Internal Revenue Code:Sec. 56. Adjustments in computing alternative minimum taxable income
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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 VI - ALTERNATIVE MINIMUM TAX
Statute
Sec. 56. Adjustments in computing alternative minimum taxable
income
(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 (FOOTNOTE 1)
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.
(FOOTNOTE 1) So in original. Probably should be ''section
1250''.
(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) or clause (ii) of section 164(b)(5)(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 (FOOTNOTE 2)
U.S.C. 1177) -
(FOOTNOTE 2) So in original. Probably should be ''46 App.''
(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 described in
clause (ii)(I)), or
(II) 90 percent of alternative
minimum taxable income determined
without regard to such deduction and the
deduction under section 199, plus
(ii) the lesser of--
(I) the amount of such deduction
attributable to the sum of carrybacks of
net operating losses from taxable years
ending during 2001 or 2002 and
carryovers of net operating losses to
taxable years ending during 2001 and 2002, or
(II) alternative minimum taxable
income determined without regard to such
deduction and the deduction under section 199
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).
[<<NOTE: Applicability. 26 USC 56 note.>> Effective
date.--The amendment made (by P.L. 107-147, Sec 102(c)) to
subsection (d)(1)(A) shall apply to taxable years ending
before January 1, 2003.]
(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
139A or 1357.
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). (FOOTNOTE 3)
(FOOTNOTE 3) See References in Text note below.
(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), (FOOTNOTE 3) clause (i) shall not apply to any
amount allowable as a deduction under section 245(c).
(v) Deduction for domestic production.--
Clause (i) shall not apply to any amount allowable
as a deduction under section 199
(vi) Special rule for certain distributions
from controlled foreign corporations.--Clause (i)
shall not apply to any deduction allowable under
section 965.
(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, OR REMIC.
Sources
(Added Pub. L. 99-514, title VII, Sec. 701(a), Oct. 22, 1986, 100
Stat. 2322; amended Pub. L. 100-203, title X, Sec. 10202(d),
10243(a), Dec. 22, 1987, 101 Stat. 1330-392, 1330-423; Pub. L.
100-647, title I, Sec. 1002(a)(12), 1007(b)(1)-(14)(A), (15)-(19),
title II, Sec. 2001(c)(3)(A), 2004(b)(2), (3), title V, Sec.
5041(b)(4), title VI, Sec. 6079(a)(1), 6303(a), Nov. 10, 1988, 102
Stat. 3355, 3428-3432, 3594, 3599, 3674, 3709, 3755; Pub. L.
101-239, title VII, Sec. 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, Sec. 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, Sec. 13115(a), 13171(b),
13227(c), Aug. 10, 1993, 107 Stat. 432, 454, 493; Pub. L. 104-188,
title I, Sec. 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, Sec. 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.)
References in Text
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.
Miscellaneous
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, Sec. 2001(g)(2)(D), 2002(g)(4), 2005(c)(7), Sept. 2,
1974, 88 Stat. 957, 968, 991; Pub. L. 94-12, title II, Sec.
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
2004 - Pub.L. 108-357, Sec.835(b)(1), amended Sec.56(g)(6)
by by striking ``REMIC, or FASIT'' and inserting ``or REMIC''.
2004 - Pub.L. 108-357, Sec.422(b). Subparagraph (C) of section 56(g)(4)
is amended by inserting after clause (v) the following new clause:
"(vi) Special rule for certain distributions from controlled foreign
corporations.--Clause (i) shall not apply to any deduction allowable
under section 965."
Effective Date.--The <<NOTE: 26 USC 56 note.>> amendments made
by this section shall apply to taxable years ending on or after the date
of the enactment of this Act.
2004 - Pub.L. 108-357, Sec.248(b)(1), amended Sec.56(g)(4)
(B)(i) as follows:--The second sentence of section 56(g)(4)(B)(i),
as amended by this Act, is further amended by
inserting ``or 1357'' after ``section 139A''.
2004 - Pub.L. 108-357, Sec. 102(b). Section 56(g)(4)(C) (relating
to disallowance of items not deductible in computing earnings and profits)
is amended by adding at the end the following new clause:
(v) Deduction for domestic production.--
Clause (i) shall not apply to any amount allowable
as a deduction under section 199.
Effective Date.--The amendments made by this section shall apply to
taxable years beginning after December 31, 2004.
2004 - Pub.L. 108-311, Sec. 403(b)(4). Subclause (I) of
section 56(d)(1)(A)(i) is amended by striking ``attributable to carryovers''.
Subclause (I) of section 56(d)(1)(A)(ii) is amended by striking
``for taxable years'' and inserting ``from taxable years'', and
by striking ``carryforwards'' and inserting ``carryovers''.
2003 - Pub. L. 108-173, Sec. 1202(d) amended
Subsection (g)(4)(B) to add reference to 20 USC 139A.
Effective date:-- Shall apply to taxable years ending
after the enactment of this Act.
2002 - Subsec. (d)(1)(A). Pub. L. 107-147, sec 102 (c), substituted new
sub paragraphs (d)(1)(A)(i) & (ii) for the Temporary Suspension of 90 Percent
Limit on Certain NOL Carryovers.
--Effective date.--The amendment made by this subsection shall apply to
taxable years ending after December 31, 1990 [amended by PL108-311,403(b)(3)].
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 2004 AMENDMENTS
Amendment by Pub.L.108-357,Sec.835(b)(1), amended Sec.56(g)(6);
Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on January 1,
2005.
(2) Exception for existing fasits.--Paragraph (1) shall not
apply to any FASIT in existence on the date of the enactment of
this Act to the extent that regular interests issued by the
FASIT before such date continue to remain outstanding in
accordance with the original terms of issuance.
Effective Date.--The amendments made by this section (PL108-357,
Sec.248(b)(1)) shall apply to taxable years beginning after the
date of the enactment of this Act.
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.
References
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.
