Internal Revenue Code:Sec. 38. General business credit
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Contents |
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 D - Business Related Credits
Statute
Sec. 38. General business credit
(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),
(15) the employer-provided child care credit determined under
section 45F(a),
(16) the railroad track maintenance credit determined
under section 45G(a),
(17) the biodiesel fuels credit determined under section 40A(a),
(18) the low sulfur diesel fuel production credit determined under
section 45H(a),
(19) the marginal oil and gas well production credit
determined under section 45I(a),
(20) the distilled spirits credit determined under section 5011(a),
(21) the advanced nuclear power facility production credit
determined under section 45J(a),
(22)the nonconventional source production credit determined under
section 45K(a).
(23) the new energy efficient home credit determined under section 45L(a),
(24) the energy efficient appliance credit determined under section 45M(a),
(25) the portion of the alternative motor vehicle credit
to which section 30B(g)(1) applies,
(26) the portion of the alternative fuel vehicle refueling
property credit to which section 30C(d)(1) applies,
(27) the Hurricane Katrina housing credit determined under
section 1400P(b),
(28) the Hurricane Katrina employee retention credit
determined under section 1400R(a),
(29) the Hurricane Rita employee retention credit
determined under section 1400R(b),
(30) the Hurricane Wilma employee retention credit
determined under section 1400R(c), plus
(31) the mine rescue team training credit determined under
section 45N(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, the New York Liberty
Zone business employee credit, and the specified credits).
(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) <<NOTE: Applicability.>> 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 and the
specified credits).
(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 for specified credits.--
(A) In general.--In the case of specified
credits--
(i) this section and section 39 shall be
applied separately with respect to such credits,
and
(ii) in applying paragraph (1) to such
credits--
(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
credit allowed under subsection (a) for
the taxable year (other than the
specified credits).
(B) Specified credits.--For purposes of this
subsection, the term `specified credits' means--
(i) for taxable years beginning after
December 31, 2004, the credit determined under
section 40,
(ii) the credit determined under section 45
to the extent that such credit is attributable to
electricity or refined coal produced--
(I) at a facility which is
originally placed in service after the
date of the enactment of this paragraph,
and
(II) during the 4-year period
beginning on the date that such facility
was originally placed in service.,
(iii) the credit determined under section
45B, and
(iv) the credit determined under section
51.
(5) 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.
Sources
(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, Sec. 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, Sec. 1002(e)(8)(A), 1007(g)(2), (8), Nov. 10, 1988, 102
Stat. 3368, 3434, 3435; Pub. L. 101-508, title XI, Sec.
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,
Sec. 13302(a)(1), (c)(1), 13322(a), 13443(b)(1), Aug. 10, 1993, 107
Stat. 555, 559, 569; Pub. L. 104-188, title I, Sec. 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.)
Amendment of Section
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.
References in Text
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)(3)(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.
Miscellaneous
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 35 of this title.
AMENDMENTS
2007 - PL 110-28
SEC. 8214. WAIVER OF INDIVIDUAL AND CORPORATE ALTERNATIVE MINIMUM TAX
LIMITS ON WORK OPPORTUNITY CREDIT AND CREDIT FOR TAXES PAID
WITH RESPECT TO EMPLOYEE CASH TIPS.
(a) Allowance Against Alternative Minimum Tax.--Subparagraph (B) of
section 38(c)(4) is amended by striking ``and'' at the end of clause
(i), by inserting a comma at the end of clause (ii), and by adding at
the end the following new clauses:
``(iii) the credit determined under section
45B, and
``(iv) the credit determined under section
51.''.
2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432)
Section 405(b) Credit Made Part of General Business Credit.--Section 38(b) is
amended by striking ``and'' at the end of paragraph (29), by striking
the period at the end of paragraph (30) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(31) the mine rescue team training credit determined under
section 45N(a).''.
2005 - P.L. 109-135, Section 412
(f)(1) Subclause (II) of section 38(c)(2)(A)(ii) is <<NOTE: 26 USC
38.>> amended by striking ``or the New York Liberty Zone business
employee credit or the specified credits'' and inserting ``, the New
York Liberty Zone business employee credit, and the specified credits''.
(2) Subclause (II) of section 38(c)(3)(A)(ii) is amended by striking
``or the specified credits'' and inserting ``and the specified
credits''.
(3) Subparagraph (B) of section 38(c)(4) is amended--
(A) by striking ``includes'' and inserting ``means'', and
(B) by inserting ``and'' at the end of clause (i).
2005 - P.L. 109-135:
(1) Subsection (b) of section 38, <<NOTE: 26 USC 38.>> as
amended by this Act, is amended by striking ``and'' at the end
of paragraph (26), by striking the period at the end of
paragraph (27) and inserting a comma, and by adding at the end
the following new paragraphs:
``(28) the Hurricane Katrina employee retention credit
determined under section 1400R(a),
``(29) the Hurricane Rita employee retention credit
determined under section 1400R(b), and
``(30) the Hurricane Wilma employee retention credit
determined under section 1400R(c).''.
2005 - P.L. 109-135:
Subsection (b) of <<NOTE: 26 USC 38.>> section 38 is
amended by striking ``and'' at the end of paragraph (25), by
striking the period at the end of paragraph (26) and inserting
``, and'', and by adding at the end the following new paragraph:
``(27) the Hurricane Katrina housing credit determined under
section 1400P(b).''.
2005 - P. L. 109-73,
SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY HURRICANE
KATRINA.
(a) In General.--In the case of an eligible employer, there shall be
allowed as a credit against the tax imposed by chapter 1 of the Internal
Revenue Code of 1986 for the taxable year an amount equal to 40 percent
of the qualified wages with respect to each eligible employee of such
employer for such taxable year. For purposes of the preceding sentence,
the amount of qualified wages which may be taken into account with
respect to any individual shall not exceed $6,000.
(b) Definitions.--For purposes of this section--
(1) Eligible employer.--The term ``eligible employer'' means
any employer--
(A) which conducted an active trade or business on
August 28, 2005, in a core disaster area, and
(B) with respect to whom the trade or business
described in subparagraph (A) is inoperable on any day
after August 28, 2005, and before January 1, 2006, as a
result of damage sustained by reason of Hurricane
Katrina.
(2) Eligible employee.--The term ``eligible employee'' means
with respect to an eligible employer an employee whose principal
place of employment on August 28, 2005, with such eligible
employer was in a core disaster area.
(3) Qualified wages.--The term ``qualified wages'' means
wages (as defined in section 51(c)(1) of such Code, but without
regard to section 3306(b)(2)(B) of such Code) paid or incurred
by an eligible employer with respect to an eligible employee on
any day after August 28, 2005, and before January 1, 2006, which
occurs during the period--
(A) beginning on the date on which the trade or
business described in paragraph (1) first became
inoperable
at the principal place of employment of the employee
immediately before Hurricane Katrina, and
(B) ending on the date on which such trade or
business has resumed significant operations at such
principal place of employment.
Such term shall include wages paid without regard to whether the
employee performs no services, performs services at a different
place of employment than such principal place of employment, or
performs services at such principal place of employment before
significant operations have resumed.
(c) Credit not Allowed for Large Businesses.--The term ``eligible
employer'' shall not include any trade or business for any taxable year
if such trade or business employed an average of more than 200 employees
on business days during the taxable year.
(d) Certain Rules to Apply.--For purposes of this section, rules
similar to the rules of sections 51(i)(1), 52, and 280C(a) of such Code
shall apply.
(e) Employee not Taken Into Account More Than Once.--An employee
shall not be treated as an eligible employee for purposes of this
section for any period with respect to any employer if such employer is
allowed a credit under section 51 of such Code with respect to such
employee for such period.
(f) Credit to Be Part of General Business Credit.--The credit
allowed under this section shall be added to the current year business
credit under section 38(b) of such Code and shall be treated as a credit
allowed under subpart D of part IV of subchapter A of chapter 1 of such
Code.
2005 - Energy Policy Act of 2005,PL109-058, Sec. 1332(b), amends Sec. 38(b),
by adding a new paragraph (23)"the new energy efficient home credit
determined under section 45L(a)". Sec.1334(b) amended Sec.38(b)by
adding a new paragraph (24) "the energy efficient appliance
credit determined under section 45M(a)." Sec.1342(b)(1),
amends Sec. 38(b) by adding a new paragraph (26).
2005 - Energy Policy Act of 2005, PL109-058, amended by adding new paragraph
38(b)(21). (d) Effective Date- The amendments made by this section
shall apply to production in taxable years beginning after the date
of the enactment of this Act. Also, amended
Sec.38(b) by adding a new paragraph (25).
2005 - Transportation Equity Act of 2005 added new paragraph
38(b)(20). Effective Date- The amendments made by this section
shall apply to taxable years beginning after September 30, 2005.
2004 - Subsec.711(a),Pub.L.108-357, amended Sec.38(c)
by redesignating Sec.38(c), paragraph (4) as (5) and adding a
new paragraph (4). Subsec.711(b), amended Sec.38(c) by amending
paragraph (2)(A)(ii)(II) and (3)(A)(ii)(II) of section 38(c)
by inserting ``or the specified credits'' after ``employee credit''.
2004 - Pub.L. 108-357, Sec 341(b). Section 38(b), as amended by
this Act, is amended by striking ``plus'' at the end of paragraph (17),
by striking the period at the end of paragraph (18) and inserting
``, plus'', and by inserting after paragraph (18) the following:
(19) the marginal oil and gas well production credit
determined under section 45I(a).
Effective Date.--The <<NOTE: 26 USC 38 note.>> amendments made
by this section shall apply to production in taxable years
beginning after December 31, 2004.
2004 - Pub.L. 108-357, Sec 339(b). Section 38(b) (relating to
general business credit), as amended by this Act, is amended by
striking ``plus'' at the end of paragraph (16), by striking the
period at the end of paragraph (17) and inserting ``, plus'', and by
inserting after paragraph (17) the new paragraph (18).
Effective Date.--The <<NOTE: 26 USC 38 note.>> amendments made
by this section shall apply to expenses paid or incurred after
December 31, 2002, in taxable years ending after such date.
2004 - Pub.L. 108-357, Sec 302(b). Section 38(b) (relating to current
year business credit), is amended by striking ``plus'' at the end of
paragraph (15), by striking the period at the end of paragraph (16)
and inserting ``, plus'', and by inserting after paragraph (16) the
new paragraph (17). Sec.245(c)(1),Pub.L.108-357, added para (16).
Effective Date: The amendments made by this section shall apply
to taxable years beginning after December 31, 2004.
2004 - Pub.L. 108-357, Sec 245(c)(1). Section 38(b)
(relating to general business credit) is amended by striking
``plus'' at the end of paragraph (14), by striking the period at
the end of paragraph (15) and inserting ``, plus'', and by adding
at the end the following new paragraph:
``(16) the railroad track maintenance credit determined
under section 45G(a).''.
Effective Date: The amendments made by this section shall apply
to taxable years beginning after December 31, 2004.
2002 - Subsec. (b)(15). Pub. L. 107-147, Sec. 411(d), amended
Section 38(b)(15) by striking ``45F'' and inserting ``45F(a)''.
2002 - Subsec. (c)(3)(A). Pub. L. 107-147, Sec. 301 (b), redesignated
sec (c)(3) as (c)(4), and inserted new sec (c)(3): Special rules for
New York Liberty Zone Business Employee Credit, and
Subsec. (c)(2)((A)(ii)(II). Pub.L. 107-147, Sec.301(b), amended
the subclause by inserting ``or the New York Liberty Zone business
employee credit'' after ``employment credit''.
[<<NOTE: Applicability. 26 USC 38 note.>> Effective
date.--The amendments made by this subsection shall apply to
taxable years ending after December 31, 2001.]
2001 - Subsec. (b)(12). Pub. L. 107-16, Sec. 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, Sec. 619(b), 901, temporarily
substituted '', plus'' for period at end. See Effective and
Termination Dates of 2001 Amendment note below.
Pub. L. 107-16, Sec. 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, Sec. 619(b), 901, temporarily
added par. (14). See Effective and Termination Dates of 2001
Amendment note below.
Pub. L. 107-16, Sec. 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, Sec. 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 2007 AMENDMENT
2007 - PL 110-28
SEC. 8214. WAIVER OF INDIVIDUAL AND CORPORATE ALTERNATIVE MINIMUM TAX
LIMITS ON WORK OPPORTUNITY CREDIT AND CREDIT FOR TAXES PAID
WITH RESPECT TO EMPLOYEE CASH TIPS.
(b) <<NOTE: 26 USC 38 note.>> Effective Date.--The amendments made
by this section shall apply to credits determined under sections 45B and
51 of the Internal Revenue Code of 1986 in taxable years beginning after
December 31, 2006, and to carrybacks of such credits.
EFFECTIVE DATES OF 2005 AMENDMENT
Amendment by Energy Policy Act of 2005, Sec. 1332(b), shall apply to
qualified new energy efficient homes acquired after December 31, 2005,
in taxable years ending after such date. Sec.1334(b) amendments
shall apply to appliances produced after December 31, 2005.
Sec.1342(b)(1) amendments shall apply to property placed in
service after December 31, 2005, in taxable years ending
after such date. Amendments by Sec.1341(b) shall apply to
property placed in service after December 31, 2005, in
taxable years ending after such date.
EFFECTIVE DATES OF 2004 AMENDMENT
Amendment by Pub.L.108-357,Sec.711, except as otherwise
provided, the amendments made by this section shall apply to
taxable years ending after the date of the enactment of this Act.
Amendment by Pub.L.108-357, Sec.245(c)(1), shall apply
to taxable years beginning after December 31, 2004.
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, 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.''
(NOTE: PL 107-147, Sec. 411(n)(2), amended this article to replace
the word "established" with the words "first effective")
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 (Sec. 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 (Sec. 1101-1147 and 1171-1177) or title
XVIII (Sec. 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 (Sec. 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.
References
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, 1274A, 1351, 1396, 4612 of this
title.
