. L. 98-369, Sec. 2663(j)(5)(A),
substituted "Secretary of Health and Human Services" for "Secretary
of Health Education and Welfare".
Subsec. (d)(11). Pub. L. 98-369, Sec. 712(n), made determination
respecting membership of a qualified summer youth employee or youth
participating in a qualified cooperative education program with
respect to an employer applicable for purposes of determining
whether such individual is a member of another targeted group with
respect to such employer.
Subsec. (d)(12)(A)(ii). Pub. L. 98-369, Sec. 1041(c)(3),
substituted "(or if later, on May 1 of the calendar year involved)"
for "(as defined in paragraph (14))".
Subsec. (d)(16)(A). Pub. L. 98-369, Sec. 1041(c)(2), inserted
"For purposes of the preceding sentence, if on or before the day on
which such individual begins work for the employer, such individual
has received from a designated local agency (or other agency or
organization designated pursuant to a written agreement with such
designated local agency) a written preliminary determination that
such individual is a member of a targeted group, then 'the fifth
day' shall be substituted for 'the day' in such sentence."
Subsec. (g). Pub. L. 98-369, Sec. 474(p)(2), substituted "the
targeted jobs credit determined under this subpart" for "the credit
provided by section 44B".
Subsec. (j). Pub. L. 98-369, Sec. 1041(c)(1), added subsec. (j)
relating to treatment of successor employers, and employees
performing services for other persons.
Pub. L. 98-369, Sec. 474(p)(3), added subsec. (j) relating to
election to have targeted jobs credit not apply.
1983 - Subsec. (d)(8)(D). Pub. L. 97-448, Sec. 102(l)(1),
substituted "clauses (i), (ii), and (iii) of subparagraph (A)" for
"subparagraph (A)".
Subsec. (d)(9)(B). Pub. L. 97-448, Sec. 102(l)(3), substituted
"section 432(b)(1) or 445" for "section 432(b)(1)".
Subsec. (d)(11). Pub. L. 97-448, Sec. 102(l)(4), substituted "the
earlier of the month in which such determination occurs or the
month in which the hiring date occurs" for "the month in which such
determination occurs".
1982 - Subsec. (c)(3). Pub. L. 97-248, Sec. 233(a), substituted
"1984" for "1982".
Subsec. (d)(1)(J). Pub. L. 97-248, Sec. 233(b)(3), added subpar.
(J).
Subsec. (d)(6)(B)(i)(II). Pub. L. 97-248, Sec. 233(d),
substituted "consists of money payments or voucher or scrip, and"
for "consists of money payments".
Subsec. (d)(10). Pub. L. 97-248, Sec. 233(c), inserted provision
respecting nonapplicability of paragraph to individuals who begin
work for the employer after December 31, 1982.
Subsec. (d)(12) to (15). Pub. L. 97-248, Sec. 233(b)(4), (5),
added par. (12) and redesignated former pars. (12) to (15) as (13)
to (16), respectively.
Subsec. (d)(16). Pub. L. 97-248, Sec. 233(b)(4), redesignated
former par. (15) as (16).
Pub. L. 97-248, Sec. 233(f), substituted "on or before" for
"before" in subpar. (A).
1981 - Subsec. (c)(3), (4). Pub. L. 97-34, Sec. 261(b)(2)(B)(ii),
redesignated par. (4) as (3). Former par. (3), which excluded from
term "wages" any amount paid or incurred by the employer to an
individual with respect to whom the employer claims credit under
section 40 of this title, was struck out.
Pub. L. 97-34, Sec. 261(a), extended termination date to Dec. 31,
1982, from Dec. 31, 1981, and inserted "to an individual who begins
work for the employer" after "paid or incurred".
Subsec. (d)(1)(H), (I). Pub. L. 97-34, Sec. 261(b)(1), added
subpars. (H) and (I).
Subsec. (d)(3)(A)(ii). Pub. L. 97-34, Sec. 261(b)(2)(B)(iii),
substituted "paragraph (11)" for "paragraph (9)".
Subsec. (d)(4). Pub. L. 97-34, Sec. 261(b)(2)(B)(iii), (3), in
subpar. (B) inserted "and" after "States," in subpar. (C)
substituted "paragraph (11)" for "paragraph (9)", and struck out
"(D) not having attained the age of 35 on the hiring date."
Subsec. (d)(7)(B). Pub. L. 97-34, Sec. 261(b)(2)(B)(iii),
substituted "paragraph (11)" for "paragraph (9)".
Subsec. (d)(8)(A)(iv). Pub L. 97-34, Sec. 261(b)(4), added cl.
(iv).
Subsec. (d)(9), (10). Pub. L. 97-34, Sec. 261(b)(2)(A), added
pars. (9) and (10) and redesignated former pars. (9) and (10) as
(11) and (12), respectively.
Subsec. (d)(11). Pub. L. 97-34, Sec. 261(b)(2)(A), (c)(2),
redesignated former par. (9) as (11), substituted "70 percent or
less" for "less than 70 percent", and provided for validity of any
determination for 45-day period beginning on the date the
determination is made. Former par. (11) redesignated (13).
Subsec. (d)(12), (13). Pub. L. 97-34, Sec. 261(b)(2)(A),
redesignated former pars. (10) and (11) as pars. (12) and (13),
respectively. Former par. (12) redesignated (14).
Subsec. (d)(14). Pub. L. 97-34, Sec. 261(f)(1)(A), substituted as
definition for term " 'designated local agency' means a State
employment security agency established in accordance with the Act
of June 6, 1933, as amended (29 U.S.C. 49-49n)" for " 'designated
local agency' means the agency for any locality designated jointly
by the Secretary and the Secretary of Labor to perform
certification of employees for employers in that locality".
Pub. L. 97-34, Sec. 261(b)(2)(A), redesignated former par. (12)
as (14).
Subsec. (d)(15). Pub. L. 97-34, Sec. 261(c)(1), added par. (15).
Subsec. (e). Pub. L. 97-34, Sec. 261(e)(1), struck out subsec.
(e) which set forth limitation that qualified first-year wages
could not exceed 30 percent of FUTA wages for all employees.
Subsec. (f). Pub. L. 97-34, Sec. 261(e)(2), substituted "any
taxable year" for "any year" in pars. (1) and (2) and struck out
par. (3), defining "year" which is covered in pars. (1) and (2).
Subsec. (g). Pub. L. 97-34, Sec. 261(f)(1)(B), substituted
"United States Employment Service" for "Secretary of Labor" in
heading and text.
Subsec. (i). Pub. L. 97-34, Sec. 261(d), added subsec. (i).
1980 - Subsec. (c)(1). Pub. L. 96-222, Sec. 103(a)(6)(E)(ii),
substituted ", subsection (d)(8)(D), and subsection (h)(2)" for
"subsection (h)(2)".
Subsec. (c)(2). Pub. L. 96-222, Sec. 103(a)(6)(G)(iii), inserted
"or incurred" after "amounts paid".
Subsec. (c)(4). Pub. L. 96-222, Sec. 103(a)(6)(A), substituted
"December 31, 1981" for "December 31, 1980".
Subsec. (d)(1)(E). Pub. L. 96-222, Sec. 103(a)(6)(G)(iv), struck
out "or" after "recipient,".
Subsec. (d)(4)(A)(i). Pub. L. 96-222, Sec. 103(a)(6)(G)(v),
substituted "active duty" for "active day".
Subsec. (d)(4)(B). Pub. L. 96-222, Sec. 103(a)(6)(G)(vi),
substituted "preemployment" for "premployment".
Subsec. (d)(5). Pub. L. 96-222, Sec. 103(a)(6)(G)(vii),
substituted "preemployment" for "pre-employment".
Subsec. (d)(8)(A). Pub. L. 96-222, Sec. 103(a)(6)(F), substituted
"age 20" for "age 19".
Subsec. (d)(8)(D). Pub. L. 96-222, Sec. 103(a)(6)(E)(i), in
heading substituted "Wages" for "Individual must be currently
pursuing program" and in text substituted "In the case of
remuneration" for "Wages shall be taken into account with respect
to a qualified cooperative education program only if the wages are"
and inserted ", wages, and unemployment insurance wages, shall be
determined without regard to section 3306(c)(10)(C)".
Subsec. (d)(12). Pub. L. 96-222, Sec. 103(a)(6)(G)(viii),
substituted "employers" for "employer".
Subsec. (e). Pub. L. 96-222, Sec. 103(a)(6)(G)(ix), inserted
"except as provided in subsection (h)(1)" after "the preceding
sentence,".
1978 - Pub. L. 95-600 amended section generally and limited
allowance of credit to the hiring of seven target groups with high
unemployment rates.
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title VI, Sec. 604(b), Mar. 9, 2002, 116 Stat.
59, provided that: "The amendment made by subsection (a) [amending
this section] shall apply to individuals who begin work for the
employer after December 31, 2001."
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 102(d)], Dec. 21,
2000, 114 Stat. 2763, 2763A-600, provided that: "The amendments
made by this section [amending this section] shall apply to
individuals who begin work for the employer after December 31,
2001."
Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 316(e)], Dec. 21,
2000, 114 Stat. 2763, 2763A-645, provided that: "The amendments
made by this section [amending this section and sections 219, 401
and 1361 of this title] shall take effect as if included in the
provisions of the Small Business Job Protection Act of 1996 [Pub.
L. 104-188] to which they relate."
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106-170, title V, Sec. 505(c), Dec. 17, 1999, 113 Stat.
1921, provided that: "The amendments made by this section [amending
this section and section 51A of this title] shall apply to
individuals who begin work for the employer after June 30, 1999."
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-277, div. J, title I, Sec. 1002(b), Oct. 21, 1998,
112 Stat. 2681-888, provided that: "The amendment made by this
section [amending this section] shall apply to individuals who
begin work for the employer after June 30, 1998."
EFFECTIVE DATE OF 1997 AMENDMENTS
Section 603(e) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply to
individuals who begin work for the employer after September 30,
1997."
Section 5518(c) of Pub. L. 105-33 provided that: "The amendments
made by section 5514(a) of this Act [amending this section and
sections 3304, 6103, 6334, 6402, and 7523 of this title] shall take
effect as if the amendments had been included in section 110 of the
Personal Responsibility and Work Opportunity Reconciliation Act of
1996 [Pub. L. 104-193] at the time such section 110 became law."
EFFECTIVE DATE OF 1996 AMENDMENTS
Amendment by Pub. L. 104-193 effective July 1, 1997, with
transition rules relating to State options to accelerate such date,
rules relating to claims, actions, and proceedings commenced before
such date, rules relating to closing out of accounts for terminated
or substantially modified programs and continuance in office of
Assistant Secretary for Family Support, and provisions relating to
termination of entitlement under AFDC program, see section 116 of
Pub. L. 104-193, as amended, set out as an Effective Date note
under section 601 of Title 42, The Public Health and Welfare.
Amendment by Pub. L. 104-188 applicable to individuals who begin
work for the employer after Sept. 30, 1996, see section 1201(g) of
Pub. L. 104-188, set out as a note under section 38 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13102(b) of Pub. L. 103-66 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
individuals who begin work for the employer after June 30, 1992."
EFFECTIVE DATE OF 1991 AMENDMENT
Section 105(b) of Pub. L. 102-227 provided that: "The amendment
made by this section [amending this section] shall apply to
individuals who begin work for the employer after December 31,
1991."
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11405(c) of Pub. L. 101-508 provided that:
"(1) Credit. - The amendment made by subsection (a) [amending
this section] shall apply to individuals who begin work for the
employer after September 30, 1990.
"(2) Authorization. - The amendment made by subsection (b)
[amending provisions set out below] shall apply to fiscal years
beginning after 1990."
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7103(c)(2) of Pub. L. 101-239 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to individuals who begin work for the employer after December 31,
1989."
EFFECTIVE DATE OF 1988 AMENDMENTS
Amendment by section 1017(a) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 4010(c)(2) of Pub. L. 100-647 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to individuals who begin work for the employer after December 31,
1988."
Section 4010(d)(2) of Pub. L. 100-647 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to individuals who begin work for the employer after December 31,
1988."
Amendment by Pub. L. 100-485 effective Oct. 1, 1990, with
provision for earlier effective dates in case of States making
certain changes in their State plans and formally notifying the
Secretary of Health and Human Services of their desire to become
subject to the amendments made by title II of Pub. L. 100-485 on
the earlier effective dates, see section 204 of Pub. L. 100-485,
set out as a note under section 671 of Title 42, The Public Health
and Welfare.
EFFECTIVE DATE OF 1987 AMENDMENT
Section 10601(b) of Pub. L. 100-203 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
amounts paid or incurred on or after January 1, 1987, for services
rendered on or after such date."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1701(e) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and provisions set out
below] shall apply with respect to individuals who begin work for
the employer after December 31, 1985."
Amendment by section 1878(f)(1) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(p)(1)-(3) of Pub. L. 98-369 applicable
to taxable years beginning after Dec. 31, 1983, and to carrybacks
from such years, see section 475(a) of Pub. L. 98-369, set out as a
note under section 21 of this title.
Amendment by section 712 of Pub. L. 98-369 effective as if
included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 715 of Pub. L. 98-369, set out as a note under
section 31 of this title.
Section 1041(c)(5) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, title XVIII, Sec. 1878(f)(2), Oct. 22, 1986, 100
Stat. 2095, 2904, provided that:
"(A) In general. - Except as provided in subparagraph (B), the
amendments made by this section [amending this section] shall apply
to individuals who begin work for the employer after the date of
the enactment of this Act [July 18, 1984].
"(B) Special rule for employees performing services for other
persons. - Paragraph (2) of section 51(k) of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] (as added by this subsection)
and the amendment made by paragraph (3) of this subsection
[amending this section] shall apply to individuals who begin work
for the employer after December 31, 1984."
Section 2638(c)(2) of Pub. L. 98-369 provided that: "The
amendments made by subsection (b) [amending this section] shall
apply with respect to payments made on or after the date of the
enactment of this Act [July 18, 1984]."
Amendment by section 2663 of Pub. L. 98-369 effective July 18,
1984, but not to be construed as changing or affecting any right,
liability, status or interpretation which existed (under the
provisions of law involved) before that date, see section 2664(b)
of Pub. L. 98-369, set out as a note under section 401 of Title 42,
The Public Health and Welfare.
EFFECTIVE DATE OF 1983 AMENDMENT
Section 102(l)(4) of Pub. L. 97-448 provided that the amendment
made by that section is effective with respect to certifications
made after Jan. 12, 1983, with respect to individuals beginning
work for an employer after May 11, 1982.
Amendment by title I of Pub. L. 97-448 effective, except as
otherwise provided, as if it had been included in the provision of
the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Section 233(f) of Pub. L. 97-248 provided that the amendments
made by that section are effective only with respect to individuals
who begin work for the taxpayer after May 11, 1982.
Section 233(g) of Pub. L. 97-248 provided that:
"(1) Subsection (b). - The amendments made by subsection (b)
[amending this section] shall apply to amounts paid or incurred
after April 30, 1983, to individuals beginning work for the
employer after such date.
"(2) Subsection (d). - The amendments made by subsection (d)
[amending this section] shall apply to amounts paid or incurred
after July 1, 1982, to individuals beginning work for the employer
after such date."
EFFECTIVE DATE OF 1981 AMENDMENT
Section 261(g) of Pub. L. 97-34, as amended by Pub. L. 97-448,
title I, Sec. 102(l)(2), Jan. 12, 1983, 96 Stat. 2374; Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) Amendments relating to members of targeted groups. -
"(A) In general. - Except as provided in subparagraphs (B),
(C), and (D), the amendments made by subsections (b), (c)(2), and
(d) [amending this section and section 50B of this title] shall
apply to wages paid or incurred with respect to individuals first
beginning work for an employer after the date of the enactment of
this Act [Aug. 13, 1981] in taxable years ending after such date.
"(B) Eligible work incentive employees. - The amendments made
by subsection (b)(2) [amending this section] to the extent
relating to the designation of eligible work incentive employees
(within the meaning of section 51(d)(9) [now 51(d)(10)] of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954]) as members
of a targeted group and subsection (b)(2)(B)(ii) [amending this
section] shall apply to taxable years beginning after December
31, 1981. In the case of an eligible work incentive employee,
subsections (a) and (b) of section 51 of such Code shall be
applied for taxable years beginning after December 31, 1981, as
if such employees had been members of a targeted group for
taxable years beginning before January 1, 1982.
"(C) Cooperative education program participants. - The
amendments made by subsection (b)(4) [amending this section]
shall apply to wages paid or incurred after December 31, 1981, in
taxable years ending after such date.
"(D) Designated local agency. - The amendments made by
subsection (f)(1) [amending this section] shall take effect on
the date 60 days after the date of the enactment of this act
[Aug. 13, 1981].
"(2) Certifications. -
"(A) In general. - The amendment made by subsection (c)(1)
[amending this section] shall apply to all individuals whether
such individuals began work for their employer before, on, or
after the date of the enactment of this Act [Aug. 13, 1981].
"(B) Special rule for individuals who began work for the
employer before 45th day before date of enactment. - In the case
of any individual (other than an individual described in section
51(d)(8) of the Internal Revenue Code of 1986) who began work for
the employer before the date 45 days before the date of the
enactment of this Act [Aug. 13, 1981], paragraph (15) of section
51(d) of the Internal Revenue Code of 1986 (as added by
subsection (c)(1)) shall be applied by substituting "July 23,
1981," for the day on which such individual begins work for the
employer.
"(C) Individuals who begin work for employer within 45 days
before or after date of enactment. - In the case of any
individual (other than an individual described in section
51(d)(8) of the Internal Revenue Code of 1986) who begins work
for the employer during the 90-day period beginning with the date
45 days before the date of the enactment of this Act [Aug. 13,
1981], and in the case of an individual described in section
51(d)(8) of such Code who begins work before the end of such
90-day period, paragraph (15) of section 51(d) of such Code (as
added by subsection (c)(1)) shall be applied by substituting "the
last day of the 90-day period beginning with the date 45 days
before the date of the enactment of this Act" for the day on
which such individual begins work for the employer.
"(3) Limitation on qualified first-year wages. - The amendment
made by subsection (e) [amending this section] shall apply to
taxable years beginning after December 31, 1981."
EFFECTIVE DATE OF 1980 AMENDMENT
Section 103(b)(1) of Pub. L. 96-222 provided that: "The amendment
made by subsection (a)(5)(F) [probably means subsec. (a)(6)(F),
amending this section] shall apply to wages paid or incurred on or
after November 27, 1979, in taxable years ending on or after such
date."
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 321(d)(1) of Pub. L. 95-600 provided that: "Except as
otherwise provided in this subsection, the amendments made by this
section [amending this section and sections 44B, 52, 53, and 6501
of this title] shall apply to amounts paid or incurred after
December 31, 1978, in taxable years ending after such date."
EFFECTIVE DATE
Section 202(e) of Pub. L. 95-30 provided that: "The amendments
made by this section [enacting this section and sections 44B, 52,
53, and 280C of this title and amending sections 56, 381, 383,
6096, 6411, 6501, 6511, 6601, and 6611 of this title] shall apply
to taxable years beginning after December 31, 1976, and to credit
carrybacks from such years."
REFERENCE TO PLAN FOR EMPLOYMENT
Pub. L. 105-277, div. J, title IV, Sec. 4006(c)(1), Oct. 21,
1998, 112 Stat. 2681-912, provided that: "The reference to 'plan
for employment' in such clause [26 U.S.C. 51(d)(6)(B)(i)] shall be
treated as including a reference to the rehabilitation plan
referred to in such clause as in effect before the amendment made
by the preceding sentence."
AUTHORIZATION OF APPROPRIATIONS
Section 261(f)(2) of Pub. L. 97-34, as amended by Pub. L. 97-248,
title II, Sec. 233(e), Sept. 3, 1982, 96 Stat. 502; Pub. L. 98-369,
div. A, title X, Sec. 1041(b), July 18, 1984, 98 Stat. 1042; Pub.
L. 99-514, title XVII, Sec. 1701(d), Oct. 22, 1986, 100 Stat. 2772;
Pub. L. 100-647, title IV, Sec. 4010(b), Nov. 10, 1988, 102 Stat.
3655; Pub. L. 101-239, title VII, Sec. 7103(b), Dec. 19, 1989, 103
Stat. 2305; Pub. L. 101-508, title XI, Sec. 11405(b), Nov. 5, 1990,
104 Stat. 1388-473, provided that: "There is authorized to be
appropriated for each fiscal year such sums as may be necessary, to
carry out the functions described by the amendments made by
paragraph (1) [amending this section], except that, of the amounts
appropriated pursuant to this paragraph -
"(A) $5,000,000 shall be used to test whether individuals
certified as members of targeted groups under section 51 of such
Code are eligible for such certification (including the use of
statistical sampling techniques), and
"(B) the remainder shall be distributed under performance
standards prescribed by the Secretary of Labor.
The Secretary of Labor shall each calendar year beginning with
calendar year 1983 report to the Committee on Ways and Means of the
House of Representatives and to the Committee on Finance of the
Senate with respect to the results of the testing conducted under
subparagraph (A) during the preceding calendar year."
[For termination, effective May 15, 2000, of reporting provisions
in section 261(f)(2) of Pub. L. 97-34, set out above, see section
3003 of Pub. L. 104-66, as amended, set out as a note under section
1113 of Title 31, Money and Finance, and page 124 of House Document
No. 103-7.]
[Amendment by Pub. L. 101-508 applicable to fiscal years
beginning after 1990, see section 11405(c)(2) of Pub. L. 101-508,
set out as an Effective Date of 1990 Amendment note above.]
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
SPECIAL RULES FOR NEWLY TARGETED GROUPS
Section 321(d)(2) of Pub. L. 95-600, as amended by Pub. L.
96-222, title I, Sec. 103(a)(6)(C), (G)(xi), Apr. 1, 1980, 94 Stat.
209, 211; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095,
provided that:
"(A) Individual must be hired after september 26, 1978. - In the
case of a member of a newly targeted group, for purposes of
applying the amendments made by this section -
"(i) such individual shall be taken into account for purposes
of the credit allowable by section 44B of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] only if such individual is
first hired by the employer after September 26, 1978, and
"(ii) such individual shall be treated for purposes of such
credit as having first begun work for the employer not earlier
than January 1, 1979.
"(B) Member of newly targeted group defined. - For purposes of
subparagraph (A), an individual is a member of a newly targeted
group if -
"(i) such individual meets the requirements of paragraph (1) of
section 51(d) of such Code, and
"(ii) in the case of an individual meeting the requirements of
subparagraph (A) of such paragraph (1), a credit was not claimed
for such individual by the taxpayer for a taxable year beginning
before January 1, 1979."
CREDIT ALLOWABLE BY SECTION 44B IN CASE OF TAXABLE YEAR BEGINNING
IN 1978 AND ENDING AFTER DECEMBER 31, 1978
Section 321(d)(3) of Pub. L. 95-600, as amended by Pub. L.
96-222, title I, Sec. 103(a)(6)(D), Apr. 1, 1980, 94 Stat. 209;
Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided
that: "In the case of a taxable year which begins in 1978 and ends
after December 31, 1978, the amount of the credit determined under
section 51 of the Internal Revenue Code of 1986 [formerly I.R.C.
1954] shall be the sum of -
"(A) the amount of the credit which would be so determined
without regard to the amendments made by this section, plus
"(B) the amount of the credit which would be so determined by
reason of the amendments made by this section."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 41, 45A, 51A, 52,
196, 280C, 936, 1396, 1397, 1400L, 6501 of this title; title 42
section 13725.
-FOOTNOTE-
(!1) See References in Text note below.
(!2) So in original. The comma probably should not appear.
-End-
-CITE-
26 USC Sec. 51A 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart F - Rules for Computing Work Opportunity Credit
-HEAD-
Sec. 51A. Temporary incentives for employing long-term family
assistance recipients
-STATUTE-
(a) Determination of amount
For purposes of section 38, the amount of the welfare-to-work
credit determined under this section for the taxable year shall be
equal to -
(1) 35 percent of the qualified first-year wages for such year,
and
(2) 50 percent of the qualified second-year wages for such
year.
(b) Qualified wages defined
For purposes of this section -
(1) In general
The term "qualified wages" means the wages paid or incurred by
the employer during the taxable year to individuals who are
long-term family assistance recipients.
(2) Qualified first-year wages
The term "qualified first-year wages" means, with respect to
any individual, qualified wages attributable to service rendered
during the 1-year period beginning with the day the individual
begins work for the employer.
(3) Qualified second-year wages
The term "qualified second-year wages" means, with respect to
any individual, qualified wages attributable to service rendered
during the 1-year period beginning on the day after the last day
of the 1-year period with respect to such individual determined
under paragraph (2).
(4) Only first $10,000 of wages per year taken into account
The amount of the qualified first-year wages, and the amount of
qualified second-year wages, which may be taken into account with
respect to any individual shall not exceed $10,000 per year.
(5) Wages
(A) In general
The term "wages" has the meaning given such term by section
51(c), without regard to paragraph (4) thereof.
(B) Certain amounts treated as wages
The term "wages" includes amounts paid or incurred by the
employer which are excludable from such recipient's gross
income under -
(i) section 105 (relating to amounts received under
accident and health plans),
(ii) section 106 (relating to contributions by employer to
accident and health plans),
(iii) section 127 (relating to educational assistance
programs), but only to the extent paid or incurred to a
person not related to the employer, or
(iv) section 129 (relating to dependent care assistance
programs).
The amount treated as wages by clause (i) or (ii) for any
period shall be based on the reasonable cost of coverage for
the period, but shall not exceed the applicable premium for the
period under section 4980B(f)(4).
(C) Special rules for agricultural and railway labor
If such recipient is an employee to whom subparagraph (A) or
(B) of section 51(h)(1) applies, rules similar to the rules of
such subparagraphs shall apply except that -
(i) such subparagraph (A) shall be applied by substituting
"$10,000" for "$6,000", and
(ii) such subparagraph (B) shall be applied by substituting
"$833.33" for "$500".
(c) Long-term family assistance recipients
For purposes of this section -
(1) In general
The term "long-term family assistance recipient" means any
individual who is certified by the designated local agency (as
defined in section 51(d)(11)) -
(A) as being a member of a family receiving assistance under
a IV-A program (as defined in section 51(d)(2)(B)) for at least
the 18-month period ending on the hiring date,
(B)(i) as being a member of a family receiving such
assistance for 18 months beginning after the date of the
enactment of this section, and
(ii) as having a hiring date which is not more than 2 years
after the end of the earliest such 18-month period, or
(C)(i) as being a member of a family which ceased to be
eligible after the date of the enactment of this section for
such assistance by reason of any limitation imposed by Federal
or State law on the maximum period such assistance is payable
to a family, and
(ii) as having a hiring date which is not more than 2 years
after the date of such cessation.
(2) Hiring date
The term "hiring date" has the meaning given such term by
section 51(d).
(d) Certain rules to apply
(1) In general
Rules similar to the rules of section 52, and subsections
(d)(11), (f), (g), (i) (as in effect on the day before the date
of the enactment of the Taxpayer Relief Act of 1997), (j), and
(k) of section 51, shall apply for purposes of this section.
(2) Credit to be part of general business credit, etc.
References to section 51 in section 38(b), 280C(a), and
1396(c)(3) shall be treated as including references to this
section.
(e) Coordination with work opportunity credit
If a credit is allowed under this section to an employer with
respect to an individual for any taxable year, then for purposes of
applying section 51 to such employer, such individual shall not be
treated as a member of a targeted group for such taxable year.
(f) Termination
This section shall not apply to individuals who begin work for
the employer after December 31, 2003.
-SOURCE-
(Added Pub. L. 105-34, title VIII, Sec. 801(a), Aug. 5, 1997, 111
Stat. 869; amended Pub. L. 105-277, div. J, title I, Sec. 1003,
Oct. 21, 1998, 112 Stat. 2681-888; Pub. L. 106-170, title V, Sec.
505(a), Dec. 17, 1999, 113 Stat. 1921; Pub. L. 107-16, title IV,
Sec. 411(c), June 7, 2001, 115 Stat. 63; Pub. L. 107-147, title IV,
Sec. 417(4), title VI, Sec. 605(a), Mar. 9, 2002, 116 Stat. 56,
60.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of this section, referred to in subsec.
(c)(1)(B)(i), (C)(i), is the date of enactment of Pub. L. 105-34,
which was approved Aug. 5, 1997.
The date of the enactment of the Taxpayer Relief Act of 1997,
referred to in subsec. (d)(1), is the date of enactment of Pub. L.
105-34, which was approved Aug. 5, 1997.
-MISC1-
AMENDMENTS
2002 - Subsec. (c)(1). Pub. L. 107-147, Sec. 417(4), substituted
"51(d)(11)" for "51(d)(10)" in introductory provisions.
Subsec. (f). Pub. L. 107-147, Sec. 605(a), substituted "2003" for
"2001".
2001 - Subsec. (b)(5)(B)(iii). Pub. L. 107-16, Secs. 411(c), 901,
temporarily struck out "or would be so excludable but for section
127(d)" before ", but only". See Effective and Termination Dates of
2001 Amendment note below.
1999 - Subsec. (f). Pub. L. 106-170 substituted "December 31,
2001" for "June 30, 1999".
1998 - Subsec. (f). Pub. L. 105-277 substituted "June 30, 1999"
for "April 30, 1999".
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title VI, Sec. 605(b), Mar. 9, 2002, 116 Stat.
60, provided that: "The amendment made by subsection (a) [amending
this section] shall apply to individuals who begin work for the
employer after December 31, 2001."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title IV, Sec. 411(d), June 7, 2001, 115 Stat.
63, provided that: "The amendments made by this section [amending
this section and section 127 of this title] shall apply with
respect to expenses relating to courses beginning after December
31, 2001."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106-170 applicable to individuals who begin
work for the employer after June 30, 1999, see section 505(c) of
Pub. L. 106-170, set out as a note under section 51 of this title.
EFFECTIVE DATE
Section 801(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [enacting this section] shall apply to
individuals who begin work for the employer after December 31,
1997."
-End-
-CITE-
26 USC Sec. 52 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart F - Rules for Computing Work Opportunity Credit
-HEAD-
Sec. 52. Special rules
-STATUTE-
(a) Controlled group of corporations
For purposes of this subpart, all employees of all corporations
which are members of the same controlled group of corporations
shall be treated as employed by a single employer. In any such
case, the credit (if any) determined under section 51(a) with
respect to each such member shall be its proportionate share of the
wages giving rise to such credit. For purposes of this subsection,
the term "controlled group of corporations" has the meaning given
to such term by section 1563(a), except that -
(1) "more than 50 percent" shall be substituted for "at least
80 percent" each place it appears in section 1563(a)(1), and
(2) the determination shall be made without regard to
subsections (a)(4) and (e)(3)(C) of section 1563.
(b) Employees of partnerships, proprietorships, etc., which are
under common control
For purposes of this subpart, under regulations prescribed by the
Secretary -
(1) all employees of trades or business (whether or not
incorporated) which are under common control shall be treated as
employed by a single employer, and
(2) the credit (if any) determined under section 51(a) with
respect to each trade or business shall be its proportionate
share of the wages giving rise to such credit.
The regulations prescribed under this subsection shall be based on
principles similar to the principles which apply in the case of
subsection (a).
(c) Tax-exempt organizations
No credit shall be allowed under section 38 for any work
opportunity credit determined under this subpart to any
organization (other than a cooperative described in section 521)
which is exempt from income tax under this chapter.
(d) Estates and trusts
In the case of an estate or trust -
(1) the amount of the credit determined under this subpart for
any taxable year shall be apportioned between the estate or trust
and the beneficiaries on the basis of the income of the estate or
trust allocable to each, and
(2) any beneficiary to whom any amount has been apportioned
under paragraph (1) shall be allowed, subject to section 38(c), a
credit under section 38(a) for such amount.
(e) Limitations with respect to certain persons
Under regulations prescribed by the Secretary, in the case of -
(1) a regulated investment company or a real estate investment
trust subject to taxation under subchapter M (section 851 and
following), and
(2) a cooperative organization described in section 1381(a),
rules similar to the rules provided in subsections (e) and (h) of
section 46 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall apply in
determining the amount of the credit under this subpart.
-SOURCE-
(Added Pub. L. 95-30, title II, Sec. 202(b), May 23, 1977, 91 Stat.
143; amended Pub. L. 95-600, title III, Sec. 321(c)(1), Nov. 6,
1978, 92 Stat. 2835; Pub. L. 96-222, title I, Sec. 103(a)(5), Apr.
1, 1980, 94 Stat. 209; Pub. L. 97-354, Sec. 5(a)(11), Oct. 19,
1982, 96 Stat. 1693; Pub. L. 98-369, div. A, title IV, Sec.
474(p)(4)-(7), July 18, 1984, 98 Stat. 838; Pub. L. 101-508, title
XI, Sec. 11813(b)(4), Nov. 5, 1990, 104 Stat. 1388-551; Pub. L.
104-188, title I, Sec. 1616(b)(2), Aug. 20, 1996, 110 Stat. 1856;
Pub. L. 105-34, title XVI, Sec. 1601(b), Aug. 5, 1997, 111 Stat.
1087.)
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsec. (e), is the date of enactment of Pub.
L. 101-508, which was approved Nov. 5, 1990.
-MISC1-
AMENDMENTS
1997 - Subsec. (c). Pub. L. 105-34 substituted "work opportunity
credit" for "targeted jobs credit".
1996 - Subsec. (e)(1) to (3). Pub. L. 104-188 redesignated pars.
(2) and (3) as (1) and (2), respectively, and struck out former
par. (1) which read as follows: "an organization to which section
593 (relating to reserves for losses on loans) applies,".
1990 - Subsec. (e). Pub. L. 101-508 substituted "section 46 (as
in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990)" for "section 46" in concluding
provisions.
1984 - Subsec. (a). Pub. L. 98-369, Sec. 474(p)(4), substituted
"the credit (if any) determined under section 51(a) with respect to
each such member" for "the credit (if any) allowable by section 44B
to each such member".
Subsec. (b)(2). Pub. L. 98-369, Sec. 474(p)(5), substituted "the
credit (if any) determined under section 51(a)" for "the credit (if
any) allowable by section 44B".
Subsec. (c). Pub. L. 98-369, Sec. 474(p)(6), substituted "credit
shall be allowed under section 38 for any targeted jobs credit
determined under this subpart" for "credit shall be allowed under
section 44B".
Subsec. (d)(2). Pub. L. 98-369, Sec. 474(p)(7), substituted ",
subject to section 38(c), a credit under section 38(a)" for ",
subject to section 53 a credit under section 44B".
1982 - Subsecs. (d) to (f). Pub. L. 97-354 struck out subsec. (d)
relating to apportionment of credit among shareholders, and
redesignated subsecs. (e) and (f) as (d) and (e), respectively.
1980 - Subsec. (f). Pub. L. 96-222 substituted "subsections (e)
and (h) of section 46" for "section 46(e)".
1978 - Subsecs. (a), (b). Pub. L. 95-600, Sec. 321(c)(1)(B),
substituted "proportionate share of the wages" for "proportionate
contribution to the increase in unemployment insurance wages".
Subsecs. (c), (d). Pub. L. 95-600, Sec. 321(c)(1)(A), struck out
subsec. (c) which related to dispositions by an employer, and
redesignated subsecs. (d) and (f) as (c) and (d), respectively.
Subsec. (e). Pub. L. 95-600, Sec. 321(c)(1)(A), (C), redesignated
subsec. (g) as (e) and struck out par. (3) which provided that the
$100,000 amount specified in section 51(d) applicable to such
estate or trust be reduced to an amount which bears the same ratio
to $100,000 as the portion of the credit allocable to the estate or
trust under paragraph (1) bears to the entire amount of such
credit. Former subsec. (e), which related to a change in status
from self-employed to employee, was struck out.
Subsecs. (f) to (h). Pub. L. 95-600, Sec. 321(c)(1)(A),
redesignated subsecs. (f) to (h) as (d) to (f), respectively.
Subsec. (i). Pub. L. 95-600, Sec. 321(c)(1)(A)(i), struck out
subsec. (i) which related to a $50,000 limitation in the case of
married individuals filing separate returns.
Subsec. (j). Pub. L. 95-600, Sec. 321(c)(1)(A)(i), struck out
subsec. (j) which related to certain short taxable years.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 effective as if included in the
provisions of the Small Business Job Protection Act of 1996, Pub.
L. 104-188, to which it relates, see section 1601(j) of Pub. L.
105-34, set out as a note under section 23 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 applicable to taxable years
beginning after Dec. 31, 1995, see section 1616(c) of Pub. L.
104-188, set out as a note under section 593 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 applicable to property placed in
service after Dec. 31, 1990, but not applicable to any transition
property (as defined in section 49(e) of this title), any property
with respect to which qualified progress expenditures were
previously taken into account under section 46(d) of this title,
and any property described in section 46(b)(2)(C) of this title, as
such sections were in effect on Nov. 4, 1990, see section 11813(c)
of Pub. L. 101-508, set out as a note under section 29 of this
title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years beginning
after Dec. 31, 1983, and to carrybacks from such years, see section
475(a) of Pub. L. 98-369, set out as a note under section 21 of
this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-354 applicable to taxable years beginning
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as
an Effective Date note under section 1361 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 applicable to amounts paid or
incurred after Dec. 31, 1978, in taxable years ending after such
date, see section 321(d)(1) of Pub. L. 95-600, set out as a note
under section 51 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1976, and to credit carrybacks from such years, see section 202(e)
of Pub. L. 95-30, set out as a note under section 51 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 29, 40, 41, 42, 44, 45,
45A, 45E, 45F, 51, 51A, 264, 280C, 448, 453A, 460, 465, 474, 685,
856, 860L, 943, 1044, 1397, 1400L, 5000, 6053, 9701 of this title;
title 42 section 1395y.
-End-
-CITE-
26 USC Subpart G - Credit Against Regular Tax for Prior
Year Minimum Tax Liability 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart G - Credit Against Regular Tax for Prior Year Minimum Tax
Liability
-HEAD-
SUBPART G - CREDIT AGAINST REGULAR TAX FOR PRIOR YEAR MINIMUM TAX
LIABILITY
-MISC1-
Sec.
53. Credit for prior year minimum tax liability.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in section 6401 of this title.
-End-
-CITE-
26 USC Sec. 53 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart G - Credit Against Regular Tax for Prior Year Minimum Tax
Liability
-HEAD-
Sec. 53. Credit for prior year minimum tax liability
-STATUTE-
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by
this chapter for any taxable year an amount equal to the minimum
tax credit for such taxable year.
(b) Minimum tax credit
For purposes of subsection (a), the minimum tax credit for any
taxable year is the excess (if any) of -
(1) the adjusted net minimum tax imposed for all prior taxable
years beginning after 1986, over
(2) the amount allowable as a credit under subsection (a) for
such prior taxable years.
(c) Limitation
The credit allowable under subsection (a) for any taxable year
shall not exceed the excess (if any) of -
(1) the regular tax liability of the taxpayer for such taxable
year reduced by the sum of the credits allowable under subparts
A, B, D, E, and F of this part, over
(2) the tentative minimum tax for the taxable year.
(d) Definitions
For purposes of this section -
(1) Net minimum tax
(A) In general
The term "net minimum tax" means the tax imposed by section
55.
(B) Credit not allowed for exclusion preferences
(i) Adjusted net minimum tax
The adjusted net minimum tax for any taxable year is -
(I) the amount of the net minimum tax for such taxable
year, reduced by
(II) the amount which would be the net minimum tax for
such taxable year if the only adjustments and items of tax
preference taken into account were those specified in
clause (ii) and if section 59(a)(2) did not apply.
(ii) Specified items
The following are specified in this clause -
(I) the adjustments provided for in subsection (b)(1) of
section 56, and
(II) the items of tax preference described in paragraphs
(1), (5), and (7) of section 57(a).
(iii) Special rule
The adjusted net minimum tax for the taxable year shall be
increased by the amount of the credit not allowed under
section 29 (relating to credit for producing fuel from a
nonconventional source) solely by reason of the application
of section 29(b)(6)(B), or not allowed under section 30
solely by reason of the application of section 30(b)(3)(B).
(iv) Credit allowable for exclusion preferences of
corporations
In the case of a corporation -
(I) the preceding provisions of this subparagraph shall
not apply, and
(II) the adjusted net minimum tax for any taxable year is
the amount of the net minimum tax for such year increased
in the manner provided in clause (iii).
(2) Tentative minimum tax
The term "tentative minimum tax" has the meaning given to such
term by section 55(b).
-SOURCE-
(Added Pub. L. 99-514, title VII, Sec. 701(b), Oct. 22, 1986, 100
Stat. 2339; amended Pub. L. 100-647, title I, Sec. 1007(g)(4),
title VI, Sec. 6304(a), Nov. 10, 1988, 102 Stat. 3435, 3756; Pub.
L. 101-239, title VII, Secs. 7612(a)(1), (2), (b)(1), 7811(d)(2),
Dec. 19, 1989, 103 Stat. 2373, 2374, 2408; Pub. L. 102-486, title
XIX, Sec. 1913(b)(2)(C), Oct. 24, 1992, 106 Stat. 3020; Pub. L.
103-66, title XIII, Secs. 13113(b)(2), 13171(c), Aug. 10, 1993, 107
Stat. 429, 455; Pub. L. 104-188, title I, Secs. 1205(d)(5),
1704(j)(1), Aug. 20, 1996, 110 Stat. 1776, 1881.)
-MISC1-
PRIOR PROVISIONS
A prior section 53, added Pub. L. 95-30, title II, Sec. 202(b),
May 23, 1977, 91 Stat. 146; amended Pub. L. 95-600, title III, Sec.
321(c)(2), Nov. 6, 1978, 92 Stat. 2835; Pub. L. 97-34, title II,
Sec. 207(c)(2), Aug. 13, 1981, 95 Stat. 225; Pub. L. 97-248, title
II, Sec. 201(d)(8)(A), formerly Sec. 201(c)(8)(A), and Sec.
265(b)(2)(A)(iii), Sept. 3, 1982, 96 Stat. 420, 547, renumbered
Sec. 201(d)(8)(A), Pub. L. 97-448, title III, Sec. 306(a)(1)(A)(i),
Jan. 12, 1983, 96 Stat. 2400; 97-354, Sec. 5(a)(12), Oct. 19, 1982,
96 Stat. 1693; 97-448, title I, Sec. 102(d)(3), Jan. 12, 1983, 96
Stat. 2370; Pub. L. 98-21, title I, Sec. 122(c)(1), Apr. 20, 1983,
97 Stat. 87; Pub. L. 98-369, div. A, title VII, Sec. 713(c)(1)(C),
July 18, 1984, 98 Stat. 957, placed limitations on the amount of
credit allowed by former section 44B for employment of certain new
employees, prior to repeal by Pub. L. 98-369, div. A, title IV,
Sec. 474(p)(8), July 18, 1984, 98 Stat. 838, applicable to taxable
years beginning after Dec. 31, 1983, and to carrybacks from such
years.
AMENDMENTS
1996 - Subsec. (d)(1)(B)(iii). Pub. L. 104-188, Sec.
1205(d)(5)(A), which directed that cl. (iii) be amended by striking
out "or not allowed under section 28 solely by reason of the
application of section 28(d)(2)(B)," was executed by striking out
"not allowed under section 28 solely by reason of the application
of section 28(d)(2)(B)," after "29(b)(6)(B),", to reflect the
probable intent of Congress.
Subsec. (d)(1)(B)(iv)(II). Pub. L. 104-188, Sec. 1704(j)(1),
amended subcl. (II) generally. Prior to amendment, subcl. (II) read
as follows: "the adjusted net minimum tax for any taxable year is
the amount of the net minimum tax for such year increased by the
amount of any credit not allowed under section 29 solely by reason
of the application of section 29(b)(5)(B) or not allowed under
section 28 solely by reason of the application of section
28(d)(2)(B)."
Pub. L. 104-188, Sec. 1205(d)(5)(B), which directed that subcl.
(II) be amended by striking out "or not allowed under section 28
solely by reason of the application of section 28(d)(2)(B)", could
not be executed because the phrase sought to be struck out did not
appear in text subsequent to the general amendment of subcl. (II)
by Pub. L. 104-188, Sec. 1704(j)(1), see above, which, pursuant to
section 1701 of Pub. L. 104-188, set out as a note under section 1
of this title, is treated as having been enacted before section
1205(d)(5)(B) of Pub. L. 104-188.
1993 - Subsec. (d)(1)(B)(ii)(II). Pub. L. 103-66, Sec. 13171(c),
substituted "(5), and (7)" for "(5), (6), and (8)".
Pub. L. 103-66, Sec. 13113(b)(2), substituted "(6), and (8)" for
"and (6)".
1992 - Subsec. (d)(1)(B)(iii). Pub. L. 102-486, Sec.
1913(b)(2)(C)(i), substituted "section 29(b)(6)(B)," for "section
29(b)(5)(B) or".
Pub. L. 102-486, Sec. 1913(b)(2)(C)(ii), inserted before period
at end ", or not allowed under section 30 solely by reason of the
application of section 30(b)(3)(B)".
1989 - Subsec. (d)(1)(B)(i)(II). Pub. L. 101-239, Sec.
7811(d)(2), inserted before period at end "and if section 59(a)(2)
did not apply".
Subsec. (d)(1)(B)(ii). Pub. L. 101-239, Sec. 7612(a)(2),
substituted "subsection (b)(1)" for "subsections (b)(1) and (c)(3)"
in subcl. (I) and struck out at end "In the case of taxable years
beginning after 1989, the adjustments provided in section 56(g)
shall be treated as specified in this clause to the extent
attributable to items which are excluded from gross income for any
taxable year for purposes of the regular tax, or are not deductible
for any taxable year under the adjusted current earnings method of
section 56(g)."
Subsec. (d)(1)(B)(iii). Pub. L. 101-239, Sec. 7612(b)(1), which
directed amendment of cl. (iii) by inserting "or not allowed under
section 28 solely by reason of the application of section
28(d)(2)(B)" after "section 29(d)(5)(B)", was executed by making
the insertion after "section 29(b)(5)(B)", as the probable intent
of Congress.
Subsec. (d)(1)(B)(iv). Pub. L. 101-239, Sec. 7612(b)(1), which
directed amendment of cl. (iv) by inserting "or not allowed under
section 28 solely by reason of the application of section
28(d)(2)(B)" after "section 29(d)(5)(B)", was executed by making
the insertion after "section 29(b)(5)(B)" in subcl. (II), as the
probable intent of Congress.
Pub. L. 101-239, Sec. 7612(a)(1), added cl. (iv).
1988 - Subsec. (d)(1)(B)(ii). Pub. L. 100-647, Sec. 1007(g)(4),
substituted "current earnings" for "earnings and profits" in last
sentence.
Subsec. (d)(1)(B)(iii). Pub. L. 100-647, Sec. 6304(a), added cl.
(iii).
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1205(d)(5) of Pub. L. 104-188 applicable to
amounts paid or incurred in taxable years ending after June 30,
1996, see section 1205(e) of Pub. L. 104-188, set out as a note
under section 29 of this title.
Section 1704(j)(1) of Pub. L. 104-188 provided that the amendment
made by that section is effective with respect to taxable years
beginning after Dec. 31, 1990.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13113(e) of Pub. L. 103-66 provided that: "The amendments
made by this section [enacting section 1202 of this title and
amending this section and sections 57, 172, 642, 643, 691, 871, and
6652 of this title] shall apply to stock issued after the date of
the enactment of this Act [Aug. 10, 1993]."
Section 13171(d) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 56 and 57
of this title] shall apply to contributions made after June 30,
1992, except that in the case of any contribution of capital gain
property which is not tangible personal property, such amendments
shall apply only if the contribution is made after December 31,
1992."
EFFECTIVE DATE OF 1992 AMENDMENT
Section 1702(e)(5) of Pub. L. 104-188 provided that: "The
amendment made by section 1913(b)(2)(C)(i) of the Energy Policy Act
of 1992 [Pub. L. 102-486] shall apply to taxable years beginning
after December 31, 1990."
Amendment by section 1913(b)(2)(C)(ii) of Pub. L. 102-486
applicable to property placed in service after June 30, 1993, see
section 1913(c) of Pub. L. 102-486, set out as an Effective Date
note under section 30 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7612(a)(3) of Pub. L. 101-239 provided that: "The
amendments made by this subsection [amending this section] shall
apply for purposes of determining the adjusted net minimum tax for
taxable years beginning after December 31, 1989."
Section 7612(b)(2) of Pub. L. 101-239 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
for purposes of determining the amount of the minimum tax credit
for taxable years beginning after December 31, 1989; except that,
for such purposes, section 53(b)(1) of the Internal Revenue Code of
1986 shall be applied as if such amendment had been in effect for
all prior taxable years."
Amendment by section 7811(d)(2) of Pub. L. 101-239 effective,
except as otherwise provided, as if included in the provision of
the Technical and Miscellaneous Revenue Act of 1988, Pub. L.
100-647, to which such amendment relates, see section 7817 of Pub.
L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1007(g)(4) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 6304(b) of Pub. L. 100-647 provided that: "The amendment
made by this section [amending this section] shall take effect as
if included in the amendments made by section 701 of the Tax Reform
Act of 1986 [Pub. L. 99-514]."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, with certain exceptions and qualifications, see section
701(f) of Pub. L. 99-514, set out as an Effective Date of 1986
Amendment note under section 55 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(b) of Pub. L.
99-514 [enacting this section] notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 55, 108, 381, 383, 772,
1374 of this title.
-End-
-CITE-
26 USC [PART V - REPEALED] 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
[PART V - REPEALED]
-HEAD-
[PART V - REPEALED]
-COD-
CODIFICATION
Part V, consisting of a prior section 51, was repealed by Pub. L.
94-455, title XIX, Sec. 1901(a)(7), Oct. 4, 1976, 90 Stat. 1765.
See Prior Provisions note set out under section 51 of this title.
-End-
-CITE-
26 USC PART VI - ALTERNATIVE MINIMUM TAX 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
-HEAD-
PART VI - ALTERNATIVE MINIMUM TAX
-MISC1-
Sec.
55. Alternative minimum tax imposed.
56. Adjustments in computing alternative minimum taxable
income.
57. Items of tax preference.
58. Denial of certain losses.
59. Other definitions and special rules.
-SECREF-
PART REFERRED TO IN OTHER SECTIONS
This part is referred to in sections 860E, 860J of this title.
-End-
-CITE-
26 USC Sec. 55 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
-HEAD-
Sec. 55. Alternative minimum tax imposed
-STATUTE-
(a) General rule
There is hereby imposed (in addition to any other tax imposed by
this subtitle) a tax equal to the excess (if any) of -
(1) the tentative minimum tax for the taxable year, over
(2) the regular tax for the taxable year.
(b) Tentative minimum tax
For purposes of this part -
(1) Amount of tentative tax
(A) Noncorporate taxpayers
(i) In general
In the case of a taxpayer other than a corporation, the
tentative minimum tax for the taxable year is the sum of -
(I) 26 percent of so much of the taxable excess as does
not exceed $175,000, plus
(II) 28 percent of so much of the taxable excess as
exceeds $175,000.
The amount determined under the preceding sentence shall be
reduced by the alternative minimum tax foreign tax credit for
the taxable year.
(ii) Taxable excess
For purposes of this subsection, the term "taxable excess"
means so much of the alternative minimum taxable income for
the taxable year as exceeds the exemption amount.
(iii) Married individual filing separate return
In the case of a married individual filing a separate
return, clause (i) shall be applied by substituting "$87,500"
for "$175,000" each place it appears. For purposes of the
preceding sentence, marital status shall be determined under
section 7703.
(B) Corporations
In the case of a corporation, the tentative minimum tax for
the taxable year is -
(i) 20 percent of so much of the alternative minimum
taxable income for the taxable year as exceeds the exemption
amount, reduced by
(ii) the alternative minimum tax foreign tax credit for the
taxable year.
(2) Alternative minimum taxable income
The term "alternative minimum taxable income" means the taxable
income of the taxpayer for the taxable year -
(A) determined with the adjustments provided in section 56
and section 58, and
(B) increased by the amount of the items of tax preference
described in section 57.
If a taxpayer is subject to the regular tax, such taxpayer shall
be subject to the tax imposed by this section (and, if the
regular tax is determined by reference to an amount other than
taxable income, such amount shall be treated as the taxable
income of such taxpayer for purposes of the preceding sentence).
(3) Maximum rate of tax on net capital gain of noncorporate
taxpayers
The amount determined under the first sentence of paragraph
(1)(A)(i) shall not exceed the sum of -
(A) the amount determined under such first sentence computed
at the rates and in the same manner as if this paragraph had
not been enacted on the taxable excess reduced by the lesser of
-
(i) the net capital gain; or
(ii) the sum of -
(I) the adjusted net capital gain, plus
(II) the unrecaptured section 1250 gain, plus
(B) 5 percent (0 percent in the case of taxable years
beginning after 2007) of so much of the adjusted net capital
gain (or, if less, taxable excess) as does not exceed the
amount on which a tax is determined under section 1(h)(1)(B),
plus
(C) 15 percent of the adjusted net capital gain (or, if less,
taxable excess) in excess of the amount on which tax is
determined under subparagraph (B), plus
(D) 25 percent of the amount of taxable excess in excess of
the sum of the amounts on which tax is determined under the
preceding subparagraphs of this paragraph.
Terms used in this paragraph which are also used in section 1(h)
shall have the respective meanings given such terms by section
1(h) but computed with the adjustments under this part.
(c) Regular tax
(1) In general
For purposes of this section, the term "regular tax" means the
regular tax liability for the taxable year (as defined in section
26(b)) reduced by the foreign tax credit allowable under section
27(a), the section 936 credit allowable under section 27(b), and
the Puerto Rico economic activity credit under section 30A. Such
term shall not include any increase in tax under section 49(b) or
50(a) or subsection (j) or (k) of section 42.
(2) Cross references
For provisions providing that certain credits are not
allowable against the tax imposed by this section, see sections
26(a), 29(b)(6), 30(b)(3), and 38(c).
(d) Exemption amount
For purposes of this section -
(1) Exemption amount for taxpayers other than corporations
In the case of a taxpayer other than a corporation, the term
"exemption amount" means -
(A) $45,000 ($58,000 in the case of taxable years beginning
in 2003 and 2004) in the case of -
(i) a joint return, or
(ii) a surviving spouse,
(B) $33,750 ($40,250 in the case of taxable years beginning
in 2003 and 2004) in the case of an individual who -
(i) is not a married individual, and
(ii) is not a surviving spouse,
(C) 50 percent of the dollar amount applicable under
paragraph (1)(A) in the case of a married individual who files
a separate return, and
(D) $22,500 in the case of an estate or trust.
For purposes of this paragraph, the term "surviving spouse" has
the meaning given to such term by section 2(a), and marital
status shall be determined under section 7703.
(2) Corporations
In the case of a corporation, the term "exemption amount" means
$40,000.
(3) Phase-out of exemption amount
The exemption amount of any taxpayer shall be reduced (but not
below zero) by an amount equal to 25 percent of the amount by
which the alternative minimum taxable income of the taxpayer
exceeds -
(A) $150,000 in the case of a taxpayer described in paragraph
(1)(A) or (2),
(B) $112,500 in the case of a taxpayer described in paragraph
(1)(B), and
(C) $75,000 in the case of a taxpayer described in
subparagraph (C) or (D) of paragraph (1).
In the case of a taxpayer described in paragraph (1)(C),
alternative minimum taxable income shall be increased by the
lesser of (i) 25 percent of the excess of alternative minimum
taxable income (determined without regard to this sentence) over
the minimum amount of such income (as so determined) for which
the exemption amount under paragraph (1)(C) is zero, or (ii) such
exemption amount (determined without regard to this paragraph).
(e) Exemption for small corporations
(1) In general
(A) $7,500,000 gross receipts test
The tentative minimum tax of a corporation shall be zero for
any taxable year if the corporation's average annual gross
receipts for all 3-taxable-year periods ending before such
taxable year does not exceed $7,500,000. For purposes of the
preceding sentence, only taxable years beginning after December
31, 1993, shall be taken into account.
(B) $5,000,000 gross receipts test for first 3-year period
Subparagraph (A) shall be applied by substituting
"$5,000,000" for "$7,500,000" for the first 3-taxable-year
period (or portion thereof) of the corporation which is taken
into account under subparagraph (A).
(C) First taxable year corporation in existence
If such taxable year is the first taxable year that such
corporation is in existence, the tentative minimum tax of such
corporation for such year shall be zero.
(D) Special rules
For purposes of this paragraph, the rules of paragraphs (2)
and (3) of section 448(c) shall apply.
(2) Prospective application of minimum tax if small corporation
ceases to be small
In the case of a corporation whose tentative minimum tax is
zero for any prior taxable year by reason of paragraph (1), the
application of this part for taxable years beginning with the
first taxable year such corporation ceases to be described in
paragraph (1) shall be determined with the following
modifications:
(A) Section 56(a)(1) (relating to depreciation) and section
56(a)(5) (relating to pollution control facilities) shall apply
only to property placed in service on or after the change date.
(B) Section 56(a)(2) (relating to mining exploration and
development costs) shall apply only to costs paid or incurred
on or after the change date.
(C) Section 56(a)(3) (relating to treatment of long-term
contracts) shall apply only to contracts entered into on or
after the change date.
(D) Section 56(a)(4) (relating to alternative net operating
loss deduction) shall apply in the same manner as if, in
section 56(d)(2), the change date were substituted for "January
1, 1987" and the day before the change date were substituted
for "December 31, 1986" each place it appears.
(E) Section 56(g)(2)(B) (relating to limitation on allowance
of negative adjustments based on adjusted current earnings)
shall apply only to prior taxable years beginning on or after
the change date.
(F) Section 56(g)(4)(A) (relating to adjustment for
depreciation to adjusted current earnings) shall not apply.
(G) Subparagraphs (D) and (F) of section 56(g)(4) (relating
to other earnings and profits adjustments and depletion) shall
apply in the same manner as if the day before the change date
were substituted for "December 31, 1989" each place it appears
therein.
(3) Exception
The modifications in paragraph (2) shall not apply to -
(A) any item acquired by the corporation in a transaction to
which section 381 applies, and
(B) any property the basis of which in the hands of the
corporation is determined by reference to the basis of the
property in the hands of the transferor,
if such item or property was subject to any provision referred to
in paragraph (2) while held by the transferor.
(4) Change date
For purposes of paragraph (2), the change date is the first day
of the first taxable year for which the taxpayer ceases to be
described in paragraph (1).
(5) Limitation on use of credit for prior year minimum tax
liability
In the case of a taxpayer whose tentative minimum tax for any
taxable year is zero by reason of paragraph (1), section 53(c)
shall be applied for such year by reducing the amount otherwise
taken into account under section 53(c)(1) by 25 percent of so
much of such amount as exceeds $25,000. Rules similar to the
rules of section 38(c)(3)(B) (!1) shall apply for purposes of the
preceding sentence.
-SOURCE-
(Added and amended Pub. L. 99-514, title II, Sec. 252(c), title
VII, Sec. 701(a), Oct. 22, 1986, 100 Stat. 2205, 2321; Pub. L.
100-647, title I, Secs. 1002(l)(27), 1007(a), Nov. 10, 1988, 102
Stat. 3381, 3428; Pub. L. 101-508, title XI, Secs. 11102(a),
11813(b)(5), Nov. 5, 1990, 104 Stat. 1388-406, 1388-551; Pub. L.
102-318, title V, Sec. 521(b)(1), July 3, 1992, 106 Stat. 310; Pub.
L. 102-486, title XIX, Sec. 1913(b)(2)(D), Oct. 24, 1992, 106 Stat.
3020; Pub. L. 103-66, title XIII, Sec. 13203(a)-(c)(1), Aug. 10,
1993, 107 Stat. 461, 462; Pub. L. 104-188, title I, Secs.
1205(d)(6), 1401(b)(3), 1601(b)(2)(A), Aug. 20, 1996, 110 Stat.
1776, 1788, 1832; Pub. L. 105-34, title III, Sec. 311(b)(1),
(2)(A), title IV, Sec. 401(a), title XVI, Sec. 1601(f)(1)(C), Aug.
5, 1997, 111 Stat. 834, 835, 843, 1090; Pub. L. 105-206, title VI,
Secs. 6005(d)(2), 6006(a), July 22, 1998, 112 Stat. 804, 806; Pub.
L. 107-16, title VII, Sec. 701(a), (b), June 7, 2001, 115 Stat.
148; Pub. L. 108-27, title I, Sec. 106(a), title III, Sec.
301(a)(1), (2)(B), (b)(2), May 28, 2003, 117 Stat. 755, 758.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by sections 107 and 303 of Pub. L.
108-27, see Effective and Termination Dates of 2003 Amendment notes
below.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
Section 38(c)(3)(B), referred to in subsec. (e)(5), was
redesignated section 38(c)(4)(B) by Pub. L. 107-147, title III,
Sec. 301(b)(1), Mar. 9, 2002, 116 Stat. 39.
-MISC1-
PRIOR PROVISIONS
A prior section 55, Pub. L. 95-600, title IV, Sec. 421(a), Nov.
6, 1978, 92 Stat. 2871; amended Pub. L. 96-222, title I, Sec.
104(a)(4)(A)-(D), (G), (H)(i), (ii), (viii), Apr. 1, 1980, 94 Stat.
215-218; Pub. L. 96-223, title II, Sec. 232(b)(2)(A), (c)(2), Apr.
2, 1980, 94 Stat. 276, 277; Pub. L. 96-603, Sec. 4(a), (b), Dec.
28, 1980, 94 Stat. 3513, 3514; Pub. L. 97-34, title I, Sec.
101(d)(1), title II, Sec. 221(b)(1)(A), title III, Sec.
331(d)(1)(A), Aug. 13, 1981, 95 Stat. 183, 246, 294; Pub. L.
97-248, title II, Sec. 201(a), Sept. 3, 1982, 96 Stat. 411; Pub. L.
97-354, Sec. 5(a)(13), Oct. 19, 1982, 96 Stat. 1693; Pub. L.
97-448, title I, Sec. 103(g)(2)(E), title III, Secs. 305(c),
306(a)(1)(B), (C), Jan. 12, 1983, 96 Stat. 2379, 2399, 2400; Pub.
L. 98-369, div. A, title IV, Secs. 474(q), 491(d)(1), title VI,
Sec. 612(e)(3), title VII, Sec. 711(a)(1), (4), (5), July 18, 1984,
98 Stat. 838, 849, 912, 942, 943; Pub. L. 99-514, title XVIII, Sec.
1847(a), Oct. 22, 1986, 100 Stat. 2856, related to alternative
minimum tax for taxpayers other than corporations, prior to the
general revision of this part by Pub. L. 99-514, Sec. 701(a).
AMENDMENTS
2003 - Subsec. (b)(3). Pub. L. 108-27, Secs. 301(b)(2), 303,
temporarily struck out first sentence of concluding provisions
which read as follows: "In the case of taxable years beginning
after December 31, 2000, rules similar to the rules of section
1(h)(2) shall apply for purposes of subparagraphs (B) and (C)." See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (b)(3)(B). Pub. L. 108-27, Secs. 301(a)(1), 303,
temporarily substituted "5 percent (0 percent in the case of
taxable years beginning after 2007)" for "10 percent". See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (b)(3)(C). Pub. L. 108-27, Secs. 301(a)(2)(B), 303,
temporarily substituted "15 percent" for "20 percent". See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (d)(1)(A). Pub. L. 108-27, Secs. 106(a)(1), 107,
temporarily substituted "$58,000 in the case of taxable years
beginning in 2003 and 2004" for "$49,000 in the case of taxable
years beginning in 2001, 2002, 2003, and 2004". See Effective and
Termination Dates of 2003 Amendment note below.
Subsec. (d)(1)(B). Pub. L. 108-27, Secs. 106(a)(2), 107,
temporarily substituted "$40,250 in the case of taxable years
beginning in 2003 and 2004" for "$35,750 in the case of taxable
years beginning in 2001, 2002, 2003, and 2004". See Effective and
Termination Dates of 2003 Amendment note below.
2001 - Subsec. (d)(1)(A). Pub. L. 107-16, Secs. 701(a)(1), 901,
temporarily substituted "$45,000 ($49,000 in the case of taxable
years beginning in 2001, 2002, 2003, and 2004)" for "$45,000" in
introductory provisions. See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (d)(1)(B). Pub. L. 107-16, Secs. 701(b)(1), 901,
temporarily struck out "and" at end. See Effective and Termination
Dates of 2001 Amendment note below.
Pub. L. 107-16, Secs. 701(a)(2), 901, temporarily substituted
"$33,750 ($35,750 in the case of taxable years beginning in 2001,
2002, 2003, and 2004)" for "$33,750" in introductory provisions.
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (d)(1)(C), (D). Pub. L. 107-16, Secs. 701(b)(1), 901,
temporarily added subpars. (C) and (D) and struck out former
subpar. (C) which read as follows: "$22,500 in the case of -
"(i) a married individual who files a separate return, or
"(ii) an estate or trust." See Effective and Termination Dates
of 2001 Amendment note below.
Subsec. (d)(3). Pub. L. 107-16, Secs. 701(b)(3), 901, in
concluding provisions, temporarily substituted "paragraph (1)(C)"
for "paragraph (1)(C)(i)" and "the minimum amount of such income
(as so determined) for which the exemption amount under paragraph
(1)(C) is zero, or (ii) such exemption amount (determined without
regard to this paragraph)" for "$165,000 or (ii) $22,500". See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (d)(3)(C). Pub. L. 107-16, Secs. 701(b)(2), 901,
temporarily substituted "subparagraph (C) or (D) of paragraph (1)"
for "paragraph (1)(C)". See Effective and Termination Dates of 2001
Amendment note below.
1998 - Subsec. (b)(3). Pub. L. 105-206, Sec. 6005(d)(2),
reenacted par. heading without change and amended text of par. (3)
generally. Prior to amendment, text read as follows: "The amount
determined under the first sentence of paragraph (1)(A)(i) shall
not exceed the sum of -
"(A) the amount determined under such first sentence computed
at the rates and in the same manner as if this paragraph had not
been enacted on the taxable excess reduced by the lesser of -
"(i) the net capital gain, or
"(ii) the sum of -
"(I) the adjusted net capital gain, plus
"(II) the unrecaptured section 1250 gain, plus
"(B) 25 percent of the lesser of -
"(i) the unrecaptured section 1250 gain, or
"(ii) the amount of taxable excess in excess of the sum of -
"(I) the adjusted net capital gain, plus
"(II) the amount on which a tax is determined under
subparagraph (A), plus
"(C) 10 percent of so much of the taxpayer's adjusted net
capital gain (or, if less, taxable excess) as does not exceed the
amount on which a tax is determined under section 1(h)(1)(D),
plus
"(D) 20 percent of the taxpayer's adjusted net capital gain
(or, if less, taxable excess) in excess of the amount on which
tax is determined under subparagraph (C).
In the case of taxable years beginning after December 31, 2000,
rules similar to the rules of section 1(h)(2) shall apply for
purposes of subparagraphs (C) and (D). Terms used in this paragraph
which are also used in section 1(h) shall have the respective
meanings given such terms by section 1(h)."
Subsec. (e)(1). Pub. L. 105-206, Sec. 6006(a), reenacted par.
heading without change and amended text of par. (1) generally.
Prior to amendment, text read as follows: "The tentative minimum
tax of a corporation shall be zero for any taxable year if -
"(A) such corporation met the $5,000,000 gross receipts test of
section 448(c) for its first taxable year beginning after
December 31, 1996, and
"(B) such corporation would meet such test for the taxable year
and all prior taxable years beginning after such first taxable
year if such test were applied by substituting '$7,500,000' for
'$5,000,000'."
1997 - Subsec. (b)(1)(A)(ii). Pub. L. 105-34, Sec. 311(b)(2)(A),
substituted "this subsection" for "clause (i)".
Subsec. (b)(3). Pub. L. 105-34, Sec. 311(b)(1), added par. (3).
Subsec. (c)(1). Pub. L. 105-34, Sec. 1601(f)(1)(C), substituted
"Puerto Rico" for "Puerto Rican".
Subsec. (e). Pub. L. 105-34, Sec. 401(a), added subsec. (e).
1996 - Subsec. (c)(1). Pub. L. 104-188, Sec. 1601(b)(2)(A),
substituted ", the section 936 credit allowable under section
27(b), and the Puerto Rican economic activity credit under section
30A" for "and the section 936 credit allowable under section
27(b)".
Pub. L. 104-188, Sec. 1401(b)(3), struck out "shall not include
any tax imposed by section 402(d) and" before "shall not include
any increase in tax under section 49(b)".
Subsec. (c)(2). Pub. L. 104-188, Sec. 1205(d)(6), struck out
"28(d)(2)," after "26(a),".
1993 - Subsec. (b)(1). Pub. L. 103-66, Sec. 13203(a), amended
heading and text of par. (1) generally. Prior to amendment, text
read as follows: "The tentative minimum tax for the taxable year is
-
"(A) 20 percent (24 percent in the case of a taxpayer other
than a corporation) of so much of the alternative minimum taxable
income for the taxable year as exceeds the exemption amount,
reduced by
"(B) the alternative minimum tax foreign tax credit for the
taxable year."
Subsec. (d)(1). Pub. L. 103-66, Sec. 13203(b), substituted
"$45,000" for "$40,000" in subpar. (A), "$33,750" for "$30,000" in
subpar. (B), and "$22,500" for "$20,000" in subpar. (C).
Subsec. (d)(3). Pub. L. 103-66, Sec. 13203(c)(1), substituted
"$165,000 or (ii) $22,500" for "$155,000 or (ii) $20,000" in last
sentence.
1992 - Subsec. (c)(1). Pub. L. 102-318 substituted "402(d)" for
"402(e)".
Subsec. (c)(2). Pub. L. 102-486 substituted "29(b)(6), 30(b)(3),"
for "29(b)(5),".
1990 - Subsec. (b)(1)(A). Pub. L. 101-508, Sec. 11102(a),
substituted "24 percent" for "21 percent".
Subsec. (c)(1). Pub. L. 101-508, Sec. 11813(b)(5), substituted
"section 49(b) or 50(a)" for "section 47".
1988 - Subsec. (b)(2). Pub. L. 100-647, Sec. 1007(a)(2), inserted
at end "If a taxpayer is subject to the regular tax, such taxpayer
shall be subject to the tax imposed by this section (and, if the
regular tax is determined by reference to an amount other than
taxable income, such amount shall be treated as the taxable income
of such taxpayer for purposes of the preceding sentence)."
Subsec. (c)(1). Pub. L. 100-647, Sec. 1007(a)(1), inserted "and
the section 936 credit allowable under section 27(b)" before period
at end of first sentence.
Pub. L. 100-647, Sec. 1002(l)(27), substituted "subsection (j) or
(k) of section 42" for "section 42(j)".
Subsec. (d)(3). Pub. L. 100-647, Sec. 1007(a)(3), inserted at end
"In the case of a taxpayer described in paragraph (1)(C)(i),
alternative minimum taxable income shall be increased by the lesser
of (i) 25 percent of the excess of alternative minimum taxable
income (determined without regard to this sentence) over $155,000,
or (ii) $20,000."
1986 - Subsec. (c)(1). Pub. L. 99-514, Sec. 252(c), inserted "or
section 42(j)".
EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT
Pub. L. 108-27, title I, Sec. 106(b), May 28, 2003, 117 Stat.
755, provided that: "The amendments made by subsection (a)
[amending this section] shall apply to taxable years beginning
after December 31, 2002."
Amendment by section 106(a) of Pub. L. 108-27 subject to title IX
of the Economic Growth and Tax Relief Reconciliation Act of 2001,
Pub. L. 107-16, Sec. 901, to the same extent and in the same manner
as the provision of such Act to which such amendment relates, see
section 107 of Pub. L. 108-27, set out as a note under section 1 of
this title.
Amendment by section 301(a)(1), (2)(B), (b)(2) of Pub. L. 108-27
applicable to taxable years ending on or after May 6, 2003, see
section 301(d) of Pub. L. 108-27, set out as a note under section 1
of this title.
Amendment by section 301(a)(1), (2)(B), (b)(2) of Pub. L. 108-27
inapplicable to taxable years beginning after Dec. 31, 2008, and
the Internal Revenue Code of 1986 to be applied and administered to
such years as if such amendment had never been enacted, see section
303 of Pub. L. 108-27, set out as a note under section 1 of this
title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title VII, Sec. 701(c), June 7, 2001, 115 Stat.
148, provided that: "The amendments made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2000."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by section 311(b)(1), (2)(A) of Pub. L. 105-34
applicable to taxable years ending after May 6, 1997, see section
311(d) of Pub. L. 105-34, set out as a note under section 1 of this
title.
Section 401(b) of Pub. L. 105-34 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1997."
Amendment by section 1601(f)(1)(C) of Pub. L. 105-34 effective as
if included in the provisions of the Small Business Job Protection
Act of 1996, Pub. L. 104-188, to which it relates, see section
1601(j) of Pub. L. 105-34, set out as a note under section 23 of
this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1205(d)(6) of Pub. L. 104-188 applicable to
amounts paid or incurred in taxable years ending after June 30,
1996, see section 1205(e) of Pub. L. 104-188, set out as a note
under section 29 of this title.
Amendment by section 1401(b)(3) of Pub. L. 104-188 applicable to
taxable years beginning after Dec. 31, 1999, with retention of
certain transition rules, see section 1401(c) of Pub. L. 104-188,
set out as a note under section 402 of this title.
Amendment by section 1601(b)(2)(A) of Pub. L. 104-188 applicable
to taxable years beginning after Dec. 31, 1995, except as otherwise
provided, see section 1601(c) of Pub. L. 104-188, set out as an
Effective Date note under section 30A of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13203(d) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and section 897 of this
title] shall apply to taxable years beginning after December 31,
1992."
EFFECTIVE DATE OF 1992 AMENDMENTS
Amendment by Pub. L. 102-486 applicable to property placed in
service after June 30, 1993, see section 1913(c) of Pub. L.
102-486, set out as an Effective Date note under section 30 of this
title.
Amendment by Pub. L. 102-318 applicable to distributions after
Dec. 31, 1992, see section 521(e) of Pub. L. 102-318, set out as a
note under section 402 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11102(b) of Pub. L. 101-508 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1990."
Amendment by section 11813(b)(5) of Pub. L. 101-508 applicable to
property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this
title), any property with respect to which qualified progress
expenditures were previously taken into account under section 46(d)
of this title, and any property described in section 46(b)(2)(C) of
this title, as such sections were in effect on Nov. 4, 1990, see
section 11813(c) of Pub. L. 101-508, set out as a note under
section 29 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1002(l)(27) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 1007(a)(3) of Pub. L. 100-647 provided that the amendment
made by that section is effective with respect to taxable years
ending after Nov. 10, 1988.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to buildings placed in
service after Dec. 31, 1986, in taxable years ending after such
date, see section 252(e) of Pub. L. 99-514, set out as an Effective
Date note under section 42 of this title.
EFFECTIVE DATE
Section 701(f) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1007(f)(2), (3), Nov. 10, 1988, 102 Stat. 3433,
provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [enacting this
section and sections 53 and 56 to 59 of this title and amending
sections 5, 12, 26, 28, 29, 38, 48, 173, 174, 263, 381, 443, 703,
882, 897, 904, 936, 1016, 1363, 1366, 1561, 6154, 6425, and 6655 of
this title] shall apply to taxable years beginning after December
31, 1986.
"(2) Adjustment of net operating loss. -
"(A) Individuals. - In the case of a net operating loss of an
individual for a taxable year beginning after December 31, 1982,
and before January 1, 1987, for purposes of determining the
amount of such loss which may be carried to a taxable year
beginning after December 31, 1986, for purposes of the minimum
tax, such loss shall be adjusted in the manner provided in
section 55(d)(2) of the Internal Revenue Code of 1954 [now 1986]
as in effect on the day before the date of the enactment of this
Act [Oct. 22, 1986].
"(B) Corporations. - If the minimum tax of a corporation was
deferred under section 56(b) of the Internal Revenue Code of 1954
[now 1986] (as in effect on the day before the date of the
enactment of this Act [Oct. 22, 1986]) for any taxable year
beginning before January 1, 1987, and the amount of such tax has
not been paid for any taxable year beginning before January 1,
1987, the amount of the net operating loss carryovers of such
corporation which may be carried to taxable years beginning after
December 31, 1986, for purposes of the minimum tax shall be
reduced by the amount of tax preferences a tax on which was so
deferred.
"(3) Installment sales. - Section 56(a)(6) of the Internal
Revenue Code of 1986 (as amended by this section) shall not apply
to any disposition to which the amendments made by section 811 of
this Act [enacting section 453C of this title] (relating to
allocation of dealer's indebtedness to installment obligations) do
not apply by reason of section 811(c)(2) of this Act [enacting
provisions set out as a note under section 453C of this title].
"(4) Exception for charitable contributions before august 16,
1986. - Section 57(a)(6) of the Internal Revenue Code of 1986 (as
amended by this section) shall not apply to any deduction
attributable to contributions made before August 16, 1986.
"(5) Book income. -
"(A) In general. - In the case of a corporation to which this
paragraph applies, the amount of any increase for any taxable
year under section 56(c)(1)(A) of the Internal Revenue Code of
1986 (as added by this section) shall be reduced (but not below
zero) by the excess (if any) of -
"(i) 50 percent of the excess of taxable income for the
5-taxable year period ending with the taxable year preceding
the 1st taxable year to which such section applies over the
adjusted net book income for such period, over
"(ii) the aggregate amounts taken into account under this
paragraph for preceding taxable years.
"(B) Taxpayer to whom paragraph applies. - This paragraph
applies to a taxpayer which was incorporated in Delaware on May
31, 1912.
"(C) Terms. - Any term used in this paragraph which is used in
section 56 of such Code (as so added) shall have the same meaning
as when used in such section.
"(6) Certain public utility. -
"(A) In the case of investment tax credits described in
subparagraph (B) or (C), subsection 38(c)(3)(A)(ii) of the
Internal Revenue Code of 1986 shall be applied by substituting
'25 percent' for '75 percent', and section 38(c)(3)(B) of the
Internal Revenue Code of 1986 shall be applied by substituting
'75 percent' for '25 percent'.
"(B) If, on September 25, 1985, a regulated electric utility
owned an undivided interest, within the range of 1,111 and 1,149,
in the 'maximum dependable capacity, net, megawatts electric' of
an electric generating unit located in Illinois or Mississippi
for which a binding written contract was in effect on December
31, 1980, then any investment tax credit with respect to such
unit shall be described in this subparagraph. The aggregate
amount of investment tax credits with respect to the unit in
Mississippi allowed solely by reason of being described in this
subparagraph shall not exceed $141,000,000.
"(C) If, on September 25, 1985, a regulated electric utility
owned an undivided interest, within the range of 1,104 and 1,111,
in the 'maximum dependable capacity, net, megawatts electric' of
an electric generating unit located in Louisiana for which a
binding written contract was in effect on December 31, 1980, then
any investment tax credit of such electric utility shall be
described in this subparagraph. The aggregate amount of
investment tax credits allowed solely by reason of being
described by this subparagraph shall not exceed $20,000,000.
"(7) Agreement vessel depreciation adjustment. -
"(A) For purposes of part VI of subchapter A of chapter 1 of
the Internal Revenue Code of 1986, in the case of a qualified
taxpayer, alternative minimum taxable income for the taxable year
shall be reduced by an amount equal to the agreement vessel
depreciation adjustment.
"(B) For purposes of this paragraph, the agreement vessel
depreciation adjustment shall be an amount equal to the
depreciation deduction that would have been allowable for such
year under section 167 of such Code with respect to agreement
vessels placed in service before January 1, 1987, if the basis of
such vessels had not been reduced under section 607 of the
Merchant Marine Act of 1936 [46 App. U.S.C. 1177], as amended,
and if depreciation with respect to such vessel had been computed
using the 25-year straight-line method. The aggregate amount by
which basis of a qualified taxpayer is treated as not reduced by
reason of this subparagraph shall not exceed $100,000,000.
"(C) For purposes of this paragraph, the term 'qualified
taxpayer' means a parent corporation incorporated in the State of
Delaware on December 1, 1972, and engaged in water
transportation, and includes any other corporation which is a
member of the affiliated group of which the parent corporation is
the common parent. No taxpayer shall be treated as a qualified
corporation for any taxable year beginning after December 31,
1991."
SAVINGS PROVISION
For provisions that nothing in amendment by section 11813(b)(5)
of Pub. L. 101-508 be construed to affect treatment of certain
transactions occurring, property acquired, or items of income,
loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
TRANSITIONAL PROVISIONS
Section 1007(f)(1) of Pub. L. 100-647 provided that: "In the case
of the taxable year of an estate or trust which begins before
January 1, 1987, and ends on or after such date, the items of tax
preference apportioned to any beneficiary of such estate or trust
under section 58(c) of the Internal Revenue Code of 1954 (as in
effect on the day before the date of the enactment of the Tax
Reform Act of 1986 [Oct. 22, 1986]) shall be taken into account for
purposes of determining the amount of the tax imposed by section 55
of the Internal Revenue Code of 1986 (as amended by the Tax Reform
Act of 1986 [Pub. L. 99-514]) on such beneficiary for such
beneficiary's taxable year in which such taxable year of the estate
or trust ends."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998
For provisions directing that if any amendments made by subtitle
D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
amendment to any plan or annuity contract, such amendment shall not
be required to be made before the first day of the first plan year
beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104-188, set out as a note under section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994
For provisions directing that if any amendments made by subtitle
B [Secs. 521-523] of title V of Pub. L. 102-318 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1994, see section 523 of Pub. L. 102-318, set out as a note under
section 401 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(a) of Pub. L.
99-514 [enacting this section] notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
HIGH INCOME TAXPAYER REPORT
Section 2123 of Pub. L. 94-455, as amended by Pub. L. 98-369,
div. A, title IV, Sec. 441(b)(1), July 18, 1984, 98 Stat. 815,
provided that: "The Secretary of the Treasury shall publish
annually information on the amount of tax paid by individual
taxpayers with high total incomes. Total income for this purpose is
to be calculated and set forth by adding to adjusted gross income
any items of tax preference excluded from, or deducted in arriving
at, adjusted gross income, and by subtracting any investment
expenses incurred in the production of such income to the extent of
the investment income. These data are to include the number of such
individuals with total income over $200,000 who owe no Federal
income tax (after credits) and the deductions, exclusions, or
credits used by them to avoid tax."
[Section 441(b)(2) of Pub. L. 98-369 provided that: "The
amendment made by paragraph (1) [amending section 2123 of Pub. L.
94-455, set out above] shall apply to information published after
the date of the enactment of this Act [July 18, 1984]."]
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 2, 5, 11, 12, 23, 24,
25B, 26, 38, 45A, 45D, 45F, 53, 59, 59A, 168, 443, 641, 666, 815,
847, 860E, 860J, 871, 877, 882, 897, 962, 1260, 1397E, 1400I, 1561,
6015, 6425, 6428, 6655, 6662 of this title.
-FOOTNOTE-
(!1) See References in Text note below.
-End-
-CITE-
26 USC Sec. 56 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
-HEAD-
Sec. 56. Adjustments in computing alternative minimum taxable
income
-STATUTE-
(a) Adjustments applicable to all taxpayers
In determining the amount of the alternative minimum taxable
income for any taxable year the following treatment shall apply (in
lieu of the treatment applicable for purposes of computing the
regular tax):
(1) Depreciation
(A) In general
(i) Property other than certain personal property
Except as provided in clause (ii), the depreciation
deduction allowable under section 167 with respect to any
tangible property placed in service after December 31, 1986,
shall be determined under the alternative system of section
168(g). In the case of property placed in service after
December 31, 1998, the preceding sentence shall not apply but
clause (ii) shall continue to apply.
(ii) 150-percent declining balance method for certain
property
The method of depreciation used shall be -
(I) the 150 percent declining balance method,
(II) switching to the straight line method for the 1st
taxable year for which using the straight line method with
respect to the adjusted basis as of the beginning of the
year will yield a higher allowance.
The preceding sentence shall not apply to any section 1250
property (as defined in section 1250(c)) (and the straight
line method shall be used for such section 1250 property) or
to any other property if the depreciation deduction
determined under section 168 with respect to such other
property for purposes of the regular tax is determined by
using the straight line method.
(B) Exception for certain property
This paragraph shall not apply to property described in
paragraph (1), (2), (3), or (4) of section 168(f).
(C) Coordination with transitional rules
(i) In general
This paragraph shall not apply to property placed in
service after December 31, 1986, to which the amendments made
by section 201 of the Tax Reform Act of 1986 do not apply by
reason of section 203, 204, or 251(d) of such Act.
(ii) Treatment of certain property placed in service before
1987
This paragraph shall apply to any property to which the
amendments made by section 201 of the Tax Reform Act of 1986
apply by reason of an election under section 203(a)(1)(B) of
such Act without regard to the requirement of subparagraph
(A) that the property be placed in service after December 31,
1986.
(D) Normalization rules
With respect to public utility property described in section
168(i)(10), the Secretary shall prescribe the requirements of a
normalization method of accounting for this section.
(2) Mining exploration and development costs
(A) In general
With respect to each mine or other natural deposit (other
than an oil, gas, or geothermal well) of the taxpayer, the
amount allowable as a deduction under section 616(a) or 617(a)
(determined without regard to section 291(b)) in computing the
regular tax for costs paid or incurred after December 31, 1986,
shall be capitalized and amortized ratably over the 10-year
period beginning with the taxable year in which the
expenditures were made.
(B) Loss allowed
If a loss is sustained with respect to any property described
in subparagraph (A), a deduction shall be allowed for the
expenditures described in subparagraph (A) for the taxable year
in which such loss is sustained in an amount equal to the
lesser of -
(i) the amount allowable under section 165(a) for the
expenditures if they had remained capitalized, or
(ii) the amount of such expenditures which have not
previously been amortized under subparagraph (A).
(3) Treatment of certain long-term contracts
In the case of any long-term contract entered into by the
taxpayer on or after March 1, 1986, the taxable income from such
contract shall be determined under the percentage of completion
method of accounting (as modified by section 460(b)). For
purposes of the preceding sentence, in the case of a contract
described in section 460(e)(1), the percentage of the contract
completed shall be determined under section 460(b)(1) by using
the simplified procedures for allocation of costs prescribed
under section 460(b)(3). The first sentence of this paragraph
shall not apply to any home construction contract (as defined in
section 460(e)(6)).
(4) Alternative tax net operating loss deduction
The alternative tax net operating loss deduction shall be
allowed in lieu of the net operating loss deduction allowed under
section 172.
(5) Pollution control facilities
In the case of any certified pollution control facility placed
in service after December 31, 1986, the deduction allowable under
section 169 (without regard to section 291) shall be determined
under the alternative system of section 168(g). In the case of
such a facility placed in service after December 31, 1998, such
deduction shall be determined under section 168 using the
straight line method.
(6) Adjusted basis
The adjusted basis of any property to which paragraph (1) or
(5) applies (or with respect to which there are any expenditures
to which paragraph (2) or subsection (b)(2) applies) shall be
determined on the basis of the treatment prescribed in paragraph
(1), (2), or (5), or subsection (b)(2), whichever applies.
(7) Section 87 not applicable
Section 87 (relating to alcohol fuel credit) shall not apply.
(b) Adjustments applicable to individuals
In determining the amount of the alternative minimum taxable
income of any taxpayer (other than a corporation), the following
treatment shall apply (in lieu of the treatment applicable for
purposes of computing the regular tax):
(1) Limitation on deductions
(A) In general
No deduction shall be allowed -
(i) for any miscellaneous itemized deduction (as defined in
section 67(b)), or
(ii) for any taxes described in paragraph (1), (2), or (3)
of section 164(a).
Clause (ii) shall not apply to any amount allowable in
computing adjusted gross income.
(B) Medical expenses
In determining the amount allowable as a deduction under
section 213, subsection (a) of section 213 shall be applied by
substituting "10 percent" for "7.5 percent".
(C) Interest
In determining the amount allowable as a deduction for
interest, subsections (d) and (h) of section 163 shall apply,
except that -
(i) in lieu of the exception under section 163(h)(2)(D),
the term "personal interest" shall not include any qualified
housing interest (as defined in subsection (e)),
(ii) sections 163(d)(6) and 163(h)(5) (relating to
phase-ins) shall not apply,
(iii) interest on any specified private activity bond (and
any amount treated as interest on a specified private
activity bond under section 57(a)(5)(B)), and any deduction
referred to in section 57(a)(5)(A), shall be treated as
includible in gross income (or as deductible) for purposes of
applying section 163(d),
(iv) in lieu of the exception under section
163(d)(3)(B)(i), the term "investment interest" shall not
include any qualified housing interest (as defined in
subsection (e)), and
(v) the adjustments of this section and sections 57 and 58
shall apply in determining net investment income under
section 163(d).
(D) Treatment of certain recoveries
No recovery of any tax to which subparagraph (A)(ii) applied
shall be included in gross income for purposes of determining
alternative minimum taxable income.
(E) Standard deduction and deduction for personal exemptions
not allowed
The standard deduction under section 63(c), the deduction for
personal exemptions under section 151, and the deduction under
section 642(b) shall not be allowed.
(F) Section 68 not applicable
Section 68 shall not apply.
(2) Circulation and research and experimental expenditures
(A) In general
The amount allowable as a deduction under section 173 or
174(a) in computing the regular tax for amounts paid or
incurred after December 31, 1986, shall be capitalized and -
(i) in the case of circulation expenditures described in
section 173, shall be amortized ratably over the 3-year
period beginning with the taxable year in which the
expenditures were made, or
(ii) in the case of research and experimental expenditures
described in section 174(a), shall be amortized ratably over
the 10-year period beginning with the taxable year in which
the expenditures were made.
(B) Loss allowed
If a loss is sustained with respect to any property described
in subparagraph (A), a deduction shall be allowed for the
expenditures described in subparagraph (A) for the taxable year
in which such loss is sustained in an amount equal to the
lesser of -
(i) the amount allowable under section 165(a) for the
expenditures if they had remained capitalized, or
(ii) the amount of such expenditures which have not
previously been amortized under subparagraph (A).
(C) Special rule for personal holding companies
In the case of circulation expenditures described in section
173, the adjustments provided in this paragraph shall apply
also to a personal holding company (as defined in section 542).
(D) Exception for certain research and experimental
expenditures
If the taxpayer materially participates (within the meaning
of section 469(h)) in an activity, this paragraph shall not
apply to any amount allowable as a deduction under section
174(a) for expenditures paid or incurred in connection with
such activity.
(3) Treatment of incentive stock options
Section 421 shall not apply to the transfer of stock acquired
pursuant to the exercise of an incentive stock option (as defined
in section 422). Section 422(c)(2) shall apply in any case where
the disposition and the inclusion for purposes of this part are
within the same taxable year and such section shall not apply in
any other case. The adjusted basis of any stock so acquired shall
be determined on the basis of the treatment prescribed by this
paragraph.
(c) Adjustments applicable to corporations
In determining the amount of the alternative minimum taxable
income of a corporation, the following treatment shall apply:
(1) Adjustment for adjusted current earnings
Alternative minimum taxable income shall be adjusted as
provided in subsection (g).
(2) Merchant marine capital construction funds
In the case of a capital construction fund established under
section 607 of the Merchant Marine Act, 1936 (46 (!1) U.S.C.
1177) -
(A) subparagraphs (A), (B), and (C) of section 7518(c)(1)
(and the corresponding provisions of such section 607) shall
not apply to -
(i) any amount deposited in such fund after December 31,
1986, or
(ii) any earnings (including gains and losses) after
December 31, 1986, on amounts in such fund, and
(B) no reduction in basis shall be made under section 7518(f)
(or the corresponding provisions of such section 607) with
respect to the withdrawal from the fund of any amount to which
subparagraph (A) applies.
For purposes of this paragraph, any withdrawal of deposits or
earnings from the fund shall be treated as allocable first to
deposits made before (and earnings received or accrued before)
January 1, 1987.
(3) Special deduction for certain organizations not allowed
The deduction determined under section 833(b) shall not be
allowed.
(d) Alternative tax net operating loss deduction defined
(1) In general
For purposes of subsection (a)(4), the term "alternative tax
net operating loss deduction" means the net operating loss
deduction allowable for the taxable year under section 172,
except that -
(A) the amount of such deduction shall not exceed the sum of
-
(i) the lesser of -
(I) the amount of such deduction attributable to net
operating losses (other than the deduction attributable to
carryovers described in clause (ii)(I)), or
(II) 90 percent of alternative minimum taxable income
determined without regard to such deduction, plus
(ii) the lesser of -
(I) the amount of such deduction attributable to the sum
of carrybacks of net operating losses for taxable years
ending during 2001 or 2002 and carryforwards of net
operating losses to taxable years ending during 2001 and
2002, or
(II) alternative minimum taxable income determined
without regard to such deduction reduced by the amount
determined under clause (i), and
(B) in determining the amount of such deduction -
(i) the net operating loss (within the meaning of section
172(c)) for any loss year shall be adjusted as provided in
paragraph (2), and
(ii) appropriate adjustments in the application of section
172(b)(2) shall be made to take into account the limitation
of subparagraph (A).
(2) Adjustments to net operating loss computation
(A) Post-1986 loss years
In the case of a loss year beginning after December 31, 1986,
the net operating loss for such year under section 172(c) shall
-
(i) be determined with the adjustments provided in this
section and section 58, and
(ii) be reduced by the items of tax preference determined
under section 57 for such year.
An item of tax preference shall be taken into account under
clause (ii) only to the extent such item increased the amount
of the net operating loss for the taxable year under section
172(c).
(B) Pre-1987 years
In the case of loss years beginning before January 1, 1987,
the amount of the net operating loss which may be carried over
to taxable years beginning after December 31, 1986, for
purposes of paragraph (2), shall be equal to the amount which
may be carried from the loss year to the first taxable year of
the taxpayer beginning after December 31, 1986.
(e) Qualified housing interest
For purposes of this part -
(1) In general
The term "qualified housing interest" means interest which is
qualified residence interest (as defined in section 163(h)(3))
and is paid or accrued during the taxable year on indebtedness
which is incurred in acquiring, constructing, or substantially
improving any property which -
(A) is the principal residence (within the meaning of section
121) of the taxpayer at the time such interest accrues, or
(B) is a qualified dwelling which is a qualified residence
(within the meaning of section 163(h)(4)).
Such term also includes interest on any indebtedness resulting
from the refinancing of indebtedness meeting the requirements of
the preceding sentence; but only to the extent that the amount of
the indebtedness resulting from such refinancing does not exceed
the amount of the refinanced indebtedness immediately before the
refinancing.
(2) Qualified dwelling
The term "qualified dwelling" means any -
(A) house,
(B) apartment,
(C) condominium, or
(D) mobile home not used on a transient basis (within the
meaning of section 7701(a)(19)(C)(v)),
including all structures or other property appurtenant thereto.
(3) Special rule for indebtedness incurred before July 1, 1982
The term "qualified housing interest" includes interest which
is qualified residence interest (as defined in section 163(h)(3))
and is paid or accrued on indebtedness which -
(A) was incurred by the taxpayer before July 1, 1982, and
(B) is secured by property which, at the time such
indebtedness was incurred, was -
(i) the principal residence (within the meaning of section
121) of the taxpayer, or
(ii) a qualified dwelling used by the taxpayer (or any
member of his family (within the meaning of section
267(c)(4))).
[(f) Repealed. Pub. L. 101-508, title XI, Sec. 11801(a)(3), Nov. 5,
1990, 104 Stat. 1388-520]
(g) Adjustments based on adjusted current earnings
(1) In general
The alternative minimum taxable income of any corporation for
any taxable year shall be increased by 75 percent of the excess
(if any) of -
(A) the adjusted current earnings of the corporation, over
(B) the alternative minimum taxable income (determined
without regard to this subsection and the alternative tax net
operating loss deduction).
(2) Allowance of negative adjustments
(A) In general
The alternative minimum taxable income for any corporation of
any taxable year, shall be reduced by 75 percent of the excess
(if any) of -
(i) the amount referred to in subparagraph (B) of paragraph
(1), over
(ii) the amount referred to in subparagraph (A) of
paragraph (1).
(B) Limitation
The reduction under subparagraph (A) for any taxable year
shall not exceed the excess (if any) of -
(i) the aggregate increases in alternative minimum taxable
income under paragraph (1) for prior taxable years, over
(ii) the aggregate reductions under subparagraph (A) of
this paragraph for prior taxable years.
(3) Adjusted current earnings
For purposes of this subsection, the term "adjusted current
earnings" means the alternative minimum taxable income for the
taxable year -
(A) determined with the adjustments provided in paragraph
(4), and
(B) determined without regard to this subsection and the
alternative tax net operating loss deduction.
(4) Adjustments
In determining adjusted current earnings, the following
adjustments shall apply:
(A) Depreciation
(i) Property placed in service after 1989
The depreciation deduction with respect to any property
placed in service in a taxable year beginning after 1989
shall be determined under the alternative system of section
168(g). The preceding sentence shall not apply to any
property placed in service after December 31, 1993, and the
depreciation deduction with respect to such property shall be
determined under the rules of subsection (a)(1)(A).
(ii) Property to which new ACRS system applies
In the case of any property to which the amendments made by
section 201 of the Tax Reform Act of 1986 apply and which is
placed in service in a taxable year beginning before 1990,
the depreciation deduction shall be determined -
(I) by taking into account the adjusted basis of such
property (as determined for purposes of computing
alternative minimum taxable income) as of the close of the
last taxable year beginning before January 1, 1990, and
(II) by using the straight-line method over the remainder
of the recovery period applicable to such property under
the alternative system of section 168(g).
(iii) Property to which original ACRS system applies
In the case of any property to which section 168 (as in
effect on the day before the date of the enactment of the Tax
Reform Act of 1986 and without regard to subsection
(d)(1)(A)(ii) thereof) applies and which is placed in service
in a taxable year beginning before 1990, the depreciation
deduction shall be determined -
(I) by taking into account the adjusted basis of such
property (as determined for purposes of computing the
regular tax) as of the close of the last taxable year
beginning before January 1, 1990, and
(II) by using the straight line method over the remainder
of the recovery period which would apply to such property
under the alternative system of section 168(g).
(iv) Property placed in service before 1981
In the case of any property not described in clause (i),
(ii), or (iii), the amount allowable as depreciation or
amortization with respect to such property shall be
determined in the same manner as for purposes of computing
taxable income.
(v) Special rule for certain property
In the case of any property described in paragraph (1),
(2), (3), or (4) of section 168(f), the amount of
depreciation allowable for purposes of the regular tax shall
be treated as the amount allowable under the alternative
system of section 168(g).
(B) Inclusion of items included for purposes of computing
earnings and profits
(i) In general
In the case of any amount which is excluded from gross
income for purposes of computing alternative minimum taxable
income but is taken into account in determining the amount of
earnings and profits -
(I) such amount shall be included in income in the same
manner as if such amount were includible in gross income
for purposes of computing alternative minimum taxable
income, and
(II) the amount of such income shall be reduced by any
deduction which would have been allowable in computing
alternative minimum taxable income if such amount were
includible in gross income.
The preceding sentence shall not apply in the case of any
amount excluded from gross income under section 108 (or the
corresponding provisions of prior law) or under section 114
or 139A. In the case of any insurance company taxable under
section 831(b), this clause shall not apply to any amount not
described in section 834(b).
(ii) Inclusion of buildup in life insurance contracts
In the case of any life insurance contract -
(I) the income on such contract (as determined under
section 7702(g)) for any taxable year shall be treated as
includible in gross income for such year, and
(II) there shall be allowed as a deduction that portion
of any premium which is attributable to insurance coverage.
(C) Disallowance of items not deductible in computing earnings
and profits
(i) In general
A deduction shall not be allowed for any item if such item
would not be deductible for any taxable year for purposes of
computing earnings and profits.
(ii) Special rule for certain dividends
(I) In general
Clause (i) shall not apply to any deduction allowable
under section 243 or 245 for any dividend which is a
100-percent dividend or which is received from a 20-percent
owned corporation (as defined in section 243(c)(2)), but
only to the extent such dividend is attributable to income
of the paying corporation which is subject to tax under
this chapter (determined after the application of sections
30A, 936 (including subsections (a)(4), (i), and (j)
thereof) and 921).(!2)
(II) 100-percent dividend
For purposes of subclause (I), the term "100 percent
dividend" means any dividend if the percentage used for
purposes of determining the amount allowable as a deduction
under section 243 or 245 with respect to such dividend is
100 percent.
(iii) Treatment of taxes on dividends from 936 corporations
(I) In general
For purposes of determining the alternative minimum
foreign tax credit, 75 percent of any withholding or income
tax paid to a possession of the United States with respect
to dividends received from a corporation eligible for the
credit provided by section 936 shall be treated as a tax
paid to a foreign country by the corporation receiving the
dividend.
(II) Limitation
If the aggregate amount of the dividends referred to in
subclause (I) for any taxable year exceeds the excess
referred to in paragraph (1), the amount treated as tax
paid to a foreign country under subclause (I) shall not
exceed the amount which would be so treated without regard
to this subclause multiplied by a fraction the numerator of
which is the excess referred to in paragraph (1) and the
denominator of which is the aggregate amount of such
dividends.
(III) Treatment of taxes imposed on 936 corporation
For purposes of this clause, taxes paid by any
corporation eligible for the credit provided by section 936
to a possession of the United States shall be treated as a
withholding tax paid with respect to any dividend paid by
such corporation to the extent such taxes would be treated
as paid by the corporation receiving the dividend under
rules similar to the rules of section 902 (and the amount
of any such dividend shall be increased by the amount so
treated).
(IV) Separate application of foreign tax credit limitations
In determining the alternative minimum foreign tax
credit, section 904(d) shall be applied as if dividends
from a corporation eligible for the credit provided by
section 936 were a separate category of income referred to
in a subparagraph of section 904(d)(1).
(V) Coordination with limitation on 936 credit
Any reference in this clause to a dividend received from
a corporation eligible for the credit provided by section
936 shall be treated as a reference to the portion of any
such dividend for which the dividends received deduction is
disallowed under clause (i) after the application of clause
(ii)(I).
(VI) Application to section 30A corporations
References in this clause to section 936 shall be treated
as including references to section 30A.
(iv) Special rule for certain dividends received by certain
cooperatives
In the case of a cooperative described in section
927(a)(4),(!2) clause (i) shall not apply to any amount
allowable as a deduction under section 245(c).
(D) Certain other earnings and profits adjustments
(i) Intangible drilling costs
The adjustments provided in section 312(n)(2)(A) shall
apply in the case of amounts paid or incurred in taxable
years beginning after December 31, 1989. In the case of a
taxpayer other than an integrated oil company (as defined in
section 291(b)(4)), in the case of any oil or gas well, this
clause shall not apply in the case of amounts paid or
incurred in taxable years beginning after December 31, 1992.
(ii) Certain amortization provisions not to apply
Sections 173 and 248 shall not apply to expenditures paid
or incurred in taxable years beginning after December 31,
1989.
(iii) LIFO inventory adjustments
The adjustments provided in section 312(n)(4) shall apply,
but only with respect to taxable years beginning after
December 31, 1989.
(iv) Installment sales
In the case of any installment sale in a taxable year
beginning after December 31, 1989, adjusted current earnings
shall be computed as if the corporation did not use the
installment method. The preceding sentence shall not apply to
the applicable percentage (as determined under section 453A)
of the gain from any installment sale with respect to which
section 453A(a)(1) applies.
(E) Disallowance of loss on exchange of debt pools
No loss shall be recognized on the exchange of any pool of
debt obligations for another pool of debt obligations having
substantially the same effective interest rates and maturities.
(F) Depletion
(i) In general
The allowance for depletion with respect to any property
placed in service in a taxable year beginning after December
31, 1989, shall be cost depletion determined under section
611.
(ii) Exception for independent oil and gas producers and
royalty owners
In the case of any taxable year beginning after December
31, 1992, clause (i) (and subparagraph (C)(i)) shall not
apply to any deduction for depletion computed in accordance
with section 613A(c).
(G) Treatment of certain ownership changes
If -
(i) there is an ownership change (within the meaning of
section 382) in a taxable year beginning after 1989 with
respect to any corporation, and
(ii) there is a net unrealized built-in loss (within the
meaning of section 382(h)) with respect to such corporation,
then the adjusted basis of each asset of such corporation
(immediately after the ownership change) shall be its
proportionate share (determined on the basis of respective fair
market values) of the fair market value of the assets of such
corporation (determined under section 382(h)) immediately
before the ownership change.
(H) Adjusted basis
The adjusted basis of any property with respect to which an
adjustment under this paragraph applies shall be determined by
applying the treatment prescribed in this paragraph.
(I) Treatment of charitable contributions
Notwithstanding subparagraphs (B) and (C), no adjustment
related to the earnings and profits effects of any charitable
contribution shall be made in computing adjusted current
earnings.
(5) Other definitions
For purposes of paragraph (4) -
(A) Earnings and profits
The term "earnings and profits" means earnings and profits
computed for purposes of subchapter C.
(B) Treatment of alternative minimum taxable income
The treatment of any item for purposes of computing
alternative minimum taxable income shall be determined without
regard to this subsection.
(6) Exception for certain corporations
This subsection shall not apply to any S corporation, regulated
investment company, real estate investment trust, REMIC, or
FASIT.
-SOURCE-
(Added Pub. L. 99-514, title VII, Sec. 701(a), Oct. 22, 1986, 100
Stat. 2322; amended Pub. L. 100-203, title X, Secs. 10202(d),
10243(a), Dec. 22, 1987, 101 Stat. 1330-392, 1330-423; Pub. L.
100-647, title I, Secs. 1002(a)(12), 1007(b)(1)-(14)(A), (15)-(19),
title II, Secs. 2001(c)(3)(A), 2004(b)(2), (3), title V, Sec.
5041(b)(4), title VI, Secs. 6079(a)(1), 6303(a), Nov. 10, 1988, 102
Stat. 3355, 3428-3432, 3594, 3599, 3674, 3709, 3755; Pub. L.
101-239, title VII, Secs. 7205(b), 7611(a)-(f)(4), 7612(c)(1),
(d)(1), 7811(d)(3), 7815(e)(2), (4), Dec. 19, 1989, 103 Stat. 2335,
2371-2374, 2408, 2419; Pub. L. 101-508, title XI, Secs. 11103(b),
11301(b), 11531(a), (b)(1), 11704(a)(1), 11801(a)(3),
(c)(2)(A)-(C), (9)(G), 11812(b)(4), Nov. 5, 1990, 104 Stat.
1388-406, 1388-449, 1388-488, 1388-490, 1388-518, 1388-520,
1388-522, 1388-523, 1388-526, 1388-535; Pub. L. 102-486, title XIX,
Sec. 1915(a)(2), (b)(2), (c)(1), (2), Oct. 24, 1992, 106 Stat.
3023, 3024; Pub. L. 103-66, title XIII, Secs. 13115(a), 13171(b),
13227(c), Aug. 10, 1993, 107 Stat. 432, 454, 493; Pub. L. 104-188,
title I, Secs. 1601(b)(2)(B), (C), 1621(b)(2), 1702(c)(1),
(e)(1)(A), (g)(4), (h)(12), 1704(t)(1), (48), Aug. 20, 1996, 110
Stat. 1832, 1833, 1867, 1869, 1870, 1873, 1874, 1887, 1889; Pub. L.
105-34, title III, Sec. 312(d)(1), title IV, Secs. 402, 403(a),
title XII, Sec. 1212(a), Aug. 5, 1997, 111 Stat. 839, 844, 1000;
Pub. L. 105-277, div. J, title IV, Sec. 4006(c)(2), Oct. 21, 1998,
112 Stat. 2681-912; Pub. L. 106-519, Sec. 4(1), Nov. 15, 2000, 114
Stat. 2432; Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 314(d)],
Dec. 21, 2000, 114 Stat. 2763, 2763A-643; Pub. L. 107-147, title I,
Sec. 102(c)(1), title IV, Sec. 417(5), Mar. 9, 2002, 116 Stat. 26,
56; Pub. L. 108-173, title XII, Sec. 1202(b), Dec. 8, 2003, 117
Stat. 2480.)
-REFTEXT-
REFERENCES IN TEXT
Section 201 of the Tax Reform Act of 1986, referred to in
subsecs. (a)(1)(C) and (g)(4)(A)(ii), is section 201 of Pub. L.
99-514, which amended sections 46, 167, 168, 178, 179, 280F, 291,
312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title.
Sections 203, 204, and 251(d) of such Act, referred to in subsec.
(a)(1)(C), are sections 203, 204, and 251(d) of the Tax Reform Act
of 1986, Pub. L. 99-514. Sections 203 and 204 are set out as notes
under section 168 of this title. Section 251(d) is set out as a
note under section 46 of this title.
The date of the enactment of the Tax Reform Act of 1986, referred
to in subsec. (g)(4)(A)(iii), is the date of enactment of Pub. L.
99-514, which was approved Oct. 22, 1986.
Sections 921 and 927, referred to in subsec. (g)(4)(C), were
repealed by Pub. L. 106-519, Sec. 2, Nov. 15, 2000, 114 Stat. 2423.
-MISC1-
PRIOR PROVISIONS
A prior section 56, added Pub. L. 91-172, title III, Sec. 301(a),
Dec. 30, 1969, 83 Stat. 580; amended Pub. L. 91-614, title V, Sec.
501(a), Dec. 31, 1970, 84 Stat. 1846; Pub. L. 92-178, title VI,
Sec. 601(c)(4), (5), Dec. 10, 1971, 85 Stat. 558; Pub. L. 93-406,
title II, Secs. 2001(g)(2)(D), 2002(g)(4), 2005(c)(7), Sept. 2,
1974, 88 Stat. 957, 968, 991; Pub. L. 94-12, title II, Secs.
203(b)(2), (3), 208(d)(2), (3), Mar. 29, 1975, 89 Stat. 30, 35;
Pub. L. 94-455, title III, Sec. 301(a), (b), (c)(4)(B), Oct. 4,
1976, 90 Stat. 1549, 1552; Pub. L. 95-30, title II, Sec. 202(d)(2),
May 23, 1977, 91 Stat. 148; Pub. L. 95-600, title I, Sec. 141(d),
Nov. 6, 1978, 92 Stat. 2794; Pub. L. 95-618, title I, Sec.
101(b)(2), Nov. 9, 1978, 92 Stat. 3179; Pub. L. 96-222, title I,
Sec. 101(a)(7)(L)(iii)(IV), Apr. 1, 1980, 94 Stat. 200; Pub. L.
97-34, title III, Sec. 331(c)(2), Aug. 13, 1981, 95 Stat. 293; Pub.
L. 97-248, title II, Sec. 201(d)(1), formerly Sec. 201(c)(1), Sept.
3, 1982, 96 Stat. 419, renumbered Sec. 201(d)(1), Pub. L. 97-448,
title III, Sec. 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub.
L. 98-369, div. A, title IV, Sec. 474(r)(1), July 18, 1984, 98
Stat. 839; Pub. L. 99-514, title XI, Sec. 1171(b)(3), Oct. 22,
1986, 100 Stat. 2513, related to a corporate minimum tax, prior to
the general revision of this part by Pub. L. 99-514, Sec. 701(a).
AMENDMENTS
2003 - Subsec. (g)(4)(B)(i). Pub. L. 108-173 inserted "or 139A"
after "section 114" in concluding provisions.
2002 - Subsec. (a)(1)(A)(ii). Pub. L. 107-147, Sec. 417(5),
substituted "such section 1250" for "such 1250" in concluding
provisions.
Subsec. (d)(1)(A). Pub. L. 107-147, Sec. 102(c)(1), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: "the amount of such deduction shall not exceed 90 percent
of alternate minimum taxable income determined without regard to
such deduction, and".
2000 - Subsec. (a)(1)(A)(ii). Pub. L. 106-554 inserted "(and the
straight line method shall be used for such 1250 property)" before
"or to any other property" in concluding provisions.
Subsec. (g)(4)(B)(i). Pub. L. 106-519 inserted "or under section
114" before the period at end of first sentence in concluding
provisions.
1998 - Subsec. (a)(3). Pub. L. 105-277 substituted "section
460(b)(1)" for "section 460(b)(2)" and "section 460(b)(3)" for
"section 460(b)(4)".
1997 - Subsec. (a)(1)(A)(i). Pub. L. 105-34, Sec. 402(a),
inserted at end "In the case of property placed in service after
December 31, 1998, the preceding sentence shall not apply but
clause (ii) shall continue to apply."
Subsec. (a)(5). Pub. L. 105-34, Sec. 402(b), inserted at end "In
the case of such a facility placed in service after December 31,
1998, such deduction shall be determined under section 168 using
the straight line method."
Subsec. (a)(6) to (8). Pub. L. 105-34, Sec. 403(a), redesignated
pars. (7) and (8) as (6) and (7), respectively, and struck out
former par. (6) which read as follows:
"(6) Installment sales of certain property. - In the case of any
disposition after March 1, 1986, of any property described in
section 1221(1), income from such disposition shall be determined
without regard to the installment method under section 453. This
paragraph shall not apply to any disposition with respect to which
an election is in effect under section 453(l)(2)(B)."
Subsec. (e)(1)(A), (3)(B)(i). Pub. L. 105-34, Sec. 312(d)(1),
substituted "section 121" for "section 1034".
Subsec. (g)(4)(B)(i). Pub. L. 105-34, Sec. 1212(a), inserted at
end of concluding provisions "In the case of any insurance company
taxable under section 831(b), this clause shall not apply to any
amount not described in section 834(b)."
1996 - Subsec. (b)(3). Pub. L. 104-188, Sec. 1702(h)(12),
provided that the amendment made by section 11801(c)(9)(G)(ii) of
Pub. L. 101-508 shall be applied as if it struck "Section
422A(c)(2)" and inserted "Section 422(c)(2)". See 1990 Amendment
note below.
Subsec. (d)(1)(B)(ii). Pub. L. 101-508, Sec. 1702(e)(1)(A),
amended cl. (ii) generally. Prior to amendment, cl. (ii) read as
follows: "in the case of taxable years beginning after December 31,
1986, section 172(b)(2) shall be applied by substituting '90
percent of alternative minimum taxable income determined without
regard to the alternative tax net operating loss deduction' for
'taxable income' each place it appears."
Subsec. (g)(1), (2)(A). Pub. L. 104-188, Sec. 1704(t)(48),
provided that section 11801(c)(2)(B) of Pub. L. 101-508 shall be
applied as if "section 56(g)" appeared instead of "section 59(g)".
See 1990 Amendment note below.
Subsec. (g)(4)(C)(ii)(I). Pub. L. 104-188, Sec. 1601(b)(2)(B),
inserted "30A," before "936" and substituted ", (i), and (j)" for
"and (i)".
Subsec. (g)(4)(C)(ii)(II). Pub. L. 104-188, Sec. 1704(t)(1),
substituted "of subclause" for "of the subclause".
Subsec. (g)(4)(C)(iii)(VI). Pub. L. 104-188, Sec. 1601(b)(2)(C),
added subcl. (VI).
Subsec. (g)(4)(D)(iii). Pub. L. 104-188, Sec. 1702(g)(4),
inserted ", but only with respect to taxable years beginning after
December 31, 1989" before period at end.
Subsec. (g)(4)(H) to (J). Pub. L. 104-188, Sec. 1702(c)(1),
redesignated subpars. (I) and (J) as (H) and (I), respectively.
Subsec. (g)(6). Pub. L. 104-188, Sec. 1621(b)(2), substituted
"REMIC, or FASIT" for "or REMIC".
1993 - Subsec. (g)(4)(A)(i). Pub. L. 103-66, Sec. 13115(a),
inserted at end "The preceding sentence shall not apply to any
property placed in service after December 31, 1993, and the
depreciation deduction with respect to such property shall be
determined under the rules of subsection (a)(1)(A)."
Subsec. (g)(4)(C)(ii)(I). Pub. L. 103-66, Sec. 13227(c)(1),
substituted "sections 936 (including subsections (a)(4) and (i)
thereof) and 921" for "sections 936 and 921".
Subsec. (g)(4)(C)(iii)(IV), (V). Pub. L. 103-66, Sec.
13227(c)(2), added subcls. (IV) and (V).
Subsec. (g)(4)(J). Pub. L. 103-66, Sec. 13171(b), added subpar.
(J).
1992 - Subsec. (d)(1)(A). Pub. L. 102-486, Sec. 1915(c)(2),
amended subpar. (A) generally. Prior to amendment, subpar. (A) read
as follows: "the amount of such deduction shall not exceed the
excess (if any) of -
"(i) 90 percent of alternative minimum taxable income
determined without regard to such deduction and the deduction
under subsection (h), over
"(ii) the deduction under subsection (h), and".
Subsec. (g)(4)(D)(i). Pub. L. 102-486, Sec. 1915(b)(2), inserted
at end "In the case of a taxpayer other than an integrated oil
company (as defined in section 291(b)(4)), in the case of any oil
or gas well, this clause shall not apply in the case of amounts
paid or incurred in taxable years beginning after December 31,
1992."
Subsec. (g)(4)(F). Pub. L. 102-486, Sec. 1915(a)(2), amended
subpar. (F) generally. Prior to amendment, subpar. (F) read as
follows: "The allowance for depletion with respect to any property
placed in service in a taxable year beginning after 1989 shall be
cost depletion determined under section 611."
Subsec. (h). Pub. L. 102-486, Sec. 1915(c)(1), struck out subsec.
(h) which related to adjustment based on energy preferences.
1990 - Subsec. (a)(1)(D). Pub. L. 101-508, Sec. 11812(b)(4),
substituted "section 168(i)(10)" for "section 167(l)(3)(A)".
Subsec. (b)(1)(F). Pub. L. 101-508, Sec. 11103(b), added subpar.
(F).
Subsec. (b)(3). Pub. L. 101-508, Sec. 11801(c)(9)(G)(i),
substituted "section 422" for "section 422A".
Pub. L. 101-508, Sec. 11801(c)(9)(G)(ii), which directed the
substitution of "section 422(c)(2)" for "section 422A(c)(2)", was
executed by substituting "Section 422(c)(2)" for "Section
422A(c)(2)". See 1996 Amendment note above.
Subsec. (c)(1). Pub. L. 101-508, Sec. 11801(c)(2)(A), substituted
heading for one which read: "Adjustment for book income or adjusted
current earnings" and amended text generally. Prior to amendment,
text read as follows:
"(A) Book income adjustment. - For taxable years beginning in
1987, 1988, and 1989, alternative minimum taxable income shall be
adjusted as provided under subsection (f).
"(B) Adjusted current earnings. - For taxable years beginning
after 1989, alternative minimum taxable income shall be adjusted as
provided under subsection (g)."
Subsec. (d)(1)(A). Pub. L. 101-508, Sec. 11531(b)(1), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: "the amount of such deduction shall not exceed 90 percent
of alternative minimum taxable income determined without regard to
such deduction, and".
Subsec. (f). Pub. L. 101-508, Sec. 11801(a)(3), struck out
subsec. (f) which related to adjustments for book income of
corporations with respect to minimum taxable income, adjusted net
book income, adjustments for certain taxes, special rules for
related corporations for consolidated returns, treatment of
dividends, statements covering different periods, special rule for
cooperatives, treatment and limitation of taxes on dividends from
936 corporations, rules for Alaska native corporations, special
rules for life insurance companies, exclusion of certain income
from transfer of stock for debt, secretarial authority to adjust
items, applicable financial statements, earnings and profits used,
special rules for more than one statement and exception for certain
corporations.
Subsec. (g)(1), (2)(A). Pub. L. 101-508, Sec. 11801(c)(2)(B),
which directed that pars. (1) and (2) "of section 59(g) are each
amended by striking 'beginning after 1989' ", was executed to pars.
(1) and (2)(A) of subsec. (g) of this section after "any taxable
year". See 1996 Amendment note above.
Subsec. (g)(4)(C)(iii). Pub. L. 101-508, Sec. 11801(c)(2)(C),
substituted heading for one which read: "Special rule for dividends
from section 936 companies" and amended text generally. Prior to
amendment, text read as follows: "In the case of any dividend
received from a corporation eligible for the credit provided by
section 936, rules similar to the rules of subparagraph (F) of
subsection (f)(1) shall apply, except that '75 percent' shall be
substituted for '50 percent' in clause (i) thereof."
Subsec. (g)(4)(D)(ii). Pub. L. 101-508, Sec. 11704(a)(1),
substituted "years" for "year".
Subsec. (g)(4)(F) to (H). Pub. L. 101-508, Sec. 11301(b),
redesignated subpars. (G) and (H) as (F) and (G), respectively, and
struck out former subpar. (F) which provided that acquisition
expenses for life insurance companies be capitalized and amortized
in accordance with the treatment generally required under generally
accepted accounting principles as if this subparagraph applied to
all taxable years.
Subsec. (h). Pub. L. 101-508, Sec. 11531(a), added subsec. (h).
1989 - Subsec. (a)(3). Pub. L. 101-239, Sec. 7815(e)(2)(B),
substituted "The first sentence of this paragraph shall not" for
"The preceding sentence shall not".
Pub. L. 101-239, Sec. 7815(e)(2)(A), made clarifying amendment to
directory language of Pub. L. 100-647, Sec. 5041(b)(4), see 1988
Amendment note below.
Pub. L. 101-239, Sec. 7612(c)(1), struck out "with respect to
which the requirements of clauses (i) and (ii) of section
460(e)(1)(B) are met" after "section 460(e)(6))".
Subsec. (b)(2)(D). Pub. L. 101-239, Sec. 7612(d)(1), added
subpar. (D).
Subsec. (b)(3). Pub. L. 101-239, Sec. 7811(d)(3), inserted after
first sentence "Section 422A(c)(2) shall apply in any case where
the disposition and the inclusion for purposes of this part are
within the same taxable year and such section shall not apply in
any other case." and substituted "this paragraph" for "the
preceding sentence" in last sentence.
Subsec. (g)(4)(A)(i). Pub. L. 101-239, Sec. 7611(a)(1)(A),
amended cl. (i) generally. Prior to amendment cl. (i) read as
follows: "The depreciation deduction with respect to any property
placed in service in a taxable year beginning after 1989 shall be
determined under whichever of the following methods yields
deductions with a smaller present value:
"(I) The alternative system of section 168(g), or
"(II) The method used for book purposes."
Subsec. (g)(4)(A)(iii). Pub. L. 101-239, Sec. 7611(a)(2),
inserted "and which is placed in service in a taxable year
beginning before 1990" after "thereof) applies".
Subsec. (g)(4)(A)(v) to (vii). Pub. L. 101-239, Sec.
7611(a)(1)(B), redesignated cl. (vii) as (v), and struck out former
cl. (v), which related to use of slower method if used for book
purposes, and cl. (vi), which related to election to have
cumulative limitation.
Subsec. (g)(4)(B)(i). Pub. L. 101-239, Sec. 7611(f)(2), inserted
at end "The preceding sentence shall not apply in the case of any
amount excluded from gross income under section 108 (or the
corresponding provisions of prior law)."
Subsec. (g)(4)(B)(iii). Pub. L. 101-239, Sec. 7611(f)(3),
repealed cl. (iii) which read as follows: "In the case of any
annuity contract, the income on such contract (as determined under
section 72(u)(2)) shall be treated as includible in gross income
for such year. The preceding sentence shall not apply to any
annuity contract which is held under a plan described in section
403(a) or which is described in section 72(u)(3)(C)."
Subsec. (g)(4)(C)(ii). Pub. L. 101-239, Sec. 7611(d), amended cl.
(ii) generally. Prior to amendment, cl. (ii) read as follows:
"Clause (i) shall not apply to any deduction allowable under
section 243 or 245 for a 100-percent dividend -
"(I) if the corporation receiving such dividend and the
corporation paying such dividend could not be members of the same
affiliated group under section 1504 by reason of section 1504(b),
"(II) but only to the extent such dividend is attributable to
income of the paying corporation which is subject to tax under
this chapter (determined after the application of sections 936
and 921).
For purposes of the preceding sentence, the term '100 percent
dividend' means any dividend if the percentage used for purposes of
determining the amount allowable as a deduction under section 243
or 245 with respect to such dividend is 100 percent."
Subsec. (g)(4)(C)(iv). Pub. L. 101-239, Sec. 7611(e), added cl.
(iv).
Subsec. (g)(4)(D). Pub. L. 101-239, Sec. 7611(b), amended subpar.
(D) generally, in cl. (i), substituting provisions directing that
adjustments in section 312(n)(2)(A) be applied, for provisions
directing adjustments in section 312(n) be applied, with certain
exceptions, in cl. (ii), substituting provisions directing that
sections 173 and 248 not apply to expenditures paid or incurred in
taxable years beginning after December 31, 1989, for material
relating to special rule for intangible drilling costs and mineral
exploration and development costs, and adding cls. (iii) and (iv).
Subsec. (g)(4)(D)(i)(IV), (V). Pub. L. 101-239, Sec. 7815(e)(4),
added subcl. (IV) relating to inapplicability of pars. (6) to (8)
and struck out former subcls. (IV) and (V), which read as follows:
"(IV) paragraph (6) shall apply only to contracts entered into on
or after March 1, 1986, and
"(V) paragraphs (7) and (8) shall not apply."
Subsec. (g)(4)(G). Pub. L. 101-239, Sec. 7611(c), amended subpar.
(G) generally. Prior to amendment, subpar. (G) read as follows:
"The allowances for depletion with respect to any property placed
in service in a taxable year beginning after 1989, shall be
determined under whichever of the following methods yields
deductions with a smaller present value:
"(i) cost depletion determined under section 611, or
"(ii) the method used for book purposes."
Subsec. (g)(4)(H). Pub. L. 101-239, Sec. 7205(b), added cl. (ii)
and concluding provision and struck out former cl. (ii) and
concluding provision which read as follows:
"(ii)(I) the aggregate adjusted bases of the assets of such
corporation (immediately after the change), exceed
"(II) the value of the stock of such corporation (as determined
for purposes of section 382), properly adjusted for liabilities and
other relevant items,
then the adjusted basis of each asset of such corporation (as of
such time) shall be its proportionate share (determined on the
basis of respective fair market values) of the amount referred to
in clause (ii)(II)."
Subsec. (g)(4)(H)(i). Pub. L. 101-239, Sec. 7611(f)(1),
substituted "in a taxable year beginning after 1989" for "after the
date of the enactment of the Tax Reform Act of 1986".
Subsec. (g)(5)(A). Pub. L. 101-239, Sec. 7611(f)(4), redesignated
subpar. (B) as (A) and struck out former subpar. (A) which defined
"book purposes".
Subsec. (g)(5)(B). Pub. L. 101-239, Sec. 7611(f)(4), redesignated
subpar. (D) as (B). Former subpar. (B) redesignated (A).
Subsec. (g)(5)(C). Pub. L. 101-239, Sec. 7611(f)(4), struck out
subpar. (C) which read as follows: "Present value. - Present value
shall be determined as of the time the property is placed in
service (or, if later, as of the beginning of the first taxable
year beginning after 1989) and under regulations prescribed by the
Secretary."
Subsec. (g)(5)(D). Pub. L. 101-239, Sec. 7611(f)(4), redesignated
subpar. (D) as (B).
1988 - Subsec. (a)(1)(A)(i). Pub. L. 100-647, Sec. 1007(b)(15),
substituted "personal" for "real" in heading.
Subsec. (a)(1)(C)(i). Pub. L. 100-647, Sec. 1002(a)(12), inserted
"by reason of section 203, 204, or 251(d) of such Act" after "do
not apply".
Subsec. (a)(3). Pub. L. 100-647, Sec. 5041(b)(4), as amended by
Pub. L. 101-239, Sec. 7815(e)(2)(A), inserted at end "The preceding
sentence shall not apply to any home construction contract (as
defined in section 460(e)(6)) with respect to which the
requirements of clauses (i) and (ii) of section 460(e)(1)(B) are
met."
Pub. L. 100-647, Sec. 1007(b)(1), inserted at end "For purposes
of the preceding sentence, in the case of a contract described in
section 460(e)(1), the percentage of the contract completed shall
be determined under section 460(b)(2) by using the simplified
procedures for allocation of costs prescribed under section
460(b)(4)."
Subsec. (a)(8). Pub. L. 100-647, Sec. 1007(b)(19), added par.
(8).
Subsec. (b)(1). Pub. L. 100-647, Sec. 1007(b)(16), struck out
"itemized" after "Limitation on" in heading.
Subsec. (b)(1)(C)(ii). Pub. L. 100-647, Sec. 2004(b)(2),
substituted "163(h)(5)" for "163(h)(6)".
Subsec. (b)(1)(C)(iii). Pub. L. 100-647, Sec. 1007(b)(4),
substituted "specified private activity bond" for "specified
activity bond" before "under", and "57(a)(5)(B)" for "56(a)(5)(B)".
Subsec. (b)(1)(C)(iv), (v). Pub. L. 100-647, Sec. 1007(b)(3),
added cls. (iv) and (v).
Subsec. (b)(1)(E). Pub. L. 100-647, Sec. 1007(b)(2), substituted
"and deduction for personal exemptions not allowed" for "not
allowed" in heading and amended text generally. Prior to amendment,
text read as follows: "The standard deduction provided in section
63(c) shall not be allowed."
Subsec. (b)(3). Pub. L. 100-647, Sec. 1007(b)(14)(A), added par.
(3).
Subsec. (c)(1). Pub. L. 100-647, Sec. 1007(b)(13)(A), substituted
"adjusted current earnings" for "adjusted earnings and profits" in
heading.
Subsec. (c)(1)(B). Pub. L. 100-647, Sec. 1007(b)(13)(B),
substituted "Adjusted current earnings" for "Adjusted earnings and
profits" in heading.
Subsec. (d)(2)(A). Pub. L. 100-647, Sec. 1007(b)(5), struck out
"(other than subsection (a)(6) thereof)" after "for such year" in
cl. (ii) and inserted sentence at end providing that an item of tax
preference shall be taken into account under clause (ii).
Subsec. (e)(1). Pub. L. 100-647, Sec. 2004(b)(3)(A), substituted
"improving" for "rehabilitating" in introductory text.
Pub. L. 100-647, Sec. 1007(b)(6)(A)(i), inserted "qualified
residence interest (as defined in section 163(h)(3)) and is" after
"interest which is" in introductory text.
Subsec. (e)(1)(A). Pub. L. 100-647, Sec. 2004(b)(3)(B), struck
out "or is paid" after "accrues".
Subsec. (e)(1)(B). Pub. L. 100-647, Sec. 1007(b)(6)(A)(ii),
substituted "section 163(h)(4)" for "section 163(h)(3)".
Subsec. (e)(3). Pub. L. 100-647, Sec. 1007(b)(6)(B), substituted
"interest which is qualified residence interest (as defined in
section 163(h)(3)) and is paid or accrued" for "interest paid or
accrued".
Subsec. (f)(2)(B). Pub. L. 100-647, Sec. 2001(c)(3)(A), inserted
at end "No adjustment shall be made under this subparagraph for the
tax imposed by section 59A."
Pub. L. 100-647, Sec. 1007(b)(7), inserted "(otherwise eligible
for the credit provided by section 901 without regard to section
901(j))" after "any such taxes".
Subsec. (f)(2)(F). Pub. L. 100-647, Sec. 1007(b)(11)(A),
substituted "Treatment of taxes on dividends from 936 corporations"
for "Treatment of dividends from 936 corporations" in heading and
amended text generally, substituting cls. (i) to (iii) for former
cls. (i) and (ii).
Subsec. (f)(2)(I), (J). Pub. L. 100-647, Sec. 6303(a), added
subpar. (I) and redesignated former subpar. (I) as (J).
Subsec. (f)(3)(A)(iii). Pub. L. 100-647, Sec. 1007(b)(8),
inserted "for a substantial nontax purpose" after "an income
statement".
Subsec. (f)(3)(B). Pub. L. 100-647, Sec. 1007(b)(9), substituted
"this subsection" for "paragraph (3)(A)" in penultimate sentence.
Subsec. (f)(3)(C). Pub. L. 100-647, Sec. 1007(b)(10), inserted at
end "If the taxpayer has 2 or more statements described in the
clause (or subclause) with the lowest number designation, the
applicable financial statement shall be the one of such statements
specified in regulations."
Subsec. (g)(4)(A)(vi), (vii). Pub. L. 100-647, Sec. 1007(b)(17),
added cls. (vi) and (vii).
Subsec. (g)(4)(B)(iii). Pub. L. 100-647, Sec. 6079(a)(1), amended
last sentence generally, inserting "which is" after "any annuity
contract" and "or which is described in section 72(u)(3)(C)" after
"in section 403(a)".
Pub. L. 100-647, Sec. 1007(b)(12), inserted at end "The preceding
sentence shall not apply to any annuity contract held under a plan
described in section 403(a)."
Subsec. (g)(4)(C)(iii). Pub. L. 100-647, Sec. 1007(b)(11)(B),
substituted "clause (i)" for "clause (ii)(I)".
Subsec. (g)(4)(I). Pub. L. 100-647, Sec. 1007(b)(18), added
subpar. (I).
1987 - Subsec. (a)(6). Pub. L. 100-203, Sec. 10202(d), amended
par. (6) generally. Prior to amendment, par. (6) read as follows:
"In the case of any -
"(A) disposition after March 1, 1986, of property described in
section 1221(1), or
"(B) other disposition if an obligation arising from such
disposition would be an applicable installment obligation (as
defined in section 453C(e)) to which section 453C applies,
income from such disposition shall be determined without regard to
the installment method under section 453 or 453A and all payments
to be received for the disposition shall be deemed received in the
taxable year of the disposition. This paragraph shall not apply to
any disposition with respect to which an election is in effect
under section 453C(e)(4)."
Subsec. (f)(2)(H), (I). Pub. L. 100-203, Sec. 10243(a), added
subpar. (H) and redesignated former subpar. (H) as (I).
EFFECTIVE DATE OF 2003 AMENDMENT
Pub. L. 108-173, title XII, Sec. 1202(d), Dec. 8, 2003, 117 Stat.
2480, provided that: "The amendments made by this section [enacting
section 139A of this title and amending this section] shall apply
to taxable years ending after the date of the enactment of this Act
[Dec. 8, 2003]."
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title I, Sec. 102(c)(2), Mar. 9, 2002, 116 Stat.
26, provided that: "The amendment made by this subsection [amending
this section] shall apply to taxable years ending before January 1,
2003."
EFFECTIVE DATE OF 2000 AMENDMENTS
Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 314(g)], Dec. 21,
2000, 114 Stat. 2763, 2763A-643, provided that: "The amendments
made by this section [amending this section and sections 403, 414,
415, 3405, 6211 and 7436 of this title and provisions set out as a
note under section 1 of this title] shall take effect as if
included in the provisions of the Taxpayer Relief [Act] of 1997
[Pub. L. 105-34] to which they relate."
Amendment by Pub. L. 106-519 applicable to transactions after
Sept. 30, 2000, with special rules relating to existing foreign
sales corporations, see section 5 of Pub. L. 106-519, set out as an
Effective Date note under section 941 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by section 312(d)(1) of Pub. L. 105-34 applicable to
sales and exchanges after May 6, 1997, with certain exceptions, see
section 312(d) of Pub. L. 105-34, set out as a note under section
121 of this title.
Section 403(b) of Pub. L. 105-34 provided that:
"(1) In general. - The amendment made by this section [amending
this section] shall apply to dispositions in taxable years
beginning after December 31, 1987.
"(2) Special rule for 1987. - In the case of taxable years
beginning in 1987, the last sentence of section 56(a)(6) of the
Internal Revenue Code of 1986 (as in effect for such taxable years)
shall be applied by inserting 'or in the case of a taxpayer using
the cash receipts and disbursements method of accounting, any
disposition described in section 453C(e)(1)(B)(ii)' after 'section
453C(e)(4)'."
Section 1212(b) of Pub. L. 105-34 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1601(b)(2)(B), (C) of Pub. L. 104-188
applicable to taxable years beginning after Dec. 31, 1995, except
as otherwise provided, see section 1601(c) of Pub. L. 104-188, set
out as an Effective Date note under section 30A of this title.
Amendment by section 1621(b)(2) of Pub. L. 104-188 effective
Sept. 1, 1997, see section 1621(d) of Pub. L. 104-188, set out as a
note under section 26 of this title.
Amendment by section 1702(c)(1), (e)(1)(A), (g)(4), and (h)(12)
of Pub. L. 104-188 effective, except as otherwise expressly
provided, as if included in the provision of the Revenue
Reconciliation Act of 1990, Pub. L. 101-508, title XI, to which
such amendment relates, see section 1702(i) of Pub. L. 104-188, set
out as a note under section 38 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13115(b) of Pub. L. 103-66 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section] shall apply
to property placed in service after December 31, 1993.
"(2) Coordination with transitional rules. - The amendments made
by this section shall not apply to any property to which paragraph
(1) of section 56(a) of the Internal Revenue Code of 1986 does not
apply by reason of subparagraph (C)(i) thereof."
Amendment by section 13171(b) of Pub. L. 103-66 applicable to
contributions made after June 30, 1992, except that in case of any
contribution of capital gain property which is not tangible
personal property, such amendment applicable only if the
contribution is made after Dec. 31, 1992, see section 13171(d) of
Pub. L. 103-66, set out as a note under section 53 of this title.
Section 13227(f) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 904, 936,
and 7652 of this title] shall apply to taxable years beginning
after December 31, 1993; except that the amendment made by
subsection (e) [amending section 7652 of this title] shall take
effect on October 1, 1993."
EFFECTIVE DATE OF 1992 AMENDMENT
Section 1915(d) of Pub. L. 102-486 provided that: "The amendments
made by this section [amending this section and sections 57, 59,
and 59A of this title] shall apply to taxable years beginning after
December 31, 1992."
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11103(b) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1990, see section 11103(e)
of Pub. L. 101-508, set out as a note under section 1 of this
title.
Section 11301(d)(2) of Pub. L. 101-508 provided that:
"(A) In general. - The amendment made by subsection (b) [amending
this section] shall apply to taxable years beginning on or after
September 30, 1990, except that, in the case of a small insurance
company, such amendment shall apply to taxable years beginning
after December 31, 1989. For purposes of this paragraph, the term
'small insurance company' means any insurance company which meets
the requirements of section 806(a)(3) of the Internal Revenue Code
of 1986; except that paragraph (2) of section 806(c) of such Code
shall not apply.
"(B) Special rules for year which includes september 30, 1990. -
In the case of any taxable year which includes September 30, 1990,
the amount of acquisition expenses which is required to be
capitalized under section 56(g)(4)(F) of the Internal Revenue Code
of 1986 (as in effect before the amendment made by subsection (b))
by a company which is not a small insurance company shall be the
amount which bears the same ratio to the amount which (but for this
subparagraph) would be so required to be capitalized as the number
of days in such taxable year before September 30, 1990, bears to
the total number of days in such taxable year. A similar reduction
shall be made in the amount amortized for such taxable year under
such section 56(g)(4)(F)."
Section 11531(c) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section and sections
59 and 59A of this title] shall apply to taxable years beginning
after December 31, 1990."
Section 11704(b) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section, sections
172, 351, 413, 461, 469, 597, 857, 860D, 860G, 892, 927, 936, 1017,
1245, 1441, 2056A, 2642, 3231, 4091, 4093, 5061, 6013, 6038A,
6039D, 6045, 6323, 6332, 6655, 7519, 7522, 7608, and 7701 of this
title, and provisions set out as a note under section 231n of Title
45, Railroads] shall take effect on the date of the enactment of
this Act."
Amendment by section 11812(b)(4) of Pub. L. 101-508 applicable to
property placed in service after Nov. 5, 1990, but not applicable
to any property to which section 168 of this title does not apply
by reason of subsec. (f)(5) of section 168, and not applicable to
rehabilitation expenditures described in section 252(f)(5) of Pub.
L. 99-514, see section 11812(c) of Pub. L. 101-508, set out as a
note under section 42 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7205(c) of Pub. L. 101-239 provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and section 382 of this title] shall apply to ownership
changes and acquisitions after October 2, 1989, in taxable years
ending after such date.
"(2) Binding contract. - The amendments made by this section
shall not apply to any ownership change or acquisition pursuant to
a written binding contract in effect on October 2, 1989, and at all
times thereafter before such change or acquisition.
"(3) Bankruptcy proceedings. - In the case of a reorganization
described in section 368(a)(1)(G) of the Internal Revenue Code of
1986, or an exchange of debt for stock in a title 11 or similar
case (as defined in section 368(a)(3) of such Code), the amendments
made by this section shall not apply to any ownership change
resulting from such a reorganization or proceeding if a petition in
such case was filed with the court before October 3, 1989.
"(4) Subsidiaries of bankrupt parent. - The amendments made by
this section shall not apply to any built-in loss of a corporation
which is a member (on October 2, 1989) of an affiliated group the
common parent of which (on such date) was subject to title 11 or
similar case (as defined in section 368(a)(3) of such Code). The
preceding sentence shall apply only if the ownership change or
acquisition is pursuant to the plan approved in such proceeding and
is before the date 2 years after the date on which the petition
which commenced such proceeding was filed."
Section 7611(g) of Pub. L. 101-239 provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and sections 59 and 312 of this title] shall apply to
taxable years beginning after December 31, 1989.
"(2) Intangible drilling costs. - The amendments made by
subsection (f)(5) [amending sections 59 and 312 of this title]
shall apply to costs paid or incurred in taxable years beginning
after December 31, 1989.
"(3) Regulations on earnings and profits rules. - Not later than
March 15, 1991, the Secretary of the Treasury or his delegate shall
prescribe initial regulations providing guidance as to which items
of income are included in adjusted current earnings under section
56(g)(4)(B)(i) of the Internal Revenue Code of 1986 and which items
of deduction are disallowed under section 56(g)(4)(C) of such
Code."
Section 7612(c)(2) of Pub. L. 101-239 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to contracts entered into in taxable years beginning after
September 30, 1990."
Section 7612(d)(2) of Pub. L. 101-239 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to taxable years beginning after December 31, 1990."
Amendment by sections 7811(d)(3) and 7815(e)(2), (4) of Pub. L.
101-239 effective, except as otherwise provided, as if included in
the provision of the Technical and Miscellaneous Revenue Act of
1988, Pub. L. 100-647, to which such amendment relates, see section
7817 of Pub. L. 101-239, set out as a note under section 1 of this
title.
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1007(b)(14)(C) of Pub. L. 100-647 provided that: "The
amendments made by this paragraph [amending this section and
section 57 of this title] shall apply with respect to options
exercised after December 31, 1987."
Amendment by sections 1002(a)(12) and 1007(b)(1)-(13), (15)-(19)
of Pub. L. 100-647 effective, except as otherwise provided, as if
included in the provision of the Tax Reform Act of 1986, Pub. L.
99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 2001(e) of Pub. L. 100-647 provided that: "Except as
otherwise provided in this section, the amendments made by this
section [amending this section, sections 59A, 882, 4041, 4081,
4091, 4662, 4672, 6416, 6421, and 6427 of this title, and
provisions set out as a note under section 4081 of this title]
shall take effect as if included in the provision of the Superfund
Revenue Act of 1986 [Pub. L. 99-499, title V] to which it relates."
Section 2004(u) of Pub. L. 100-647 provided that: "Except as
otherwise provided in this section, any amendment made by this
section [amending this section, sections 163, 244, 280H, 301, 304,
355, 384, 444, 453, 453A, 469, 514, 811, 812, 816, 842, 904, 1201,
1363, 1503, 1561, 4093, 5113, 5123, 5276, 5881, 6427, 6655, 7519,
and 7704 of this title, and provisions set out as notes under
sections 21, 219, 243, 301, 304, 444, 453, 1503, and 7704 of this
title] shall take effect as if included in the provisions of the
Revenue Act of 1987 [Pub. L. 100-203, title X] to which such
amendment relates."
Amendment by section 5041(b)(4) of Pub. L. 100-647 applicable to
contracts entered into on or after June 21, 1988, but not
applicable to any contract resulting from the acceptance of a bid
made before June 21, 1988, if the bid could not have been revoked
or altered at any time on or after June 21, 1988, and not
applicable in the case of a qualified ship contract (as defined in
section 10203(b)(2)(B) of Pub. L. 100-203, set out as a note under
section 460 of this title), see section 5041(e) of Pub. L. 100-647,
set out as a note under section 460 of this title.
Section 6079(a)(2) of Pub. L. 100-647 provided that: "The
amendment made by paragraph (1) [amending this section] shall take
effect as if included in the amendments made by section 701 of the
Reform Act [Pub. L. 99-514]."
Section 6303(b) of Pub. L. 100-647 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1986."
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by section 10202(d) of Pub. L. 100-203 applicable to
dispositions in taxable years beginning after Dec. 31, 1986, with
coordination with Tax Reform Act of 1986, see section 10202(e)(4),
(5) of Pub. L. 100-203, set out as a note under section 453 of this
title.
Section 10243(b) of Pub. L. 100-203 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1987."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, with certain exceptions and qualifications, see section
701(f) of Pub. L. 99-514, set out as a note under section 55 of
this title.
SAVINGS PROVISION
For provisions that nothing in amendment by sections 11801 and
11812 of Pub. L. 101-508 be construed to affect treatment of
certain transactions occurring, property acquired, or items of
income, loss, deduction, or credit taken into account prior to Nov.
5, 1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
APPLICATION OF SUBSECTION (G)(1) AND (3) TO TAXABLE YEARS BEGINNING
IN 1991 AND 1992
Section 1702(e)(1)(B) of Pub. L. 104-188 provided that: "For
purposes of applying sections 56(g)(1) and 56(g)(3) of the Internal
Revenue Code of 1986 with respect to taxable years beginning in
1991 and 1992, the reference in such sections to the alternative
tax net operating loss deduction shall be treated as including a
reference to the deduction under section 56(h) of such Code as in
effect before the amendments made by section 1915 of the Energy
Policy Act of 1992 [Pub. L. 102-486]."
INSTALLMENT SALES; TAXABLE YEARS BEGINNING IN 1987
Section 7821(a)(5) of Pub. L. 101-239 provided that: "In the case
of taxable years beginning in 1987, the reference to section 453
contained in section 56(a)(6) of the Internal Revenue Code of 1986
shall be treated as including a reference to section 453A."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(a) of Pub. L.
99-514 [enacting this section] notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
STUDY OF BOOK AND EARNINGS AND PROFITS ADJUSTMENTS
Section 702 of Pub. L. 99-514 required Secretary of the Treasury
or his delegate to conduct a study of operation and effect of
provisions of sections 56(f) and 56(g) of the Internal Revenue Code
of 1986, prior to repeal by Pub. L. 101-508, title XI, Sec.
11832(4), Nov. 5, 1990, 104 Stat. 1388-559.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 53, 55, 57, 58, 59, 59A,
168, 382, 772, 847, 848, 1400I of this title.
-FOOTNOTE-
(!1) So in original. Probably should be "46 App."
(!2) See References in Text note below.
-End-
-CITE-
26 USC Sec. 57 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
-HEAD-
Sec. 57. Items of tax preference
-STATUTE-
(a) General rule
For purposes of this part, the items of tax preference determined
under this section are -
(1) Depletion
With respect to each property (as defined in section 614), the
excess of the deduction for depletion allowable under section 611
for the taxable year over the adjusted basis of the property at
the end of the taxable year (determined without regard to the
depletion deduction for the taxable year). Effective with respect
to taxable years beginning after December 31, 1992, this
paragraph shall not apply to any deduction for depletion computed
in accordance with section 613A(c).
(2) Intangible drilling costs
(A) In general
With respect to all oil, gas, and geothermal properties of
the taxpayer, the amount (if any) by which the amount of the
excess intangible drilling costs arising in the taxable year is
greater than 65 percent of the net income of the taxpayer from
oil, gas, and geothermal properties for the taxable year.
(B) Excess intangible drilling costs
For purposes of subparagraph (A), the amount of the excess
intangible drilling costs arising in the taxable year is the
excess of -
(i) the intangible drilling and development costs paid or
incurred in connection with oil, gas, and geothermal wells
(other than costs incurred in drilling a nonproductive well)
allowable under section 263(c) or 291(b) for the taxable
year, over
(ii) the amount which would have been allowable for the
taxable year if such costs had been capitalized and straight
line recovery of intangibles (as defined in subsection (b))
had been used with respect to such costs.
(C) Net income from oil, gas, and geothermal properties
For purposes of subparagraph (A), the amount of the net
income of the taxpayer from oil, gas, and geothermal properties
for the taxable year is the excess of -
(i) the aggregate amount of gross income (within the
meaning of section 613(a)) from all oil, gas, and geothermal
properties of the taxpayer received or accrued by the
taxpayer during the taxable year, over
(ii) the amount of any deductions allocable to such
properties reduced by the excess described in subparagraph
(B) for such taxable year.
(D) Paragraph applied separately with respect to geothermal
properties and oil and gas properties
This paragraph shall be applied separately with respect to -
(i) all oil and gas properties which are not described in
clause (ii), and
(ii) all properties which are geothermal deposits (as
defined in section 613(e)(2)).
(E) Exception for independent producers
In the case of any oil or gas well -
(i) In general
In the case of any taxable year beginning after December
31, 1992, this paragraph shall not apply to any taxpayer
which is not an integrated oil company (as defined in section
291(b)(4)).
(ii) Limitation on benefit
The reduction in alternative minimum taxable income by
reason of clause (i) for any taxable year shall not exceed 40
percent (30 percent in case of taxable years beginning in
1993) of the alternative minimum taxable income for such year
determined without regard to clause (i) and the alternative
tax net operating loss deduction under section 56(a)(4).
[(3) Repealed. Pub. L. 100-647, title I, Sec. 1007(b)(14)(B),
Nov. 10, 1988, 102 Stat. 3430]
[(4) Repealed. Pub. L. 104-188, title I, Sec. 1616(b)(3), Aug.
20, 1996, 110 Stat. 1856]
(5) Tax-exempt interest
(A) In general
Interest on specified private activity bonds reduced by any
deduction (not allowable in computing the regular tax) which
would have been allowable if such interest were includible in
gross income.
(B) Treatment of exempt-interest dividends
Under regulations prescribed by the Secretary, any
exempt-interest dividend (as defined in section 852(b)(5)(A))
shall be treated as interest on a specified private activity
bond to the extent of its proportionate share of the interest
on such bonds received by the company paying such dividend.
(C) Specified private activity bonds
(i) In general
For purposes of this part, the term "specified private
activity bond" means any private activity bond (as defined in
section 141) which is issued after August 7, 1986, and the
interest on which is not includible in gross income under
section 103.
(ii) Exception for qualified 501(c)(3) bonds
For purposes of clause (i), the term "private activity
bond" shall not include any qualified 501(c)(3) bond (as
defined in section 145).
(iii) Exception for refundings
For purposes of clause (i), the term "private activity
bond" shall not include any refunding bond (whether a current
or advance refunding) if the refunded bond (or in the case of
a series of refundings, the original bond) was issued before
August 8, 1986.
(iv) Certain bonds issued before September 1, 1986
For purposes of this subparagraph, a bond issued before
September 1, 1986, shall be treated as issued before August
8, 1986, unless such bond would be a private activity bond if
-
(I) paragraphs (1) and (2) of section 141(b) were applied
by substituting "25 percent" for "10 percent" each place it
appears,
(II) paragraphs (3), (4), and (5) of section 141(b) did
not apply, and
(III) subparagraph (B) of section 141(c)(1) did not
apply.
(6) Accelerated depreciation or amortization on certain property
placed in service before January 1, 1987
The amounts which would be treated as items of tax preference
with respect to the taxpayer under paragraphs (2), (3), (4), and
(12) of this subsection (as in effect on the day before the date
of the enactment of the Tax Reform Act of 1986). The preceding
sentence shall not apply to any property to which section
56(a)(1) or (5) applies.
(7) Exclusion for gains on sale of certain small business stock
An amount equal to 7 percent of the amount excluded from gross
income for the taxable year under section 1202.
(b) Straight line recovery of intangibles defined
For purposes of paragraph (2) of subsection (a) -
(1) In general
The term "straight line recovery of intangibles", when used
with respect to intangible drilling and development costs for any
well, means (except in the case of an election under paragraph
(2)) ratable amortization of such costs over the 120-month period
beginning with the month in which production from such well
begins.
(2) Election
If the taxpayer elects with respect to the intangible drilling
and development costs for any well, the term "straight line
recovery of intangibles" means any method which would be
permitted for purposes of determining cost depletion with respect
to such well and which is selected by the taxpayer for purposes
of subsection (a)(2).
-SOURCE-
(Added Pub. L. 99-514, title VII, Sec. 701(a), Oct. 22, 1986, 100
Stat. 2333; amended Pub. L. 100-647, title I, Sec. 1007(b)(14)(B),
(c), Nov. 10, 1988, 102 Stat. 3430, 3432; Pub. L. 101-508, title
XI, Secs. 11344, 11801(c)(12)(A), 11815(b)(3), Nov. 5, 1990, 104
Stat. 1388-472, 1388-527, 1388-558; Pub. L. 102-227, title I, Sec.
112, Dec. 11, 1991, 105 Stat. 1689; Pub. L. 102-486, title XIX,
Sec. 1915(a)(1), (b)(1), Oct. 24, 1992, 106 Stat. 3023, 3024; Pub.
L. 103-66, title XIII, Secs. 13113(b)(1), 13171(a), Aug. 10, 1993,
107 Stat. 429, 454; Pub. L. 104-188, title I, Sec. 1616(b)(3), Aug.
20, 1996, 110 Stat. 1856; Pub. L. 105-34, title III, Sec.
311(b)(2)(B), Aug. 5, 1997, 111 Stat. 835; Pub. L. 105-206, title
VI, Sec. 6005(d)(3), July 22, 1998, 112 Stat. 805; Pub. L. 108-27,
title III, Sec. 301(b)(3), May 28, 2003, 117 Stat. 759.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 303 of Pub. L. 108-27,
see Effective and Termination Dates of 2003 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of the Tax Reform Act of 1986, referred
to in subsec. (a)(6), is the date of enactment of Pub. L. 99-514,
which was approved Oct. 22, 1986.
-MISC1-
PRIOR PROVISIONS
A prior section 57, added Pub. L. 91-172, title III, Sec. 301(a),
Dec. 30, 1969, 83 Stat. 581; amended Pub. L. 92-178, title III,
Secs. 303(b), 304(a)(1), (b)(1), (d), Dec. 10, 1971, 85 Stat.
522-524; Pub. L. 94-455, title III, Sec. 301(c)(1)-(4)(A), (C),
title XIX, Secs. 1901(b)(33)(A), (B), 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1550-1552, 1800, 1834; Pub. L. 95-30, title I, Sec.
101(d)(5), title III, Sec. 308(a), title IV, Sec. 402(a)(5), May
23, 1977, 91 Stat. 133, 153, 155; Pub. L. 95-600, title III, Sec.
301(b)(2), title IV, Secs. 402(b)(1), 421(b), title VII, Sec.
701(b)(1), (3), (4), (f)(3)(D), Nov. 6, 1978, 92 Stat. 2820, 2868,
2874, 2898, 2899, 2901; Pub. L. 95-618, title IV, Sec. 402(b), Nov.
9, 1978, 92 Stat. 3202; Pub. L. 96-222, title I, Secs.
104(a)(4)(E), (F), 107(a)(1)(A), Apr. 1, 1980, 94 Stat. 217, 222;
Pub. L. 96-596, Sec. 3(a), Dec. 24, 1980, 94 Stat. 3475; Pub. L.
97-34, title I, Sec. 121(c)(1), title II, Secs. 205, 212(d)(2)(B),
Aug. 13, 1981, 95 Stat. 197, 223, 239; Pub. L. 97-248, title II,
Secs. 201(b), 204(b), Sept. 3, 1982, 96 Stat. 416, 426; Pub. L.
97-354, Sec. 5(a)(14), (15), Oct. 19, 1982, 96 Stat. 1693; Pub. L.
97-448, title I, Sec. 102(b)(1)(A), (3), (4), Jan. 12, 1983, 96
Stat. 2369, 2370; Pub. L. 98-369, div. A, title I, Secs. 16(b),
68(c), 111(e)(5)-(7), title V, Sec. 555(a)(2), title VII, Secs.
711(a)(3)(A), 722(a)(1), July 18, 1984, 98 Stat. 505, 588, 633,
897, 942, 972; Pub. L. 99-121, title I, Sec. 103(b)(1)(B), (7),
Oct. 11, 1985, 99 Stat. 509, 510; Pub. L. 99-272, title XIII, Sec.
13208(a), Apr. 7, 1986, 100 Stat. 321; Pub. L. 99-514, title XVIII,
Secs. 1804(k)(3)(B)-(D), 1809(a)(3), Oct. 22, 1986, 100 Stat. 2809,
2819, related to items of tax preference, prior to the general
revision of this part by Pub. L. 99-514, Sec. 701(a).
AMENDMENTS
2003 - Subsec. (a)(7). Pub. L. 108-27, Secs. 301(b)(3), 303,
temporarily substituted "7 percent" for "42 percent" after "An
amount equal to" and struck out last sentence which read as
follows: "In the case of stock the holding period of which begins
after December 31, 2000 (determined with the application of the
last sentence of section 1(h)(2)(B)), the preceding sentence shall
be applied by substituting '28 percent' for '42 percent'." See
Effective and Termination Dates of 2003 Amendment note below.
1998 - Subsec. (a)(7). Pub. L. 105-206 inserted at end "In the
case of stock the holding period of which begins after December 31,
2000 (determined with the application of the last sentence of
section 1(h)(2)(B)), the preceding sentence shall be applied by
substituting '28 percent' for '42 percent'."
1997 - Subsec. (a)(7). Pub. L. 105-34 substituted "42 percent"
for "one-half".
1996 - Subsec. (a)(4). Pub. L. 104-188 struck out par. (4) which
read as follows: "Reserves for losses on bad debts of financial
institutions. - In the case of a financial institution to which
section 593 applies, the amount by which the deduction allowable
for the taxable year for a reasonable addition to a reserve for bad
debts exceeds the amount that would have been allowable had the
institution maintained its bad debt reserve for all taxable years
on the basis of actual experience."
1993 - Subsec. (a)(6), (7). Pub. L. 103-66, Sec. 13171(a),
redesignated pars. (7) and (8) as (6) and (7), respectively, and
struck out heading and text of former par. (6). Text read as
follows:
"(A) In general. - The amount by which the deduction allowable
under section 170 or 642(c) would be reduced if all capital gain
property were taken into account at its adjusted basis.
"(B) Capital gain property. - For purposes of subparagraph (A),
the term 'capital gain property' has the meaning given to such term
by section 170(b)(1)(C)(iv). Such term shall not include any
property to which an election under section 170(b)(1)(C)(iii)
applies. In the case of any taxable year beginning in 1991, such
term shall not include any tangible personal property. In the case
of a contribution made before July 1, 1992, in a taxable year
beginning in 1992, such term shall not include any tangible
personal property."
Subsec. (a)(8). Pub. L. 103-66, Sec. 13171(a), redesignated par.
(8) as (7).
Pub. L. 103-66, Sec. 13113(b)(1), added par. (8).
1992 - Subsec. (a)(1). Pub. L. 102-486, Sec. 1915(a)(1), inserted
at end "Effective with respect to taxable years beginning after
December 31, 1992, this paragraph shall not apply to any deduction
for depletion computed in accordance with section 613A(c)."
Subsec. (a)(2)(E). Pub. L. 102-486, Sec. 1915(b)(1), added
subpar. (E).
1991 - Subsec. (a)(6)(B). Pub. L. 102-227 inserted at end "In the
case of a contribution made before July 1, 1992, in a taxable year
beginning in 1992, such term shall not include any tangible
personal property."
1990 - Subsec. (a)(2)(D)(ii). Pub. L. 101-508, Sec. 11815(b)(3),
substituted "section 613(e)(2)" for "section 613(e)(3)".
Subsec. (a)(4). Pub. L. 101-508, Sec. 11801(c)(12)(A), struck out
"585 or" after "section".
Subsec. (a)(6)(B). Pub. L. 101-508, Sec. 11344, inserted at end
"In the case of any taxable year beginning in 1991, such term shall
not include any tangible personal property."
1988 - Subsec. (a)(3). Pub. L. 100-647, Sec. 1007(b)(14)(B),
struck out par. (3) which related to incentive stock options.
Subsec. (a)(5)(C)(i). Pub. L. 100-647, Sec. 1007(c)(2), amended
cl. (i) generally. Prior to amendment, cl. (i) read as follows:
"For purposes of this part, the term 'specified private activity
bonds' means any private activity bond (as defined in section 141)
issued after August 7, 1986."
Subsec. (a)(5)(C)(iii). Pub. L. 100-647, Sec. 1007(c)(1),
inserted "(whether a current or advance refunding)" after "any
refunding bond".
Subsec. (a)(6)(A). Pub. L. 100-647, Sec. 1007(c)(3), inserted "or
642(c)" after "section 170".
EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT
Amendment by Pub. L. 108-27 applicable to dispositions on or
after May 6, 2003, see section 301(d)(3) of Pub. L. 108-27, set out
as a note under section 1 of this title.
Amendment by Pub. L. 108-27 inapplicable to taxable years
beginning after Dec. 31, 2008, and the Internal Revenue Code of
1986 to be applied and administered to such years as if such
amendment had never been enacted, see section 303 of Pub. L.
108-27, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to taxable years ending
after May 6, 1997, see section 311(d) of Pub. L. 105-34, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 applicable to taxable years
beginning after Dec. 31, 1995, see section 1616(c) of Pub. L.
104-188, set out as a note under section 593 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by section 13113(b)(1) of Pub. L. 103-66 applicable to
stock issued after Aug. 10, 1993, see section 13113(e) of Pub. L.
103-66, set out as a note under section 53 of this title.
Amendment by section 13171(a) of Pub. L. 103-66 applicable to
contributions made after June 30, 1992, except that in case of any
contribution of capital gain property which is not tangible
personal property, such amendment applicable only if the
contribution is made after Dec. 31, 1992, see section 13171(d) of
Pub. L. 103-66, set out as a note under section 53 of this title.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to taxable years
beginning after Dec. 31, 1992, see section 1915(d) of Pub. L.
102-486, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1007(b)(14)(B) of Pub. L. 100-647 applicable
with respect to options exercised after Dec. 31, 1987, see section
1007(b)(14)(C) of Pub. L. 100-647, set out as a note under section
56 of this title.
Amendment by section 1007(c) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, with certain exceptions and qualifications, but subsec.
(a)(6) not to apply to any deduction attributable to contributions
made before Aug. 16, 1986, see section 701(f) of Pub. L. 99-514,
set out as a note under section 55 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by sections 11801 and
11815 of Pub. L. 101-508 be construed to affect treatment of
certain transactions occurring, property acquired, or items of
income, loss, deduction, or credit taken into account prior to Nov.
5, 1990, for purposes of determining liability for tax for periods
ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508,
set out as a note under section 29 of this title.
TRANSITIONAL PROVISIONS
Section 1007(f)(4) of Pub. L. 100-647 provided that:
"(A) If any property to which this paragraph applies is placed in
service in a taxable year which begins before January 1, 1987, and
ends on or after August 1, 1986, the item of tax preference
determined under section 57(a) of the Internal Revenue Code of 1954
(as in effect on the day before the date of the enactment of the
Tax Reform Act of 1986 [Oct. 22, 1986]) with respect to such
property shall be the excess of -
"(i) the amount allowable as a deduction for depreciation or
amortization for such taxable year, over
"(ii) the amount which would be determined for such taxable
year under the rules of paragraph (1) or (5) (whichever is
appropriate) of section 56(a) of the Internal Revenue Code of
1954 (as amended by the Tax Reform Act of 1986 [Pub. L. 99-514]).
"(B) This paragraph shall apply to any property -
"(i) which is described in paragraph (4) or (12) of section
57(a) of the Internal Revenue Code of 1954 (as so in effect), and
"(ii) to which paragraph (1) or (5) of section 56(a) of the
Internal Revenue Code of 1986 would apply if the taxable year
referred to in subparagraph (A) began after December 31, 1986."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(a) of Pub. L.
99-514 [enacting this section] notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1, 53, 55, 56, 58, 59,
148, 149, 772, 1400L of this title.
-End-
-CITE-
26 USC Sec. 58 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
-HEAD-
Sec. 58. Denial of certain losses
-STATUTE-
(a) Denial of farm loss
(1) In general
For purposes of computing the amount of the alternative minimum
taxable income for any taxable year of a taxpayer other than a
corporation -
(A) Disallowance of farm loss
No loss of the taxpayer for such taxable year from any tax
shelter farm activity shall be allowed.
(B) Deduction in succeeding taxable year
Any loss from a tax shelter farm activity disallowed under
subparagraph (A) shall be treated as a deduction allocable to
such activity in the 1st succeeding taxable year.
(2) Tax shelter farm activity
For purposes of this subsection, the term "tax shelter farm
activity" means -
(A) any farming syndicate as defined in section 464(c), and
(B) any other activity consisting of farming which is a
passive activity (within the meaning of section 469(c)).
(3) Application to personal service corporations
For purposes of paragraph (1), a personal service corporation
(within the meaning of section 469(j)(2)) shall be treated as a
taxpayer other than a corporation.
(4) Determination of loss
In determining the amount of the loss from any tax shelter farm
activity, the adjustments of sections 56 and 57 shall apply.
(b) Disallowance of passive activity loss
In computing the alternative minimum taxable income of the
taxpayer for any taxable year, section 469 shall apply, except that
in applying section 469 -
(1) the adjustments of sections 56 and 57 shall apply,
(2) the provisions of section 469(m) (relating to phase-in of
disallowance) shall not apply, and
(3) in lieu of applying section 469(j)(7), the passive activity
loss of a taxpayer shall be computed without regard to qualified
housing interest (as defined in section 56(e)).
(c) Special rules
For purposes of this section -
(1) Special rule for insolvent taxpayers
(A) In general
The amount of losses to which subsection (a) or (b) applies
shall be reduced by the amount (if any) by which the taxpayer
is insolvent as of the close of the taxable year.
(B) Insolvent
For purposes of this paragraph, the term "insolvent" means
the excess of liabilities over the fair market value of assets.
(2) Loss allowed for year of disposition of farm shelter activity
If the taxpayer disposes of his entire interest in any tax
shelter farm activity during any taxable year, the amount of the
loss attributable to such activity (determined after carryovers
under subsection (a)(1)(B)) shall (to the extent otherwise
allowable) be allowed for such taxable year in computing
alternative minimum taxable income and not treated as a loss from
a tax shelter farm activity.
-SOURCE-
(Added Pub. L. 99-514, title VII, Sec. 701(a), Oct. 22, 1986, 100
Stat. 2335; amended Pub. L. 100-203, title X, Sec. 10212(b), Dec.
22, 1987, 101 Stat. 1330-406; Pub. L. 100-647, title I, Sec.
1007(d), Nov. 10, 1988, 102 Stat. 3432.)
-MISC1-
PRIOR PROVISIONS
A prior section 58, added Pub. L. 91-172, title III, Sec. 301(a),
Dec. 30, 1969, 83 Stat. 583; amended Pub. L. 92-178, title III,
Sec. 308(a), Dec. 10, 1971, 85 Stat. 524; Pub. L. 94-455, title
III, Sec. 301(d), title XIX, Secs. 1901(b)(40), 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1553, 1803, 1834; Pub. L. 95-600, title IV,
Secs. 421(c), 423(a), title VII, Sec. 701(b)(2), Nov. 6, 1978, 92
Stat. 2875, 2877, 2898; Pub. L. 96-222, title I, Sec. 107(a)(1)(C),
Apr. 1, 1980, 94 Stat. 222; Pub. L. 97-248, title II, Sec.
201(c)(1), Sec. 201(d)(3), formerly Sec. 201(c)(3), Sept. 3, 1982,
96 Stat. 417, 419, renumbered Sec. 201(d)(3), Pub. L. 97-448, title
III, Sec. 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L.
97-354, Secs. 3(c), 5(a)(16), Oct. 19, 1982, 96 Stat. 1688, 1693;
Pub. L. 97-448, title I, Sec. 102(b)(2), Jan. 12, 1983, 96 Stat.
2369; Pub. L. 98-369, div. A, title VII, Sec. 711(a)(2), (3)(B),
July 18, 1984, 98 Stat. 942; Pub. L. 99-514, title XVIII, Sec.
1875(a), Oct. 22, 1986, 100 Stat. 2894, related to rules for
application of minimum tax for tax preferences, prior to the
general revision of this part by Pub. L. 99-514, Sec. 701(a).
AMENDMENTS
1988 - Subsec. (a)(2). Pub. L. 100-647, Sec. 1007(d)(1), struck
out "(as modified by section 461(i)(4)(A))" after "section 464(c)"
in subpar. (A) and substituted "section 469(c)" for "section
469(d), without regard to paragraph (1)(B) thereof" in subpar. (B).
Subsec. (a)(3). Pub. L. 100-647, Sec. 1007(d)(2), substituted
"469(j)(2)" for "469(g)(1)(C)".
Subsec. (a)(4). Pub. L. 100-647, Sec. 1007(d)(3), added par. (4).
Subsec. (b). Pub. L. 100-647, Sec. 1007(d)(4), added pars. (1) to
(3) and struck out former pars. (1) to (3) which read as follows:
"(1) the adjustments of section 56 shall apply,
"(2) any deduction to the extent such deduction is an item of tax
preference under section 57(a) shall not be taken into account, and
"(3) the provisions of section 469(m) (relating to phase-in of
disallowance) shall not apply."
1987 - Subsec. (b)(3). Pub. L. 100-203 substituted "section
469(m)" for "section 469(l)".
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Section 10212(c) of Pub. L. 100-203 provided that: "The
amendments made by this section [amending this section and sections
163 and 469 of this title] shall take effect as if included in the
amendments made by section 501 of the Tax Reform Act of 1986
[section 501 of Pub. L. 99-514, see section 501(c) of Pub. L.
99-514, set out as an Effective Date note under section 469 of this
title]."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, with certain exceptions and qualifications, see section
701(f) of Pub. L. 99-514, set out as a note under section 55 of
this title.
APPLICABILITY OF 1986 REPEAL
Pub. L. 101-239, title VII, Sec. 7811(d)(1)(B), Dec. 19, 1989,
103 Stat. 2408, provided that: "The repeal of section 58(h) of the
Internal Revenue Code of 1954 by the Tax Reform Act of 1986 [Pub.
L. 99-514] shall be effective only with respect to items of tax
preference arising in taxable years beginning after December 31,
1986."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(a) of Pub. L.
99-514 [enacting this section] notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 55, 56, 59, 772 of this
title.
-End-
-CITE-
26 USC Sec. 59 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
-HEAD-
Sec. 59. Other definitions and special rules
-STATUTE-
(a) Alternative minimum tax foreign tax credit
For purposes of this part -
(1) In general
The alternative minimum tax foreign tax credit for any taxable
year shall be the credit which would be determined under section
27(a) for such taxable year if -
(A) the pre-credit tentative minimum tax were the tax against
which such credit was taken for purposes of section 904 for the
taxable year and all prior taxable years beginning after
December 31, 1986,
(B) section 904 were applied on the basis of alternative
minimum taxable income instead of taxable income, and
(C) the determination of whether any income is high-taxed
income for purposes of section 904(d)(2) were made on the basis
of the applicable rate specified in subparagraph (A)(i) or
(B)(i) of section 55(b)(1) (whichever applies) in lieu of the
highest rate of tax specified in section 1 or 11 (whichever
applies).
(2) Limitation to 90 percent of tax
(A) In general
The alternative minimum tax foreign tax credit for any
taxable year shall not exceed the excess (if any) of -
(i) the pre-credit tentative minimum tax for the taxable
year, over
(ii) 10 percent of the amount which would be the pre-credit
tentative minimum tax without regard to the alternative tax
net operating loss deduction and section 57(a)(2)(E).
(B) Carryback and carryforward
If the alternative minimum tax foreign tax credit exceeds the
amount determined under subparagraph (A), such excess shall,
for purposes of this part, be treated as an amount to which
section 904(c) applies.
(3) Pre-credit tentative minimum tax
For purposes of this subsection, the term "pre-credit tentative
minimum tax" means -
(A) in the case of a taxpayer other than a corporation, the
amount determined under the first sentence of section
55(b)(1)(A)(i), or
(B) in the case of a corporation, the amount determined under
section 55(b)(1)(B)(i).
(4) Election to use simplified section 904 limitation
(A) In general
In determining the alternative minimum tax foreign tax credit
for any taxable year to which an election under this paragraph
applies -
(i) subparagraph (B) of paragraph (1) shall not apply, and
(ii) the limitation of section 904 shall be based on the
proportion which -
(I) the taxpayer's taxable income (as determined for
purposes of the regular tax) from sources without the
United States (but not in excess of the taxpayer's entire
alternative minimum taxable income), bears to
(II) the taxpayer's entire alternative minimum taxable
income for the taxable year.
(B) Election
(i) In general
An election under this paragraph may be made only for the
taxpayer's first taxable year which begins after December 31,
1997, and for which the taxpayer claims an alternative
minimum tax foreign tax credit.
(ii) Election revocable only with consent
An election under this paragraph, once made, shall apply to
the taxable year for which made and all subsequent taxable
years unless revoked with the consent of the Secretary.
(b) Minimum tax not to apply to income eligible for credits under
section 30A or 936
In the case of any corporation for which a credit is allowable
for the taxable year under section 30A or 936, alternative minimum
taxable income shall not include any income with respect to which a
credit is determined under section 30A or 936.
(c) Treatment of estates and trusts
In the case of any estate or trust, the alternative minimum
taxable income of such estate or trust and any beneficiary thereof
shall be determined by applying part I of subchapter J with the
adjustments provided in this part.
(d) Apportionment of differently treated items in case of certain
entities
(1) In general
The differently treated items for the taxable year shall be
apportioned (in accordance with regulations prescribed by the
Secretary) -
(A) Regulated investment companies and real estate investment
trusts
In the case of a regulated investment company to which part I
of subchapter M applies or a real estate investment company to
which part II of subchapter M applies, between such company or
trust and shareholders and holders of beneficial interest in
such company or trust.
(B) Common trust funds
In the case of a common trust fund (as defined in section
584(a)), pro rata among the participants of such fund.
(2) Differently treated items
For purposes of this section, the term "differently treated
item" means any item of tax preference or any other item which is
treated differently for purposes of this part than for purposes
of computing the regular tax.
(e) Optional 10-year writeoff of certain tax preferences
(1) In general
For purposes of this title, any qualified expenditure to which
an election under this paragraph applies shall be allowed as a
deduction ratably over the 10-year period (3-year period in the
case of circulation expenditures described in section 173)
beginning with the taxable year in which such expenditure was
made (or, in the case of a qualified expenditure described in
paragraph (2)(C), over the 60-month period beginning with the
month in which such expenditure was paid or incurred).
(2) Qualified expenditure
For purposes of this subsection, the term "qualified
expenditure" means any amount which, but for an election under
this subsection, would have been allowable as a deduction
(determined without regard to section 291) for the taxable year
in which paid or incurred under -
(A) section 173 (relating to circulation expenditures),
(B) section 174(a) (relating to research and experimental
expenditures),
(C) section 263(c) (relating to intangible drilling and
development expenditures),
(D) section 616(a) (relating to development expenditures), or
(E) section 617(a) (relating to mining exploration
expenditures).
(3) Other sections not applicable
Except as provided in this subsection, no deduction shall be
allowed under any other section for any qualified expenditure to
which an election under this subsection applies.
(4) Election
(A) In general
An election may be made under paragraph (1) with respect to
any portion of any qualified expenditure.
(B) Revocable only with consent
Any election under this subsection may be revoked only with
the consent of the Secretary.
(C) Partners and shareholders of S corporations
In the case of a partnership, any election under paragraph
(1) shall be made separately by each partner with respect to
the partner's allocable share of any qualified expenditure. A
similar rule shall apply in the case of an S corporation and
its shareholders.
(5) Dispositions
(A) Application of section 1254
In the case of any disposition of property to which section
1254 applies (determined without regard to this section), any
deduction under paragraph (1) with respect to amounts which are
allocable to such property shall, for purposes of section 1254,
be treated as a deduction allowable under section 263(c),
616(a), or 617(a), whichever is appropriate.
(B) Application of section 617(d)
In the case of any disposition of mining property to which
section 617(d) applies (determined without regard to this
subsection), any deduction under paragraph (1) with respect to
amounts which are allocable to such property shall, for
purposes of section 617(d), be treated as a deduction allowable
under section 617(a).
(6) Amounts to which election apply not treated as tax preference
Any portion of any qualified expenditure to which an election
under paragraph (1) applies shall not be treated as an item of
tax preference under section 57(a) and section 56 shall not apply
to such expenditure.
(f) Coordination with section 291
Except as otherwise provided in this part, section 291 (relating
to cutback of corporate preferences) shall apply before the
application of this part.
(g) Tax benefit rule
The Secretary may prescribe regulations under which differently
treated items shall be properly adjusted where the tax treatment
giving rise to such items will not result in the reduction of the
taxpayer's regular tax for the taxable year for which the item is
taken into account or for any other taxable year.
(h) Coordination with certain limitations
The limitations of sections 704(d), 465, and 1366(d) (and such
other provisions as may be specified in regulations) shall be
applied for purposes of computing the alternative minimum taxable
income of the taxpayer for the taxable year with the adjustments of
sections 56, 57, and 58.
(i) Special rule for amounts treated as tax preference
For purposes of this subtitle (other than this part), any amount
shall not fail to be treated as wholly exempt from tax imposed by
this subtitle solely by reason of being included in alternative
minimum taxable income.
(j) Treatment of unearned income of minor children
(1) In general
In the case of a child to whom section 1(g) applies, the
exemption amount for purposes of section 55 shall not exceed the
sum of -
(A) such child's earned income (as defined in section
911(d)(2)) for the taxable year, plus
(B) $5,000.
(2) Inflation adjustment
In the case of any taxable year beginning in a calendar year
after 1998, the dollar amount in paragraph (1)(B) shall be
increased by an amount equal to the product of -
(A) such dollar amount, and
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting "1997" for "1992" in subparagraph
(B) thereof.
If any increase determined under the preceding sentence is not a
multiple of $50, such increase shall be rounded to the nearest
multiple of $50.
-SOURCE-
(Added Pub. L. 99-514, title VII, Sec. 701(a), Oct. 22, 1986, 100
Stat. 2336; amended Pub. L. 100-647, title I, Secs. 1007(e),
1014(e)(5)(A), Nov. 10, 1988, 102 Stat. 3432, 3561; Pub. L.
101-239, title VII, Secs. 7611(f)(5)(B), (6), 7612(e)(1),
7811(d)(1)(A), (j)(7), Dec. 19, 1989, 103 Stat. 2373, 2374, 2408,
2412; Pub. L. 101-508, title XI, Secs. 11101(d)(3), 11531(b)(2),
11702(d), 11801(c)(2)(D), Nov. 5, 1990, 104 Stat. 1388-405,
1388-490, 1388-514, 1388-523; Pub. L. 102-486, title XIX, Sec.
1915(c)(3), Oct. 24, 1992, 106 Stat. 3024; Pub. L. 104-188, title
I, Secs. 1601(b)(2)(D), 1702(a)(1), 1703(e), 1704(m)(3), Aug. 20,
1996, 110 Stat. 1833, 1868, 1875, 1883; Pub. L. 105-34, title X,
Sec. 1057(a), title XI, Sec. 1103(a), title XII, Sec. 1201(b)(1),
Aug. 5, 1997, 111 Stat. 945, 966, 994; Pub. L. 105-206, title VI,
Secs. 6011(a), 6023(2), July 22, 1998, 112 Stat. 817, 824.)
-STATAMEND-
ADJUSTMENT OF ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNT FOR TAXABLE
YEARS BEGINNING IN 2004
For adjustment of alternative minimum tax exemption amount under
subsection (j) of this section in the case of a child to whom the
"kiddie tax" applies for taxable years beginning in 2004, see
section 3.08 of Revenue Procedure 2003-85, set out as a note under
section 1 of this title.
-MISC1-
AMENDMENTS
1998 - Subsec. (a)(3), (4). Pub. L. 105-206, Sec. 6011(a),
redesignated par. (3), relating to election to use simplified
section 904 limitation, as (4).
Subsec. (b). Pub. L. 105-206, Sec. 6023(2), substituted "credits
under section 30A or 936" for "section 936 credit" in heading.
1997 - Subsec. (a)(2)(C). Pub. L. 105-34, Sec. 1057(a), struck
out subpar. (C) which read as follows:
"(C) Exception. - Subparagraph (A) shall not apply to any
domestic corporation if -
"(i) more than 50 percent of the stock of such domestic
corporation (by vote and value) is owned by United States persons
who are not members of an affiliated group (as defined in section
1504 of such Code) which includes such corporation,
"(ii) all of the activities of such corporation are conducted
in 1 foreign country with which the United States has an income
tax treaty in effect and such treaty provides for the exchange of
information between such foreign country and the United States,
"(iii) all of the current earnings and profits of such
corporation are distributed at least annually (other than current
earnings and profits retained for normal maintenance or capital
replacements or improvements of an existing business), and
"(iv) all of such distributions by such corporation to United
States persons are used by such persons in a trade or business
conducted in the United States."
Subsec. (a)(3). Pub. L. 105-34, Sec. 1103(a), added par. (3)
relating to election to use simplified section 904 limitation.
Subsec. (j). Pub. L. 105-34, Sec. 1201(b)(1), amended subsec. (j)
generally, restating limitation on exemption amount, adding
provisions for inflation adjustment of such amount, and deleting
provisions relating to limitation based on parental minimum tax and
unused parental minimum tax exemption.
1996 - Subsec. (a)(1)(A). Pub. L. 104-188, Sec. 1703(e)(1),
substituted "the pre-credit tentative minimum tax" for "the amount
determined under section 55(b)(1)(A)".
Subsec. (a)(1)(C). Pub. L. 104-188, Sec. 1703(e)(2), substituted
"specified in subparagraph (A)(i) or (B)(i) of section 55(b)(1)
(whichever applies)" for "specified in section 55(b)(1)(A)".
Subsec. (a)(2)(A)(i). Pub. L. 104-188, Sec. 1703(e)(1),
substituted "the pre-credit tentative minimum tax" for "the amount
determined under section 55(b)(1)(A)".
Subsec. (a)(2)(A)(ii). Pub. L. 104-188, Sec. 1703(e)(3),
substituted "which would be the pre-credit tentative minimum tax"
for "which would be determined under section 55(b)(1)(A)".
Subsec. (a)(3). Pub. L. 104-188, Sec. 1703(e)(4), added par. (3).
Subsec. (b). Pub. L. 104-188, Sec. 1601(b)(2)(D), substituted
"section 30A or 936, alternative minimum taxable income shall not
include any income with respect to which a credit is determined
under section 30A or 936." for "section 936, alternative minimum
taxable income shall not include any amount with respect to which
the requirements of subparagraph (A) or (B) of section 936(a)(1)
are met."
Subsec. (j)(1)(B). Pub. L. 104-188, Sec. 1704(m)(3), substituted
"twice the amount in effect for the taxable year under section
63(c)(5)(A)" for "$1,000".
Subsec. (j)(3)(B). Pub. L. 104-188, Sec. 1702(a)(1), substituted
"section 1(g)(3)(B)" for "section 1(i)(3)(B)".
1992 - Subsec. (a)(2)(A)(ii). Pub. L. 102-486 substituted "and
section 57(a)(2)(E)" for "and the alternative tax energy preference
deduction under section 56(h)".
1990 - Subsec. (a)(1)(B) to (D). Pub. L. 101-508, Sec.
11801(c)(2)(D), inserted "and" at end of subpar. (B), redesignated
subpar. (D) as (C), and struck out former subpar. (C) which read as
follows: "for purposes of section 904, any increase in alternative
minimum taxable income by reason of section 56(c)(1)(A) (relating
to adjustment for book income) shall have the same proportionate
source (and character) as alternative minimum taxable income
determined without regard to such increase, and".
Subsec. (a)(2)(A)(ii). Pub. L. 101-508, Sec. 11531(b)(2),
inserted before period at end "and the alternative tax energy
preference deduction under section 56(h)".
Subsec. (j). Pub. L. 101-508, Sec. 11101(d)(3)(A), substituted
"section 1(g)" for "section 1(i)" in pars. (1), (2)(A), (B)(i)(I),
(II), (D), and (3).
Subsec. (j)(1)(B). Pub. L. 101-508, Sec. 11702(d)(1), inserted
"(or, if greater, the child's share of the unused parental minimum
tax exemption)" before period at end.
Subsec. (j)(2)(C). Pub. L. 101-508, Sec. 11101(d)(3)(B),
substituted "section 1(g)(3)(B)" for "section 1(i)(3)(B)".
Subsec. (j)(2)(D). Pub. L. 101-508, Sec. 11702(d)(3), substituted
"paragraphs (3)(D), (5), and (6)" for "paragraphs (5) and (6)".
Subsec. (j)(3). Pub. L. 101-508, Sec. 11702(d)(2), added par.
(3).
1989 - Subsec. (a)(2)(C). Pub. L. 101-239, Sec. 7612(e)(1), added
subpar. (C).
Subsec. (e)(1). Pub. L. 101-239, Sec. 7611(f)(5)(B), inserted
before period at end "(or, in the case of a qualified expenditure
described in paragraph (2)(C), over the 60-month period beginning
with the month in which such expenditure was paid or incurred)".
Subsec. (g). Pub. L. 101-239, Sec. 7811(d)(1)(A), substituted
"for the taxable year for which the item is taken into account or
for any other taxable year" for "for any taxable year".
Subsec. (i). Pub. L. 101-239, Sec. 7611(f)(6), substituted
"amounts" for "interest" in heading and "any amount shall" for
"interest shall" in text.
Subsec. (j)(2)(D). Pub. L. 101-239, Sec. 7811(j)(7), substituted
"Other rules" for "Others rules" in heading.
1988 - Subsec. (a)(1)(D). Pub. L. 100-647, Sec. 1007(e)(3), added
subpar. (D).
Subsec. (e)(2). Pub. L. 100-647, Sec. 1007(e)(1), inserted
"(determined without regard to section 291)" after "as a
deduction".
Subsec. (h). Pub. L. 100-647, Sec. 1007(e)(2), substituted
"taxable year with the adjustments of sections 56, 57, and 58" for
"taxable year -
"(1) with the adjustments of section 56, and
"(2) by not taking into account any deduction to the extent
such deduction is an item of tax preference under section 57(a)".
Subsec. (i). Pub. L. 100-647, Sec. 1007(e)(4), inserted "(other
than this part)" after "of this subtitle" and substituted
"subtitle" for "title" before "solely".
Subsec. (j). Pub. L. 100-647, Sec. 1014(e)(5)(A), added subsec.
(j).
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by section 6023(2) of Pub. L. 105-206 effective July
22, 1998, see section 6023(32) of Pub. L. 105-206, set out as a
note under section 34 of this title.
Amendment by section 6011(a) of Pub. L. 105-206 effective, except
as otherwise provided, as if included in the provisions of the
Taxpayer Relief Act of 1997, Pub. L. 105-34, to which such
amendment relates, see section 6024 of Pub. L. 105-206, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1057(b) of Pub. L. 105-34 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after the date of the enactment of this Act [Aug.
5, 1997]."
Section 1103(b) of Pub. L. 105-34 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1997."
Section 1201(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section and sections 63 and
6103 of this title] shall apply to taxable years beginning after
December 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1601(b)(2)(D) of Pub. L. 104-188 applicable
to taxable years beginning after Dec. 31, 1995, except as otherwise
provided, see section 1601(c) of Pub. L. 104-188, set out as an
Effective Date note under section 30A of this title.
Amendment by section 1702(a)(1) of Pub. L. 104-188 effective,
except as otherwise expressly provided, as if included in the
provision of the Revenue Reconciliation Act of 1990, Pub. L.
101-508, title XI, to which such amendment relates, see section
1702(i) of Pub. L. 104-188, set out as a note under section 38 of
this title.
Amendment by section 1703(e) of Pub. L. 104-188 effective as if
included in the provision of the Revenue Reconciliation Act of
1993, Pub. L. 103-66, Secs. 13001-13444, to which such amendment
relates, see section 1703(o) of Pub. L. 104-188, set out as a note
under section 39 of this title.
Amendment by section 1704(m)(3) of Pub. L. 104-188 applicable to
taxable years beginning after Dec. 31, 1995, see section 1704(m)(4)
of Pub. L. 104-188, set out as a note under section 1 of this
title.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to taxable years
beginning after Dec. 31, 1992, see section 1915(d) of Pub. L.
102-486, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(3) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1990, see section 11101(e)
of Pub. L. 101-508, set out as a note under section 1 of this
title.
Amendment by section 11531(b)(2) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1990, see section 11531(c)
of Pub. L. 101-508, set out as a note under section 56 of this
title.
Section 11702(j) of Pub. L. 101-508 provided that: "Any amendment
made by this section [amending this section and sections 135, 216,
355, 367, 447, 453B, 468B, 2056, 2056A, 2523, 4980B, and 6114 of
this title] shall take effect as if included in the provision of
the Technical and Miscellaneous Revenue Act of 1988 [Pub. L.
100-647] to which such amendment relates."
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7611(f)(6) of Pub. L. 101-239 applicable to
taxable years beginning after Dec. 31, 1989, see section 7611(g)(1)
of Pub. L. 101-239, set out as a note under section 56 of this
title.
Amendment by section 7611(f)(5)(B) of Pub. L. 101-239 applicable
to costs paid or incurred in taxable years beginning after Dec. 31,
1989, see section 7611(g)(2) of Pub. L. 101-239, set out as a note
under section 56 of this title.
Section 7612(e)(2) of Pub. L. 101-239 provided that:
"(A) In general. - The amendment made by paragraph (1) [amending
this section] shall apply to taxable years beginning after March
31, 1990.
"(B) Special rule for year which includes march 31, 1990. - In
the case of any taxable year (of a corporation described in
subparagraph (C) of section 59(a)(2) of the Internal Revenue Code
of 1986 (as added by paragraph (1))) which begins after December
31, 1989, and includes March 31, 1990, the amount determined under
clause (ii) of section 59(a)(2)(A) of such Code shall be an amount
which bears the same ratio to the amount which would have been
determined under such clause without regard to this subparagraph as
the number of days in such taxable year on or before March 31,
1990, bears to the total number of days in such taxable year."
Amendment by section 7811(d)(1)(A), (j)(7) of Pub. L. 101-239
effective, except as otherwise provided, as if included in the
provision of the Technical and Miscellaneous Revenue Act of 1988,
Pub. L. 100-647, to which such amendment relates, see section 7817
of Pub. L. 101-239, set out as a note under section 1 of this
title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1007(e) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 1014(e)(5)(B) of Pub. L. 100-647 provided that: "The
amendment made by subparagraph (A) [amending this section] shall
apply to taxable years beginning after December 31, 1988."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, with certain exceptions and qualifications, see section
701(f) of Pub. L. 99-514, set out as a note under section 55 of
this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801 of Pub.
L. 101-508 be construed to affect treatment of certain transactions
occurring, property acquired, or items of income, loss, deduction,
or credit taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
CONSIDERATION OF CERTAIN TAXES TREATED AS PAID OR ACCRUED UNDER
SECTION 904(C) IN DETERMINATION OF ALTERNATIVE MINIMUM TAX FOREIGN
TAX CREDIT
Section 1007(f)(5) of Pub. L. 100-647 provided that: "In
determining the amount of the alternative minimum tax foreign tax
credit under section 59 of the 1986 Code, there shall not be taken
into account any taxes paid or accrued in a taxable year beginning
after December 31, 1986, which are treated under section 904(c) of
the 1986 Code as paid or accrued in a taxable year beginning on or
before December 31, 1986."
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(a) of Pub. L.
99-514 [enacting this section] notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 53, 173, 174, 263, 263A,
616, 617, 904, 1016 of this title.
-End-
-CITE-
26 USC PART VII - ENVIRONMENTAL TAX 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VII - ENVIRONMENTAL TAX
-HEAD-
PART VII - ENVIRONMENTAL TAX
-MISC1-
Sec.
59A. Environmental tax.
-End-
-CITE-
26 USC Sec. 59A 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VII - ENVIRONMENTAL TAX
-HEAD-
Sec. 59A. Environmental tax
-STATUTE-
(a) Imposition of tax
In the case of a corporation, there is hereby imposed (in
addition to any other tax imposed by this subtitle) a tax equal to
0.12 percent of the excess of -
(1) the modified alternative minimum taxable income of such
corporation for the taxable year, over
(2) $2,000,000.
(b) Modified alternative minimum taxable income
For purposes of this section, the term "modified alternative
minimum taxable income" means alternative minimum taxable income
(as defined in section 55(b)(2)) but determined without regard to -
(1) the alternative tax net operating loss deduction (as
defined in section 56(d)), and
(2) the deduction allowed under section 164(a)(5).
(c) Exception for RIC's and REIT's
The tax imposed by subsection (a) shall not apply to -
(1) a regulated investment company to which part I of
subchapter M applies, and
(2) a real estate investment trust to which part II of
subchapter M applies.
(d) Special rules
(1) Short taxable years
The application of this section to taxable years of less than
12 months shall be in accordance with regulations prescribed by
the Secretary.
(2) Section 15 not to apply
Section 15 shall not apply to the tax imposed by this section.
(e) Application of tax
(1) In general
The tax imposed by this section shall apply to taxable years
beginning after December 31, 1986, and before January 1, 1996.
(2) Earlier termination
The tax imposed by this section shall not apply to taxable
years -
(A) beginning during a calendar year during which no tax is
imposed under section 4611(a) by reason of paragraph (2) of
section 4611(e), and
(B) beginning after the calendar year which includes the
termination date under paragraph (3) of section 4611(e).
-SOURCE-
(Added Pub. L. 99-499, title V, Sec. 516(a), Oct. 17, 1986, 100
Stat. 1770; amended Pub. L. 100-647, title II, Sec. 2001(c)(1),
(3)(B), Nov. 10, 1988, 102 Stat. 3594; Pub. L. 101-508, title XI,
Secs. 11231(a)(1)(A), 11531(b)(3), 11801(c)(2)(E), Nov. 5, 1990,
104 Stat. 1388-444, 1388-490, 1388-523; Pub. L. 102-486, title XIX,
Sec. 1915(c)(4), Oct. 24, 1992, 106 Stat. 3024.)
-MISC1-
AMENDMENTS
1992 - Subsec. (b)(1). Pub. L. 102-486 struck out "or the
alternative tax energy preference deduction under section 56(h)"
after "section 56(d))".
1990 - Subsec. (b)(1). Pub. L. 101-508, Sec. 11531(b)(3),
inserted before comma "or the alternative tax energy preference
deduction under section 56(h)".
Subsec. (b)(2). Pub. L. 101-508, Sec. 11801(c)(2)(E), struck out
"(and the last sentence of section 56(f)(2)(B))" after "section
164(a)(5)".
Subsec. (e)(1). Pub. L. 101-508, Sec. 11231(a)(1)(A), substituted
"January 1, 1996" for "January 1, 1992".
1988 - Subsec. (b)(2). Pub. L. 100-647, Sec. 2001(c)(3)(B),
inserted "(and the last sentence of section 56(f)(2)(B))" before
period at end.
Subsecs. (c) to (e). Pub. L. 100-647, Sec. 2001(c)(1), added
subsec. (c) and redesignated former subsecs. (c) and (d) as (d) and
(e), respectively.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to taxable years
beginning after Dec. 31, 1992, see section 1915(d) of Pub. L.
102-486, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11531(b)(3) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1990, see section 11531(c)
of Pub. L. 101-508, set out as a note under section 56 of this
title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Superfund Revenue
Act of 1986, Pub. L. 99-499, title V, to which it relates, see
section 2001(e) of Pub. L. 100-647, set out as a note under section
56 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, see section 516(c) of Pub. L. 99-499, set out as an Effective
Date of 1986 Amendment note under section 26 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801 of Pub.
L. 101-508 be construed to affect treatment of certain transactions
occurring, property acquired, or items of income, loss, deduction,
or credit taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 26, 30A, 164, 275, 882,
936, 1561, 4611, 6425, 6655, 9507 of this title.
-End-
-CITE-
26 USC [PART VIII - REPEALED] 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
[PART VIII - REPEALED]
-HEAD-
[PART VIII - REPEALED]
-End-
-CITE-
26 USC Sec. 59B 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
[PART VIII - REPEALED]
-HEAD-
[Sec. 59B. Repealed. Pub. L. 101-234, title I, Sec. 102(a), Dec.
13, 1989, 103 Stat. 1980]
-MISC1-
Section, added Pub. L. 100-360, title I, Sec. 111(a), July 1,
1988, 102 Stat. 690, provided for imposition of a supplemental
medicare premium.
EFFECTIVE DATE OF REPEAL
Section 102(d) of Pub. L. 101-234 provided that:
"(1) In general. - Except as provided in this subsection, the
provisions of this section [repealing section 1395i-1a of Title 42,
The Public Health and Welfare, enacting provisions set out as notes
under section 6050F of this title and section 1395t of Title 42,
and repealing provisions set out as a note under section 1395i-1a
of Title 42] shall take effect January 1, 1990.
"(2) Repeal of supplemental medicare premium. - The repeal of
section 111 of MCCA [Pub. L. 100-360, which enacted this section,
amended section 6050F of this title, and enacted provisions set out
as notes below] shall apply to taxable years beginning after
December 31, 1988."
EFFECTIVE DATE
Section 111(e) of Pub. L. 100-360, which provided that the
enactment of this section and the amendment of section 6050F of
this title applied to taxable years beginning after December 31,
1988, and that in case of a taxable year beginning in 1989, the
premium imposed by this section should not be treated as a tax for
purposes of applying section 6654 of this title, was repealed by
Pub. L. 101-234, title I, Sec. 102(a), Dec. 13, 1989, 103 Stat.
1980.
ANNOUNCEMENT OF SUPPLEMENTAL PREMIUM RATE
Section 111(d) of Pub. L. 100-360, which provided that in the
case of calendar year 1993 or any calendar year thereafter (1) not
later than July 1 of such calendar year, the Secretary of the
Treasury or his delegate was required to make an announcement of
the estimated supplemental premium rate under this section for
taxable years beginning in the following calendar year, and (2) not
later than October 1 of such calendar year, the Secretary of the
Treasury or his delegate was required to make an announcement of
the actual supplemental premium rate under this section for such
taxable years, was repealed by Pub. L. 101-234, title I, Sec.
102(a), Dec. 13, 1989, 103 Stat. 1980.
-End-
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