Internal Revenue Code:Sec. 30A. Puerto Rico economic activity credit

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Location in Internal Revenue Code

     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
        

Statute

    Sec. 30A. Puerto Rico economic activity credit
 
    (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.
 

Sources

    (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.)
 

Miscellaneous

                                 AMENDMENTS

2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432)
SEC. 119. <<NOTE: 26 USC 30A note.>> AMERICAN SAMOA ECONOMIC DEVELOPMENT 
            CREDIT.
    (a) <<NOTE: Corporations.>> In General.--For purposes of section 30A 
of the Internal Revenue Code of 1986, a domestic corporation shall be 
treated as a qualified domestic corporation to which such section 
applies if such corporation--
            (1) is an existing credit claimant with respect to American 
        Samoa, and
            (2) elected the application of section 936 of the Internal 
        Revenue Code of 1986 for its last taxable year beginning before 
        January 1, 2006.
    (b) Special Rules for Application of Section.--The following rules 
shall apply in applying section 30A of the Internal Revenue Code of 1986 
for purposes of this section:
            (1) Amount of credit.--Notwithstanding section 30A(a)(1) of 
        such Code, the amount of the credit determined under section 
        30A(a)(1) of such Code for any taxable year shall be the amount 
        determined under section 30A(d) of such Code, except that 
        section 30A(d) shall be applied without regard to paragraph (3) 
        thereof.
            (2) Separate application.--In applying section 30A(a)(3) of 
        such Code in the case of a corporation treated as a qualified 
        domestic corporation by reason of this section, section 30A of 
        such Code (and so much of section 936 of such Code as relates to 
        such section 30A) shall be applied separately with respect to 
        American Samoa.
            (3) Foreign tax credit allowed.--Notwithstanding section 
        30A(e) of such Code, the provisions of section 936(c) of such 
        Code shall not apply with respect to the credit allowed by 
        reason of this section.
    (c) Definitions.--For purposes of this section, any term which is 
used in this section which is also used in section 30A or 936 of such 
Code shall have the same meaning given such term by such section 30A or 
936.
    (d) Application of Section.--Notwithstanding section 30A(h) or 
section 936(j) of such Code, this section (and so much of section 30A 
and section 936 of such Code as relates to this section) shall apply to 
the first two taxable years of a corporation to which subsection (a) 
applies which begin after December 31, 2005, and before January 1, 2008.

      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.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 55, 56, 59, 936 of this
    title.