Internal Revenue Code:Sec. 381. Carryovers in certain corporate acquisitions
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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 C - Corporate Distributions and Adjustments
PART V - CARRYOVERS
Statute
Sec. 381. Carryovers in certain corporate acquisitions
(a) General rule
In the case of the acquisition of assets of a corporation by
another corporation -
(1) in a distribution to such other corporation to which
section 332 (relating to liquidations of subsidiaries) applies;
or
(2) in a transfer to which section 361 (relating to
nonrecognition of gain or loss to corporations) applies, but only
if the transfer is in connection with a reorganization described
in subparagraph (A), (C), (D), (F), or (G) of section 368(a)(1),
the acquiring corporation shall succeed to and take into account,
as of the close of the day of distribution or transfer, the items
described in subsection (c) of the distributor or transferor
corporation, subject to the conditions and limitations specified in
subsections (b) and (c). For purposes of the preceding sentence, a
reorganization shall be treated as meeting the requirements of
subparagraph (D) or (G) of section 368(a)(1) only if the
requirements of subparagraphs (A) and (B) of section 354(b)(1) are
met.
(b) Operating rules
Except in the case of an acquisition in connection with a
reorganization described in subparagraph (F) of section 368(a)(1) -
(1) The taxable year of the distributor or transferor
corporation shall end on the date of distribution or transfer.
(2) For purposes of this section, the date of distribution or
transfer shall be the day on which the distribution or transfer
is completed; except that, under regulations prescribed by the
Secretary, the date when substantially all of the property has
been distributed or transferred may be used if the distributor or
transferor corporation ceases all operations, other than
liquidating activities, after such date.
(3) The corporation acquiring property in a distribution or
transfer described in subsection (a) shall not be entitled to
carry back a net operating loss or a net capital loss for a
taxable year ending after the date of distribution or transfer to
a taxable year of the distributor or transferor corporation.
(c) Items of the distributor or transferor corporation
The items referred to in subsection (a) are:
(1) Net operating loss carryovers
The net operating loss carryovers determined under section 172,
subject to the following conditions and limitations:
(A) the taxable year of the acquiring corporation to which
the net operating loss carryovers of the distributor or
transferor corporation are first carried shall be the first
taxable year ending after the date of distribution or transfer.
(B) In determining the net operating loss deduction, the
portion of such deduction attributable to the net operating
loss carryovers of the distributor or transferor corporation to
the first taxable year of the acquiring corporation ending
after the date of distribution or transfer shall be limited to
an amount which bears the same ratio to the taxable income
(determined without regard to a net operating loss deduction)
of the acquiring corporation in such taxable year as the number
of days in the taxable year after the date of distribution or
transfer bears to the total number of days in the taxable year.
(C) For the purpose of determining the amount of the net
operating loss carryovers under section 172(b)(2), a net
operating loss for a taxable year (hereinafter in this
subparagraph referred to as the ''loss year'') of a distributor
or transferor corporation which ends on or before the end of a
loss year of the acquiring corporation shall be considered to
be a net operating loss for a year prior to such loss year of
the acquiring corporation. For the same purpose, the taxable
income for a ''prior taxable year'' (as the term is used in
section 172(b)(2)) shall be computed as provided in such
section; except that, if the date of distribution or transfer
is on a day other than the last day of a taxable year of the
acquiring corporation -
(i) such taxable year shall (for the purpose of this
subparagraph only) be considered to be 2 taxable years
(hereinafter in this subparagraph referred to as the
''pre-acquisition part year'' and the ''post-acquisition part
year'');
(ii) the pre-acquisition part year shall begin on the same
day as such taxable year begins and shall end on the date of
distribution or transfer;
(iii) the post-acquisition part year shall begin on the day
following the date of distribution or transfer and shall end
on the same day as the end of such taxable year;
(iv) the taxable income for such taxable year (computed
with the modifications specified in section 172(b)(2)(A) but
without a net operating loss deduction) shall be divided
between the pre-acquisition part year and the
post-acquisition part year in proportion to the number of
days in each;
(v) the net operating loss deduction for the
pre-acquisition part year shall be determined as provided in
section 172(b)(2)(B), but without regard to a net operating
loss year of the distributor or transferor corporation; and
(vi) the net operating loss deduction for the
post-acquisition part year shall be determined as provided in
section 172(b)(2)(B).
(2) Earnings and profits
In the case of a distribution or transfer described in
subsection (a) -
(A) the earnings and profits or deficit in earnings and
profits, as the case may be, of the distributor or transferor
corporation shall, subject to subparagraph (B), be deemed to
have been received or incurred by the acquiring corporation as
of the close of the date of the distribution or transfer; and
(B) a deficit in earnings and profits of the distributor,
transferor, or acquiring corporation shall be used only to
offset earnings and profits accumulated after the date of
transfer. For this purpose, the earnings and profits for the
taxable year of the acquiring corporation in which the
distribution or transfer occurs shall be deemed to have been
accumulated after such distribution or transfer in an amount
which bears the same ratio to the undistributed earnings and
profits of the acquiring corporation for such taxable year
(computed without regard to any earnings and profits received
from the distributor or transferor corporation, as described in
subparagraph (A) of this paragraph) as the number of days in
the taxable year after the date of distribution or transfer
bears to the total number of days in the taxable year.
(3) Capital loss carryover
The capital loss carryover determined under section 1212,
subject to the following conditions and limitations:
(A) The taxable year of the acquiring corporation to which
the capital loss carryover of the distributor or transferor
corporation is first carried shall be the first taxable year
ending after the date of distribution or transfer.
(B) The capital loss carryover shall be a short-term capital
loss in the taxable year determined under subparagraph (A) but
shall be limited to an amount which bears the same ratio to the
capital gain net income (determined without regard to a
short-term capital loss attributable to capital loss
carryover), if any, of the acquiring corporation in such
taxable year as the number of days in the taxable year after
the date of distribution or transfer bears to the total number
of days in the taxable year.
(C) For purposes of determining the amount of such capital
loss carryover to taxable years following the taxable year
determined under subparagraph (A), the capital gain net income
in the taxable year determined under subparagraph (A) shall be
considered to be an amount equal to the amount determined under
subparagraph (B).
(4) Method of accounting
The acquiring corporation shall use the method of accounting
used by the distributor or transferor corporation on the date of
distribution or transfer unless different methods were used by
several distributor or transferor corporations or by a
distributor or transferor corporation and the acquiring
corporation. If different methods were used, the acquiring
corporation shall use the method or combination of methods of
computing taxable income adopted pursuant to regulations
prescribed by the Secretary.
(5) Inventories
In any case in which inventories are received by the acquiring
corporation, such inventories shall be taken by such corporation
(in determining its income) on the same basis on which such
inventories were taken by the distributor or transferor
corporation, unless different methods were used by several
distributor or transferor corporations or by a distributor or
transferor corporation and the acquiring corporation. If
different methods were used, the acquiring corporation shall use
the method or combination of methods of taking inventory adopted
pursuant to regulations prescribed by the Secretary.
(6) Method of computing depreciation allowance
The acquiring corporation shall be treated as the distributor
or transferor corporation for purposes of computing the
depreciation allowance under sections 167 and 168 on property
acquired in a distribution or transfer with respect to so much of
the basis in the hands of the acquiring corporation as does not
exceed the adjusted basis in the hands of the distributor or
transferor corporation.
((7) Repealed. June 15, 1955, ch. 143, Sec. 2(1), 69 Stat. 134)
(8) Installment method
If the acquiring corporation acquires installment obligations
(the income from which the distributor or transferor corporation
reports on the installment basis under section 453) the acquiring
corporation shall, for purposes of section 453, be treated as if
it were the distributor or transferor corporation.
(9) Amortization of bond discount or premium
If the acquiring corporation assumes liability for bonds of the
distributor or transferor corporation issued at a discount or
premium, the acquiring corporation shall be treated as the
distributor or transferor corporation after the date of
distribution or transfer for purposes of determining the amount
of amortization allowable or includible with respect to such
discount or premium.
(10) Treatment of certain mining development and exploration
expenses of distributor of transferor corporation
The acquiring corporation shall be entitled to deduct, if it
were the distributor or transferor corporation, expenses deferred
under section 616 (relating to certain development expenditures)
if the distributor or transferor corporation has so elected.
(11) Contributions to pension plans, employees' annuity plans,
and stock bonus and profit-sharing plans
The acquiring corporation shall be considered to be the
distributor or transferor corporation after the date of
distribution or transfer for the purpose of determining the
amounts deductible under section 404 with respect to pension
plans, employees' annuity plans, and stock bonus and
profit-sharing plans.
(12) Recovery of tax benefit items
If the acquiring corporation is entitled to the recovery of any
amounts previously deducted by (or allowable as credits to) the
distributor or transferor corporation, the acquiring corporation
shall succeed to the treatment under section 111 which would
apply to such amounts in the hands of the distributor or
transferor corporation.
(13) Involuntary conversions under section 1033
The acquiring corporation shall be treated as the distributor
or transferor corporation after the date of distribution or
transfer for purposes of applying section 1033.
(14) Dividend carryover to personal holding company
The dividend carryover (described in section 564) to taxable
years ending after the date of distribution or transfer.
((15) Repealed. Pub. L. 101-508, title XI, Sec. 11801(c)(10)(A),
Nov. 5, 1990, 104 Stat. 1388-526)
(16) Certain obligations of distributor or transferor corporation
If the acquiring corporation -
(A) assumes an obligation of the distributor or transferor
corporation which, after the date of the distribution or
transfer, gives rise to a liability, and
(B) such liability, if paid or accrued by the distributor or
transferor corporation, would have been deductible in computing
its taxable income,
the acquiring corporation shall be entitled to deduct such items
when paid or accrued, as the case may be, as if such corporation
were the distributor or transferor corporation. A corporation
which would have been an acquiring corporation under this section
if the date of distribution or transfer had occurred on or after
the effective date of the provisions of this subchapter
applicable to a liquidation or reorganization, as the case may
be, shall be entitled, even though the date of distribution or
transfer occurred before such effective date, to apply this
paragraph with respect to amounts paid or accrued in taxable
years beginning after December 31, 1953, on account of such
obligations of the distributor or transferor corporation. This
paragraph shall not apply if such obligations are reflected in
the amount of stock, securities, or property transferred by the
acquiring corporation to the transferor corporation for the
property of the transferor corporation.
(17) Deficiency dividend of personal holding company
If the acquiring corporation pays a deficiency dividend (as
defined in section 547(d)) with respect to the distributor or
transferor corporation, such distributor or transferor
corporation shall, with respect to such payments, be entitled to
the deficiency dividend deduction provided in section 547.
(18) Percentage depletion on extraction of ores or minerals from
the waste or residue of prior mining
The acquiring corporation shall be considered to be the
distributor or transferor corporation for the purpose of
determining the applicability of section 613(c)(3) (relating to
extraction of ores or minerals from the ground).
(19) Charitable contributions in excess of prior years'
limitation
Contributions made in the taxable year ending on the date of
distribution or transfer and the 4 prior taxable years by the
distributor or transferor corporation in excess of the amount
deductible under section 170(b)(2) for such taxable years shall
be deductible by the acquiring corporation for its taxable years
which begin after the date of distribution or transfer, subject
to the limitations imposed in section 170(b)(2). In applying the
preceding sentence, each taxable year of the distributor or
transferor corporation beginning on or before the date of
distribution or transfer shall be treated as a prior taxable year
with reference to the acquiring corporation's taxable years
beginning after such date.
((20), (21) Repealed. Pub. L. 94-455, title XIX, Sec.
1901(a)(54), (b)(16), Oct. 4, 1976, 90 Stat. 1773, 1796)
(22) Successor insurance company
If the acquiring corporation is an insurance company taxable
under subchapter L, there shall be taken into account (to the
extent proper to carry out the purposes of this section and of
subchapter L, and under such regulations as may be prescribed by
the Secretary) the items required to be taken into account for
purposes of subchapter L in respect of the distributor or
transferor corporation.
(23) Deficiency dividend of regulated investment company or real
estate investment trust
If the acquiring corporation pays a deficiency dividend (as
defined in section 860(f)) with respect to the distributor or
transferor corporation, such distributor or transferor
corporation shall, with respect to such payments, be entitled to
the deficiency dividend deduction provided in section 860.
(24) Credit under section 38
The acquiring corporation shall take into account (to the
extent proper to carry out the purposes of this section and
section 38, and under such regulations as may be prescribed by
the Secretary) the items required to be taken into account for
purposes of section 38 in respect of the distributor or
transferor corporation.
(25) Credit under section 53
The acquiring corporation shall take into account (to the
extent proper to carry out the purposes of this section and
section 53, and under such regulations as may be prescribed by
the Secretary) the items required to be taken into account for
purposes of section 53 in respect of the distributor or
transferor corporation.
(26) Enterprise zone provisions
The acquiring corporation shall take into account (to the
extent proper to carry out the purposes of this section and
subchapter U, and under such regulations as may be prescribed by
the Secretary) the items required to be taken into account for
purposes of subchapter U in respect of the distributor or
transferor corporation.
(d) Operations loss carrybacks and carryovers of life insurance
companies
For application of this part to operations loss carrybacks
and carryovers of life insurance companies, see section 810.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 124; June 15, 1955, ch. 143,
Sec. 2(1), 69 Stat. 134; Jan. 28, 1956, ch. 15, Sec. 1, 70 Stat. 7;
Pub. L. 85-866, title I, Sec. 29(c), Sept. 2, 1958, 72 Stat. 1628;
Pub. L. 86-69, Sec. 3(c), June 25, 1959, 73 Stat. 139; Pub. L.
87-834, Sec. 2(d), Oct. 16, 1962, 76 Stat. 971; Pub. L. 88-272,
title II, Sec. 209(d)(2), 225(i)(3), Feb. 26, 1964, 78 Stat. 46,
92; Pub. L. 90-240, Sec. 5(d), Jan. 2, 1968, 81 Stat. 778; Pub. L.
91-172, title V, Sec. 504(c)(2), 512(c), 521(f), Dec. 30, 1969, 83
Stat. 633, 639, 654; Pub. L. 92-178, title VI, Sec. 601(c)(3), Dec.
10, 1971, 85 Stat. 557; Pub. L. 94-455, title XVI, Sec. 1601(e),
title XIX, Sec. 1901(a)(54), (b)(16), (17), (21)(B), (33)(N),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1746, 1773, 1796, 1797,
1802, 1834; Pub. L. 95-30, title II, Sec. 202(d)(3)(A), May 23,
1977, 91 Stat. 148; Pub. L. 95-600, title III, Sec. 362(d)(2), Nov.
6, 1978, 92 Stat. 2851; Pub. L. 96-223, title II, Sec.
232(b)(2)(B), Apr. 2, 1980, 94 Stat. 276; Pub. L. 96-471, Sec.
2(b)(2), Oct. 19, 1980, 94 Stat. 2253; Pub. L. 96-589, Sec. 4(g),
Dec. 24, 1980, 94 Stat. 3404; Pub. L. 97-34, title II, Sec. 208,
221(b)(1)(B), title III, Sec. 331(d)(1)(B), Aug. 13, 1981, 95 Stat.
226, 246, 294; Pub. L. 97-248, title II, Sec. 224(c)(7), Sept. 3,
1982, 96 Stat. 489; Pub. L. 97-448, title I, Sec. 102(h)(3),
103(g)(2)(F), Jan. 12, 1983, 96 Stat. 2372, 2379; Pub. L. 98-369,
div. A, title II, Sec. 211(b)(4), title IV, Sec. 474(r)(11), July
18, 1984, 98 Stat. 754, 841; Pub. L. 99-514, title II, Sec.
231(d)(3)(F), title IV, Sec. 411(b)(2)(C)(iii), title VII, Sec.
701(e)(1), title XVIII, Sec. 1812(a)(3), Oct. 22, 1986, 100 Stat.
2179, 2227, 2342, 2833; Pub. L. 100-203, title X, Sec. 10202(c)(3),
Dec. 22, 1987, 101 Stat. 1330-392; Pub. L. 100-647, title I, Sec.
1002(a)(13), Nov. 10, 1988, 102 Stat. 3355; Pub. L. 101-239, title
VII, Sec. 7841(d)(10), Dec. 19, 1989, 103 Stat. 2428; Pub. L.
101-508, title XI, Sec. 11801(c)(10)(A), 11812(b)(6), Nov. 5, 1990,
104 Stat. 1388-526, 1388-535; Pub. L. 103-66, title XIII, Sec.
13302(e), Aug. 10, 1993, 107 Stat. 556; Pub. L. 104-188, title I,
Sec. 1704(t)(26), Aug. 20, 1996, 110 Stat. 1888.)
Miscellaneous
AMENDMENTS
1996 - Subsec. (c)(26), (27). Pub. L. 104-188 amended directory
language of Pub. L. 101-239. See 1989 Amendment note below.
1993 - Subsec. (c)(26). Pub. L. 103-66 added par. (26).
1990 - Subsec. (c)(6). Pub. L. 101-508, Sec. 11812(b)(6)(A),
substituted ''sections 167 and 168'' for ''subsections (b), (j),
and (k) of section 167''.
Subsec. (c)(15). Pub. L. 101-508, Sec. 11801(c)(10)(A), struck
out par. (15) ''Indebtedness of certain personal holding
companies'' which read as follows: ''The acquiring corporation
shall be considered to be the distributor or transferor corporation
for the purpose of determining the applicability of subsection (c)
of section 545, relating to deduction with respect to payment of
certain indebtedness.''
Subsec. (c)(24) to (26). Pub. L. 101-508, Sec. 11812(b)(6)(B),
redesignated pars. (25) and (26) as (24) and (25), respectively,
and struck out former par. (24) ''Method of computing depreciation
deduction'' which read as follows: ''The acquiring corporation
shall be treated as the distributor or transferor corporation for
purposes of computing the deduction allowable under section 168(a)
on property acquired in a distribution or transfer with respect to
so much of the basis in the hands of the acquiring corporation as
does not exceed the adjusted basis in the hands of the distributor
or transferor corporation.''
1989 - Subsec. (c)(26), (27). Pub. L. 101-239, as amended by Pub.
L. 104-188, redesignated par. (27) as (26).
1988 - Subsec. (c)(24). Pub. L. 100-647 substituted
''depreciation deduction'' for ''recovery allowance for recovery
property'' in heading.
1987 - Subsec. (c)(8). Pub. L. 100-203 struck out ''or 453A''
after ''section 453'' in two places.
1986 - Subsec. (c)(10). Pub. L. 99-514, Sec. 411(b)(2)(C)(iii),
struck out last sentence which read: ''For the purpose of applying
the limitation provided in section 617(h), if, for any taxable
year, the distributor or transferor corporation was allowed a
deduction under section 617(a), the acquiring corporation shall be
deemed to have been allowed such deduction.''
Subsec. (c)(12). Pub. L. 99-514, Sec. 1812(a)(3), amended par.
(12) generally. Prior to amendment, par. (12), recovery of bad
debts, prior taxes, or delinquency amounts, read as follows: ''If
the acquiring corporation is entitled to the recovery of bad debts,
prior taxes, or delinquency amounts previously deducted or credited
by the distributor or transferor corporation, the acquiring
corporation shall include in its income such amounts as would have
been includible by the distributor or transferor corporation in
accordance with section 111 (relating to the recovery of bad debts,
prior taxes, and delinquency amounts).''
Subsec. (c)(25), (26). Pub. L. 99-514, Sec. 231(d)(3)(F),
redesignated par. (26) as (25). Former par. (25), relating to
credit under section 30, was struck out.
Subsec. (c)(27). Pub. L. 99-514, Sec. 701(e)(1), added par. (27).
1984 - Subsec. (c)(23). Pub. L. 98-369, Sec. 474(r)(11)(B),
redesignated par. (25) as (23). Former par. (23), relating to
credit under section 38 for investment in certain depreciable
property, was struck out.
Subsec. (c)(24). Pub. L. 98-369, Sec. 474(r)(11)(B), redesignated
par. (28) as (24). Former par. (24), relating to credit under
section 40 for work incentive program expenses, was struck out.
Subsec. (c)(25). Pub. L. 98-369, Sec. 474(r)(11)(B), (C),
redesignated par. (29) as (25), and substituted ''30'' for ''44F''
wherever appearing in heading and text. Former par. (25)
redesignated (23).
Subsec. (c)(26). Pub. L. 98-369, Sec. 474(r)(11)(D), added par.
(26). Former par. (26), relating to credit under section 44B for
employment of certain new employees, was struck out.
Subsec. (c)(27). Pub. L. 98-369, Sec. 474(r)(11)(A), struck out
par. (27) relating to credit under section 44E for alcohol used as
fuel.
Subsec. (c)(28), (29). Pub. L. 98-369, Sec. 474(r)(11)(B),
redesignated pars. (28) and (29) as (24) and (25), respectively.
Subsec. (c)(30). Pub. L. 98-369, Sec. 474(r)(11)(A), struck out
par. (30) relating to credit under section 44G.
Subsec. (d). Pub. L. 98-369, Sec. 211(b)(4), substituted
''section 810'' for ''section 812(f)''.
1983 - Subsec. (c)(28), (29). Pub. L. 97-448, Sec. 102(h)(3),
redesignated par. (28), relating to credit under section 44F, as
(29). Former par. (29) redesignated (30).
Subsec. (c)(30). Pub. L. 97-448, Sec. 103(g)(2)(F), redesignated
former par. (29), relating to credit under section 44G, as (30).
1982 - Subsec. (a)(1). Pub. L. 97-248 struck out '', except in a
case in which the basis of the assets distributed is determined
under section 334(b)(2)'' after ''applies''.
1981 - Subsec. (c)(28). Pub. L. 97-34, Sec. 208, added par. (28)
relating to recovery allowance for recovery property.
Pub. L. 97-34, Sec. 221(b)(1)(B), added par. (28) relating to
credit under section 44F.
Subsec. (c)(29). Pub. L. 97-34, Sec. 331(d)(1)(B), added par.
(29).
1980 - Subsec. (a). Pub. L. 96-589, Sec. 4(g)(2), inserted
provisions that a reorganization shall be treated as meeting the
requirements of subparagraph (D) or (G) of section 368(a)(1) only
if the requirements of subparagraphs (A) and (B) of section
354(b)(1) are met.
Subsec. (a)(2). Pub. L. 96-589, Sec. 4(g)(1), substituted
''subparagraph (A), (C), (D), (F), or (G) of section 368(a)(1)''
for ''subparagraph (A), (C), (D) (but only if the requirements of
subparagraphs (A) and (B) of section 354(b)(1) are met), or (F) of
section 368(a)(1)''.
Subsec. (c)(8). Pub. L. 96-471 substituted ''reports on the
installment basis under section 453 or 453A'' for ''has elected,
under section 453, to report on the installment basis'' and ''for
purposes of section 453 or 453A'' for ''for purposes of section
453.''
Subsec. (c)(27). Pub. L. 96-223 added par. (27).
1978 - Subsec. (c)(25). Pub. L. 95-600 substituted ''regulated
investment company or real estate investment trust'' for ''real
estate investment trust'' in heading, and in text ''section
860(f)'' for ''section 859(d)'' and ''section 860'' for ''section
859''.
1977 - Subsec. (c)(26). Pub. L. 95-30 added par. (26).
1976 - Subsec. (b)(2). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary''.
Subsec. (c)(3). Pub. L. 94-455, Sec. 1901(b)(33)(N), substituted
in subpars. (B) and (C) ''capital gain net income'' for ''net
capital gain''.
Subsec. (c)(4), (5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Subsec. (c)(10). Pub. L. 94-455, Sec. 1901(b)(21(B), among other
changes, substituted reference to section 616 (relating to certain
development expenditures) if the distributor or transferor
corporation has so elected for reference to sections 615 and 616
(relating to pre-1970 exploration expenditures and development
expenditures, respectively) if the distributor or transferor
corporation has so elected and struck out provisions that if, for
any taxable year, the distributor of transferor corporation was
allowed or made the election of the deduction under section 615 of
this title, the acquiring corporation shall be deemed to have been
allowed or to have made such election of the deduction under
section 615 of this title.
Subsec. (c)(15). Pub. L. 94-455, Sec. 1901(b)(17), substituted
''subsection (c)'' for ''subsections (b)(7) and (c)''.
Subsec. (c)(20). Pub. L. 94-455, Sec. 1901(a)(54), struck out
par. (20) which related to carry-over of unused pension trust
deductions in certain cases.
Subsec. (c)(21). Pub. L. 94-455, Sec. 1901(b)(16), struck out
par. (21) which related to pre-1954 adjustments resulting from
change in method of accounting.
Subsec. (c)(22) to (24). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary''.
Subsec. (c)(25). Pub. L. 94-455, Sec. 1601(e), added par. (25).
1971 - Subsec. (c)(24). Pub. L. 92-178 added par. (24).
1969 - Subsec. (b)(3). Pub. L. 91-172, Sec. 512(c), substituted
''a net operating loss or a net capital loss'' for ''a net
operating loss''.
Subsec. (c)(6). Pub. L. 91-172, Sec. 521(f), substituted
''subsections (b), (j) and (k) of section 167'' for ''paragraphs
(2), (3) and (4) of section 167(b)'' and inserted reference to
adjusted basis in the hand of the distributor or transferor
corporation.
Subsec. (c)(10). Pub. L. 91-172, Sec. 504(c)(2), substituted
''Treatment of certain mining exploration and development expenses
of distributor or transferor corporation'' for ''Treatment of
certain expenses deferred by the election of distributor or
transferor corporation'' in heading, limited deduction of expenses
deferred under sections 615 and 616 of this title by the acquiring
corporation as if it were the distributor or transferor corporation
to pre-1970 exploration and development expenditures, and inserted
provision that if distributor or transferor corporation, for any
taxable year, was allowed the deduction in sections 615(a) or
617(a) of this title or made the election provided in section
615(b) of this title, acquiring corporation shall be deemed to have
been allowed such deduction or deductions or to have made such
election, as the case may be, for the purpose of applying the
limitation provided in section 617 of this title.
1968 - Subsec. (c)(22). Pub. L. 90-240 substituted successor
insurance companies for successor life insurance companies as the
business enterprise covered, substituted reference to insurance
companies taxable under subchapter L for reference to life
insurance companies as defined in section 801(a), and substituted
reference to the purposes of this section and of subchapter L for
reference to the purposes of this section and part I of subchapter
L.
1964 - Subsec. (c)(15). Pub. L. 88-272, Sec. 225(i)(3),
substituted ''subsections (b)(7) and (c) of section 545, relating
to deductions with respect to payment of certain indebtedness'' for
''section 545(b)(7), relating to a deduction for payment of certain
indebtedness incurred before Jan. 1, 1934''.
Subsec. (c)(19). Pub. L. 88-272, Sec. 209(d)(2), permitted
deductions for contributions made in the taxable year and in 4
prior taxable years, instead of one prior taxable year, and
provided that each taxable year beginning on or before the
distribution or transfer date shall be treated as a prior taxable
year with reference to the acquiring corporation's taxable years
beginning after such date.
1962 - Subsec. (c)(23). Pub. L. 87-834 added par. (23).
1959 - Subsec. (c)(22). Pub. L. 86-69, Sec. 3(c)(1), added par.
(22).
Subsec. (d). Pub. L. 86-69, Sec. 3(c)(2), added subsec. (d).
1958 - Subsec. (c)(21). Pub. L. 85-866 added par. (21).
1956 - Subsec. (c)(20). Act Jan. 28, 1956 added par. (20).
1955 - Subsec. (c)(7). Act June 15, 1955, repealed par. (7) which
related to carryover of prepaid income.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11812(b)(6) 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 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by Pub. L. 100-203 applicable to dispositions in
taxable years beginning after Dec. 31, 1987, with special rules for
nondealers and coordination with Tax Reform Act of 1986, see
section 10202(e)(1), (3), (5) of Pub. L. 100-203, set out as a note
under section 453 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 231(d)(3)(F) 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 411(b)(2)(C)(iii) of Pub. L. 99-514
applicable, except as otherwise provided, to costs paid or incurred
after Dec. 31, 1986, in taxable years ending after such date, see
section 411(c) of Pub. L. 99-514, set out as a note under section
263 of this title.
Amendment by section 701(e)(1) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 701(f) of Pub. L.
99-514, set out as an Effective Date note under section 55 of this
title.
Amendment by section 1812(a)(3) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 211(b)(4) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, see section 215 of
Pub. L. 98-369, set out as an Effective Date note under section 801
of this title.
Amendment by section 474(r)(11) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-248 applicable to any target corporation
with respect to which the acquisition date occurs after Aug. 31,
1982, with special rules for certain acquisitions before Sept. 1,
1982, and certain acquisitions of financial institutions in which
there was a binding contract on July 22, 1982, to acquire control,
see section 224(d) of Pub. L. 97-248, set out as an Effective Date
note under section 338 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 208 of Pub. L. 97-34 applicable to property
placed in service after Dec. 31, 1980, in taxable years ending
after that date, see section 209(a) of Pub. L. 97-34, set out as an
Effective Date note under section 168 of this title.
Amendment by section 221(b)(1)(B) of Pub. L. 97-34 applicable to
amounts paid or incurred after June 30, 1981, see section 221(d) of
Pub. L. 97-34, as amended, set out as an Effective Date note under
section 41 of this title.
Amendment by section 331(d)(1)(B) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1981, see section 339 of
Pub. L. 97-34, set out as a note under section 401 of this title.
EFFECTIVE DATE OF 1980 AMENDMENTS
Amendment by Pub. L. 96-589 applicable to bankruptcy cases or
similar judicial proceeding commencing after Dec. 31, 1980, with
exception permitting the debtor to make the amendment applicable to
such cases or proceeding commencing after Sept. 30, 1979, see
section 7(c)(1), (f) of Pub. L. 96-589, set out as a note under
section 108 of this title.
For effective date of amendment by Pub. L. 96-471, see section
6(a)(1) of Pub. L. 96-471, set out as an Effective Date note under
section 453 of this title.
Amendment by Pub. L. 96-223 applicable to sales or uses after
Sept. 30, 1980, in taxable years ending after such date, see
section 232(h)(1) of Pub. L. 96-223, set out as an Effective Date
note under section 40 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 applicable with respect to
determinations (as defined in section 860(e) of this title) after
Nov. 6, 1978, see section 362(e) of Pub. L. 95-600, set out as an
Effective Date note under section 860 of this title.
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, and to credit carrybacks from such years, see
section 202(e) of Pub. L. 95-30, set out as an Effective Date note
under section 51 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
For effective date of amendment by section 1601(e) of Pub. L.
94-455, see section 1608(a) of Pub. L. 94-455, set out as a note
under section 857 of this title.
Amendment by section 1901(a)(54), (b)(16), (17), (21)(B), (33)(N)
of Pub. L. 94-455 effective for taxable years beginning after Dec.
31, 1976, see section 1901(d) of Pub. L. 94-455, set out as a note
under section 2 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT
Section 601(f) of Pub. L. 92-178 provided that: ''The amendments
made by this section (enacting sections 40, 50A, and 50B of this
title and amending this section and sections 56, 6411, 6501, 6511,
6601, and 6611 of this title) shall apply to taxable years
beginning after December 31, 1971.''
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 504(c)(2) of Pub. L. 91-172 applicable with
respect to exploration expenditures paid or incurred after Dec. 31,
1969, see section 504(d)(1) of Pub. L. 91-172, set out as a note
under section 243 of this title.
Amendment by section 512(c) of Pub. L. 91-172 applicable with
respect to net capital losses sustained in taxable years beginning
after Dec. 31, 1969, see section 512(g) of Pub. L. 91-172, set out
as a note under section 1212 of this title.
Amendment by section 521(f) of Pub. L. 91-172 applicable with
respect to taxable years ending after July 24, 1969, see section
521(g) of Pub. L. 91-172, set out as a note under section 167 of
this title.
EFFECTIVE DATE OF 1968 AMENDMENT
Amendment by Pub. L. 90-240 applicable to taxable years beginning
after Dec. 31, 1966, see section 5(e) of Pub. L. 90-240, set out as
a note under section 832 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by section 225(i)(3) of Pub. L. 88-272 applicable to
taxable years beginning after Dec. 31, 1963, see section 225(l) of
Pub. L. 88-272 set out as a note under section 316 of this title.
Amendment by section 209(d)(2) of Pub. L. 88-272 applicable to
taxable years beginning after Dec. 31, 1963, with respect to
contributions paid or treated as paid under section 170(a)(2) of
this title, in taxable years beginning after Dec. 31, 1961, see
section 209(f)(2) of Pub. L. 88-272, set out as a note under
section 170 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-834 applicable with respect to taxable
years ending after Dec. 31, 1961, see section 2(h) of Pub. L.
87-834, set out as an Effective Date note under section 46 of this
title.
EFFECTIVE DATE OF 1959 AMENDMENT
Section 4 of Pub. L. 86-69 provided that: ''Except as otherwise
provided in this Act, the amendments made by this Act (amending
this section, part I (Sec. 801 et seq.) of subchapter L, and
sections 841, 842, 891, 1016, 1201, 1232, 1504, 4371, and 6501 of
this title) shall apply only with respect to taxable years
beginning after December 31, 1957.''
EFFECTIVE DATE OF 1958 AMENDMENT
For effective date of amendment by Pub. L. 85-866, see section
29(d) of Pub. L. 85-866, set out as a note under section 481 of
this title.
EFFECTIVE DATE OF 1956 AMENDMENT
Section 2 of act Jan. 28, 1956, provided that: ''The amendments
made by the first section of this Act (amending this section) shall
reply with respect to taxable years beginning after December 31,
1953, and ending after August 16, 1954.''
EFFECTIVE DATE OF 1955 AMENDMENT
Section 3 of act June 15, 1955, provided that: ''The amendments
made by this Act (amending this section and repealing sections 452
and 462 of this title) shall apply with respect to taxable years
beginning after December 31, 1953, and ending after August 16,
1954.''
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
Section 4 of act June 15, 1955, as amended by act Oct. 22, 1986,
Pub. L. 99-514, Sec. 2, 100 Stat. 2095, provided:
''(a) Filing of Statement. - If -
''(1) the amount of any tax required to be paid for any taxable
year ending on or before the date of the enactment of this Act
(June 15, 1955) is increased by reason of the enactment of this
Act (amending this section and repealing sections 452 and 462),
and
''(2) the last date prescribed for payment of such tax (or any
installment thereof) is before December 15, 1955, then the
taxpayer shall, on or before December 15, 1955, file a statement
which shows the increase in the amount of such tax required to be
paid by reason of the enactment of this Act.
''(b) Form and Effect of Statement. -
''(1) Form of statement, etc. - The statement required by
subsection (a) shall be filed at the place fixed for filing the
return. Such statement shall be in such form, and shall include
such information necessary or appropriate to show the increase in
the amount of the tax required to be paid for the taxable year by
reason of the enactment of this Act, as the Secretary of the
Treasury or his delegate shall by regulations prescribe.
''(2) Treatment as amount shown on return. - The amount shown
on a statement filed under subsection (a) as the increase in the
amount of the tax required to be paid for the taxable year by
reason of the enactment of this Act shall, for all purposes of
the internal revenue laws, be treated as tax shown on the
return. Notwithstanding the preceding sentence, that portion of
the amount of increase in tax for any taxable year which is
attributable to a decrease (by reason of the enactment of this
Act) in the net operating loss for a succeeding taxable year
shall not be treated as tax shown on the return.
''(3) Waiver of interest in case of payment on or before
december 15, 1955. - If the taxpayer, on or before December 15,
1955, files the statement referred to in subsection (a) and pays
in full that portion of the amount shown thereon for which the
last date prescribed for payment is before December 15, 1955,
then for purposes of computing interest (other than interest on
overpayments) such portion shall be treated as having been paid
on the last date prescribed for payment. This paragraph shall
not apply if the amount shown on the statement as the increase in
the amount of the tax required to be paid for the taxable year by
reason of the enactment of this Act is greater than the actual
increase unless the taxpayer establishes, to the satisfaction of
the Secretary of the Treasury or his delegate, that his
computation of the greater amount was based upon a reasonable
interpretation and application of sections 452 and 462 of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954) (sections
452 and 462 of this title), as those sections existed before the
enactment of this Act.
''(c) Special Rules. -
''(1) Interest for period before enactment. - Interest shall
not be imposed on the amount of any increase in tax resulting
from the enactment of this Act for any period before the day
after the date of the enactment of this Act (June 15, 1955).
''(2) Estimated tax. - Any addition to the tax under section
294(d) of the Internal Revenue Code of 1939 (section 294(d) of
former Title 26, Internal Revenue Code), shall be computed as if
this Act had not been enacted. In the case of any installment
for which the last date prescribed for payment is before December
15, 1955, any addition to the tax under section 6654 of the
Internal Revenue Code of 1986 (section 6654 of this title), shall
be computed as if this Act had not been enacted.
''(3) Treatment of certain payments which taxpayer is required
to make. - If -
''(A) the taxpayer is required to make a payment (or an
additional payment) to another person by reason of the
enactment of this Act, and
''(B) the Internal Revenue Code of 1986 (this title)
prescribes a period, which expires after the close of the
taxable year, within which the taxpayer must make such payment
(or additional payment) if the amount thereof is to be taken
into account (as a deduction or otherwise) in computing taxable
income for such taxable year,
then, subject to such regulations as the Secretary of the
Treasury or his delegate may prescribe, if such payment (or
additional payment) is made on or before December 15, 1955, it
shall be treated as having been made within the period prescribed
by such Code.
''(4) Treatment of certain dividends. - Subject to such
regulations as the Secretary of the Treasury or his delegate may
prescribe, for purposes of section 561(a)(1) of the Internal
Revenue Code of 1986 (section 561(a)(1) of this title), dividends
paid after the 15th day of the third month following the close of
the taxable year and on or before December 15, 1955, may be
treated as having been paid on the last day of the taxable year,
but only to the extent (A) that such dividends are attributable
to an increase in taxable income for the taxable year resulting
from the enactment of this Act, and (B) elected by the taxpayer.
''(5) Determination of date prescribed. - For purposes of this
section, the determination of the last date prescribed for
payment or for filing a return shall be made without regard to
any extension of time therefor and without regard to any
provision of this section.
''(6) Regulations. - For requirement that the Secretary of the
Treasury or his delegate shall prescribe all rules and
regulations as may be necessary by reason of the enactment of
this Act, see section 7805(a) of the Internal Revenue Code of
1986 (section 7805(a) of this title).''
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(e)(1) of Pub. L.
99-514 notwithstanding any treaty obligation of the United States
in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had
been included in the provision of Pub. L. 99-514 to which such
amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,
set out as a note under section 861 of this title.
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.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 45A, 50, 55, 172, 394,
593, 597, 807, 809, 810, 832, 904, 1388, 1396, 1847, 7518 of this
title; title 46 App. section 1177.
