Internal Revenue Code:Sec. 461. General rule for taxable year of deduction
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TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter E - Accounting Periods and Methods of Accounting
PART II - METHODS OF ACCOUNTING
Subpart C - Taxable Year for Which Deductions Taken
Statute
Sec. 461. General rule for taxable year of deduction
(a) General rule
The amount of any deduction or credit allowed by this subtitle
shall be taken for the taxable year which is the proper taxable
year under the method of accounting used in computing taxable
income.
(b) Special rule in case of death
In the case of the death of a taxpayer whose taxable income is
computed under an accrual method of accounting, any amount accrued
as a deduction or credit only by reason of the death of the
taxpayer shall not be allowed in computing taxable income for the
period in which falls the date of the taxpayer's death.
(c) Accrual of real property taxes
(1) In general
If the taxable income is computed under an accrual method of
accounting, then, at the election of the taxpayer, any real
property tax which is related to a definite period of time shall
be accrued ratably over that period.
(2) When election may be made
(A) Without consent
A taxpayer may, without the consent of the Secretary, make an
election under this subsection for his first taxable year in
which he incurs real property taxes. Such an election shall be
made not later than the time prescribed by law for filing the
return for such year (including extensions thereof).
(B) With consent
A taxpayer may, with the consent of the Secretary, make an
election under this subsection at any time.
(d) Limitation on acceleration of accrual of taxes
(1) General rule
In the case of a taxpayer whose taxable income is computed
under an accrual method of accounting, to the extent that the
time for accruing taxes is earlier than it would be but for any
action of any taxing jurisdiction taken after December 31, 1960,
then, under regulations prescribed by the Secretary, such taxes
shall be treated as accruing at the time they would have accrued
but for such action by such taxing jurisdiction.
(2) Limitation
Under regulations prescribed by the Secretary, paragraph (1)
shall be inapplicable to any item of tax to the extent that its
application would (but for this paragraph) prevent all persons
(including successors in interest) from ever taking such item
into account.
(e) Dividends or interest paid on certain deposits or withdrawable
accounts
Except as provided in regulations prescribed by the Secretary,
amounts paid to, or credited to the accounts of, depositors or
holders of accounts as dividends or interest on their deposits or
withdrawable accounts (if such amounts paid or credited are
withdrawable on demand subject only to customary notice to
withdraw) by a mutual savings bank not having capital stock
represented by shares, a domestic building and loan association, or
a cooperative bank shall not be allowed as a deduction for the
taxable year to the extent such amounts are paid or credited for
periods representing more than 12 months. Any such amount not
allowed as a deduction as the result of the application of the
preceding sentence shall be allowed as a deduction for such other
taxable year as the Secretary determines to be consistent with the
preceding sentence.
(f) Contested liabilities
If -
(1) the taxpayer contests an asserted liability,
(2) the taxpayer transfers money or other property to provide
for the satisfaction of the asserted liability,
(3) the contest with respect to the asserted liability exists
after the time of the transfer, and
(4) but for the fact that the asserted liability is contested,
a deduction would be allowed for the taxable year of the transfer
(or for an earlier taxable year) determined after application of
subsection (h),
then the deduction shall be allowed for the taxable year of the
transfer. This subsection shall not apply in respect of the
deduction for income, war profits, and excess profits taxes imposed
by the authority of any foreign country or possession of the United
States.
(g) Prepaid interest
(1) In general
If the taxable income of the taxpayer is computed under the
cash receipts and disbursements method of accounting, interest
paid by the taxpayer which, under regulations prescribed by the
Secretary, is properly allocable to any period -
(A) with respect to which the interest represents a charge
for the use or forbearance of money, and
(B) which is after the close of the taxable year in which
paid,
shall be charged to capital account and shall be treated as paid
in the period to which so allocable.
(2) Exception
This subsection shall not apply to points paid in respect of
any indebtedness incurred in connection with the purchase or
improvement of, and secured by, the principal residence of the
taxpayer to the extent that, under regulations prescribed by the
Secretary, such payment of points is an established business
practice in the area in which such indebtedness is incurred, and
the amount of such payment does not exceed the amount generally
charged in such area.
(h) Certain liabilities not incurred before economic performance
(1) In general
For purposes of this title, in determining whether an amount
has been incurred with respect to any item during any taxable
year, the all events test shall not be treated as met any earlier
than when economic performance with respect to such item occurs.
(2) Time when economic performance occurs
Except as provided in regulations prescribed by the Secretary,
the time when economic performance occurs shall be determined
under the following principles:
(A) Services and property provided to the taxpayer
If the liability of the taxpayer arises out of -
(i) the providing of services to the taxpayer by another
person, economic performance occurs as such person provides
such services,
(ii) the providing of property to the taxpayer by another
person, economic performance occurs as the person provides
such property, or
(iii) the use of property by the taxpayer, economic
performance occurs as the taxpayer uses such property.
(B) Services and property provided by the taxpayer
If the liability of the taxpayer requires the taxpayer to
provide property or services, economic performance occurs as
the taxpayer provides such property or services.
(C) Workers compensation and tort liabilities of the taxpayer
If the liability of the taxpayer requires a payment to
another person and -
(i) arises under any workers compensation act, or
(ii) arises out of any tort,
economic performance occurs as the payments to such person are
made. Subparagraphs (A) and (B) shall not apply to any
liability described in the preceding sentence.
(D) Other items
In the case of any other liability of the taxpayer, economic
performance occurs at the time determined under regulations
prescribed by the Secretary.
(3) Exception for certain recurring items
(A) In general
Notwithstanding paragraph (1) an item shall be treated as
incurred during any taxable year if -
(i) the all events test with respect to such item is met
during such taxable year (determined without regard to
paragraph (1)),
(ii) economic performance with respect to such item occurs
within the shorter of -
(I) a reasonable period after the close of such taxable
year, or
(II) 8 1/2 months after the close of such taxable year,
(iii) such item is recurring in nature and the taxpayer
consistently treats items of such kind as incurred in the
taxable year in which the requirements of clause (i) are met,
and
(iv) either -
(I) such item is not a material item, or
(II) the accrual of such item in the taxable year in
which the requirements of clause (i) are met results in a
more proper match against income than accruing such item in
the taxable year in which economic performance occurs.
(B) Financial statements considered under subparagraph (A)(iv)
In making a determination under subparagraph (A)(iv), the
treatment of such item on financial statements shall be taken
into account.
(C) Paragraph not to apply to workers compensation and tort
liabilities
This paragraph shall not apply to any item described in
subparagraph (C) of paragraph (2).
(4) All events test
For purposes of this subsection, the all events test is met
with respect to any item if all events have occurred which
determine the fact of liability and the amount of such liability
can be determined with reasonable accuracy.
(5) Subsection not to apply to certain items
This subsection shall not apply to any item for which a
deduction is allowable under a provision of this title which
specifically provides for a deduction for a reserve for estimated
expenses.
(i) Special rules for tax shelters
(1) Recurring item exception not to apply
In the case of a tax shelter, economic performance shall be
determined without regard to paragraph (3) of subsection (h).
(2) Special rule for spudding of oil or gas wells
(A) In general
In the case of a tax shelter, economic performance with
respect to amounts paid during the taxable year for drilling an
oil or gas well shall be treated as having occurred within a
taxable year if drilling of the well commences before the close
of the 90th day after the close of the taxable year.
(B) Deduction limited to cash basis
(i) Tax shelter partnerships
In the case of a tax shelter which is a partnership, in
applying section 704(d) to a deduction or loss for any
taxable year attributable to an item which is deductible by
reason of subparagraph (A), the term ''cash basis'' shall be
substituted for the term ''adjusted basis''.
(ii) Other tax shelters
Under regulations prescribed by the Secretary, in the case
of a tax shelter other than a partnership, the aggregate
amount of the deductions allowable by reason of subparagraph
(A) for any taxable year shall be limited in a manner similar
to the limitation under clause (i).
(C) Cash basis defined
For purposes of subparagraph (B), a partner's cash basis in a
partnership shall be equal to the adjusted basis of such
partner's interest in the partnership, determined without
regard to -
(i) any liability of the partnership, and
(ii) any amount borrowed by the partner with respect to
such partnership which -
(I) was arranged by the partnership or by any person who
participated in the organization, sale, or management of
the partnership (or any person related to such person
within the meaning of section 465(b)(3)(C)), or
(II) was secured by any asset of the partnership.
(3) Tax shelter defined
For purposes of this subsection, the term ''tax shelter'' means
-
(A) any enterprise (other than a C corporation) if at any
time interests in such enterprise have been offered for sale in
any offering required to be registered with any Federal or
State agency having the authority to regulate the offering of
securities for sale,
(B) any syndicate (within the meaning of section
1256(e)(3)(B)), and
(C) any tax shelter (as defined in section
6662(d)(2)(C)(ii)).
(4) Special rules for farming
In the case of the trade or business of farming (as defined in
section 464(e)), in determining whether an entity is a tax
shelter, the definition of farming syndicate in section 464(c)
shall be substituted for subparagraphs (A) and (B) of paragraph
(3).
(5) Economic performance
For purposes of this subsection, the term ''economic
performance'' has the meaning given such term by subsection (h).
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 157; Pub. L. 86-781, Sec. 6(a),
Sept. 14, 1960, 74 Stat. 1020; Pub. L. 87-876, Sec. 3(a), Oct. 24,
1962, 76 Stat. 1199; Pub. L. 88-272, title II, Sec. 223(a)(1), Feb.
26, 1964, 78 Stat. 76; Pub. L. 94-455, title II, Sec. 208(a), title
XIX, Sec. 1901(a)(69), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1541,
1775, 1834; Pub. L. 98-369, div. A, title I, Sec. 91(a), (e), July
18, 1984,98 Stat. 598, 607; Pub. L. 99-514, title VIII, Sec.
801(b), 805(c)(5), 823(b)(1), title XVIII, Sec. 1807(a)(1), (2),
Oct. 22, 1986, 100 Stat. 2347, 2362, 2374, 2811; Pub. L. 100-203,
title X, Sec. 10201(b)(5), Dec. 22, 1987, 101 Stat. 1330-387; Pub.
L. 100-647, title I, Sec. 1008(a)(3), 1018(u)(5), Nov. 10, 1988,
102 Stat. 3436, 3590; Pub. L. 101-239, title VII, Sec. 7721(c)(10),
Dec. 19, 1989, 103 Stat. 2400; Pub. L. 101-508, title XI, Sec.
11704(a)(5), Nov. 5, 1990, 104 Stat. 1388-518; Pub. L. 104-188,
title I, Sec. 1704(t)(24), (78), Aug. 20, 1996, 110 Stat. 1888,
1891.)
Miscellaneous
AMENDMENTS
1996 - Subsec. (i)(3)(C). Pub. L. 104-188, Sec. 1704(t)(78),
substituted ''section 6662(d)(2)(C)(iii)'' for ''section
6662(d)(2)(C)(ii)''.
Pub. L. 104-188, Sec. 1704(t)(24), amended directory language of
Pub. L. 101-239. See 1989 Amendment note below.
1990 - Subsec. (i)(3)(C). Pub. L. 101-508 amended subpar. (C)
generally. Prior to amendment, subpar. (C) read as follows: ''any
tax shelter (within the meaning of section 6662(d)(2)(C)(ii)).''
1989 - Subsec. (i)(3)(C). Pub. L. 101-239, as amended by Pub. L.
104-188, Sec. 1704(t)(24), substituted ''section
6662(d)(2)(C)(ii)'' for ''section 6661(b)(2)(C)(ii)''.
1988 - Subsec. (h)(5)(B), (C). Pub. L. 100-647, Sec. 1018(u)(5),
amended Pub. L. 99-514, Sec. 823(b)(1). See 1986 Amendment note
below.
Subsec. (i)(2). Pub. L. 100-647, Sec. 1008(a)(3), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: ''In
the case of a tax shelter, economic performance with respect to the
act of drilling an oil or gas well shall be treated as having
occurred within a taxable year if drilling of the well commences
before the close of the 90th day after the close of the taxable
year.''
1987 - Subsec. (h)(5). Pub. L. 100-203 substituted ''items'' for
''cases to which other provisions of this title specifically
apply'' in heading and amended text generally. Prior to amendment,
text read as follows: ''This subsection shall not apply to any item
to which any of the following provisions apply:
''(A) Section 463 (relating to vacation pay).
''(B) Any other provisions of this title which specifically
provides for a deduction for a reserve for estimated expenses.''
1986 - Subsec. (h)(5)(A). Pub. L. 99-514, Sec. 805(c)(5),
redesignated subpar. (B) as (A) and struck out former subpar. (A)
which referred to subsec. (c) or (f) of section 166.
Subsec. (h)(5)(B). Pub. L. 99-514, Sec. 823(b)(1), as amended by
Pub. L. 100-647, Sec. 1018(u)(5), redesignated subpar. (C) as (B)
and struck out former subpar. (B) which read as follows: ''Section
466 (relating to discount coupons).''
Pub. L. 99-514, Sec. 805(c)(5), redesignated subpar. (C) as (B).
Former subpar. (B) redesignated (A).
Subsec. (h)(5)(C). Pub. L. 99-514, Sec. 823(b)(1), as amended by
Pub. L. 100-647, Sec. 1018(u)(5), redesignated subpar. (C) as (B).
Pub. L. 99-514, Sec. 805(c)(5), redesignated subpar. (D) as (C).
Former subpar. (C) redesignated (B).
Subsec. (h)(5)(D). Pub. L. 99-514, Sec. 805(c)(5), redesignated
subpar. (D) as (C).
Subsec. (i). Pub. L. 99-514, Sec. 801(b)(1), substituted
''Special rules for tax shelters'' for ''Tax shelters may not
deduct items earlier than when economic performance occurs'' in
heading.
Subsec. (i)(1). Pub. L. 99-514, Sec. 801(b)(1), substituted
''Recurring item exception not to apply'' for ''In general'' in
heading and amended par. (1) generally. Prior to amendment, par.
(1) read as follows: ''In the case of a tax shelter computing
taxable income under the cash receipts and disbursements method of
accounting, such tax shelter shall not be allowed a deduction under
this chapter with respect to any item any earlier than the time
when such item would be treated as incurred under subsection (h)
(determined without regard to paragraph (3) thereof).''
Subsec. (i)(2). Pub. L. 99-514, Sec. 801(b)(1), amended par. (2)
generally, substituting provisions relating to special rule for
spudding of oil or gas wells for former provisions consisting of
subpars. (A) to (D) which related to deduction of items when
economic performance occurs on or before 90th day after close of
the taxable year to the extent of cash basis.
Pub. L. 99-514, Sec. 1807(a)(1), substituted ''on or before the
90th day'' for ''within 90 days'' in heading and substituted
''before the close of the 90th day after the close of the taxable
year'' for ''within 90 days after the close of the taxable year''
in subpar. (A).
Subsec. (i)(4). Pub. L. 99-514, Sec. 801(b)(2), amended par. (4)
generally. Prior to amendment, par. (4) read as follows: ''In the
case of the trade or business of farming (as defined in section
464(e)) -
''(A) any tax shelter described in paragraph (3)(C) shall be
treated as a farming syndicate for purposes of section 464;
except that this subparagraph shall not apply for purposes of
determining the income of an individual meeting the requirements
of section 464(c)(2),
''(B) section 464 shall be applied before this subsection, and
''(C) in determining whether an entity is a tax shelter, the
definition of farming syndicate in section 464(c) shall be
substituted for subparagraphs (A) and (B) of paragraph (3).''
Subsec. (i)(4)(A). Pub. L. 99-514, Sec. 1807(a)(2), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: ''section 464 shall be applied to any tax shelter
described in paragraph (3)(C),''.
1984 - Subsec. (f)(4). Pub. L. 98-369, Sec. 91(e), inserted
''determined after application of subsection (h)''.
Subsecs. (h), (i). Pub. L. 98-369, Sec. 91(a), added subsecs. (h)
and (i).
1976 - Subsec. (c)(2), (3). Pub. L. 94-455, Sec. 1901(a)(69)(A),
(B), 1906(b)(13)(A), redesignated par. (3) as (2), substituted ''in
which he'' for ''which begins after December 31, 1953, and ends
after the date of the enactment of this title in which the
taxpayer'', and struck out ''or his delegate'' after ''Secretary''
wherever appearing. Former par. (2), which related to special
limitations on the applicability of par. (1), was struck out.
Subsecs. (d), (e). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary'' wherever appearing.
Subsec. (g). Pub. L. 94-455, Sec. 208(a), added subsec. (g).
1964 - Subsec. (f). Pub. L. 88-272 added subsec. (f).
1962 - Subsec. (e). Pub. L. 87-876 added subsec. (e).
1960 - Subsec. (d). Pub. L. 86-781 added subsec. (d).
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7721(d) of Pub. L. 101-239 provided that: ''The
amendments made by this section (enacting sections 6662 to 6665 of
this title, amending this section and sections 1274, 5684, 5761,
6013, 6222, 6601, 6621, 6653, 6672, and 7519 of this title, and
repealing sections 6659, 6659A, 6660, 6661, and former section 6662
of this title) shall apply to returns the due date for which
(determined without regard to extensions) is after December 31,
1989.''
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 taxable years
beginning after Dec. 31, 1987, see section 10201(c)(1) of Pub. L.
100-203, set out as a note under section 404 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 801(b) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 801(d) of Pub. L.
99-514, set out as an Effective Date note under section 448 of this
title.
Amendment by section 805(c)(5) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain changes
required in method of accounting, see section 805(d) of Pub. L.
99-514, set out as a note under section 166 of this title.
Amendment by section 823 of Pub. L. 99-514 applicable to taxable
years beginning after Dec. 31, 1986, with changes required in the
method of accounting, see section 823(c) of Pub. L. 99-514, set out
as an Effective Date of Repeal note under section 466 of this
title.
Amendment by section 1807(a)(1), (2) 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
Section 91(g)-(i) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, title XVIII, Sec. 1807(a)(3)(B), (4)(F), (5), (6),
Oct. 22, 1986, 100 Stat. 2095, 2811, 2813, 2814, provided that:
''(g) Effective Dates. -
''(1) In general. - Except as provided in this subsection and
subsections (h) and (i), the amendments made by this section
(enacting sections 88, 468, and 468A of this title and amending
this section and section 172 of this title) shall apply to
amounts with respect to which a deduction would be allowable
under chapter 1 of the Internal Revenue Code of 1986 (formerly
I.R.C. 1954) (determined without regard to such amendments) after
-
''(A) in the case of amounts to which section 461(h) of such
Code (as added by such amendments) applies, the date of the
enactment of this Act (July 18, 1984), and
''(B) in the case of amounts to which section 461(i) of such
Code (as so added) applies, after March 31, 1984.
''(2) Taxpayer may elect earlier application. -
''(A) In general. - In the case of amounts described in
paragraph (1)(A), a taxpayer may elect to have the amendments
made by this section apply to amounts which -
''(i) are incurred on or before the date of the enactment
of this Act (July 18, 1984) (determined without regard to
such amendments), and
''(ii) are incurred after the date of the enactment of this
Act (determined with regard to such amendments).
The Secretary of the Treasury or his delegate may by regulations
provide that (in lieu of an election under the preceding
sentence) a taxpayer may (subject to such conditions as such
regulations may provide) elect to have subsection (h) of
section 461 of such Code apply to the taxpayer's entire taxable
year in which occurs July 19, 1984.
''(B) Election treated as change in the method of accounting.
- For purposes of section 481 of the Internal Revenue Code of
1986, if an election is made under subparagraph (A) with
respect to any amount, the application of the amendments made
by this section shall be treated as a change in method of
accounting -
''(i) initiated by the taxpayer,
''(ii) made with the consent of the Secretary of the
Treasury, and
''(iii) with respect to which section 481 of such Code
shall be applied by substituting a 3-year adjustment period
for a 10-year adjustment period.
''(3) Section 461(h) to apply in certain cases. -
Notwithstanding paragraph (1), section 461(h) of the Internal
Revenue Code of 1986 (as added by this section) shall be treated
as being in effect to the extent necessary to carry out any
amendments made by this section which take effect before section
461(h).
''(4) Effective date for treatment of mining and solid waste
reclamation and closing costs. - Except as otherwise provided in
subsection (h), the amendments made by subsection (b) (enacting
section 468 of this title) shall take effect on the date of the
enactment of this Act (July 18, 1984) with respect to taxable
years ending after such date.
''(5) Rules for nuclear decommissioning costs. - The amendments
made by subsections (c) and (f) (enacting sections 88 and 468A of
this title) shall take effect on the date of the enactment of
this Act (July 18, 1984) with respect to taxable years ending
after such date.
''(6) Modification of net operating loss carryback period. -
The amendments made by subsection (d) (amending section 172 of
this title) shall apply to losses for taxable years beginning
after December 31, 1983.
''(h) Exception for Certain Existing Activities and Contracts. -
If -
''(1) Existing accounting practices. - If, on March 1, 1984,
any taxpayer was regularly computing his deduction for mining
reclamation activities under a current cost method of accounting
(as determined by the Secretary of the Treasury or his delegate),
the liability for reclamation activities -
''(A) for land disturbed before the date of the enactment of
this Act (July 18, 1984), or
''(B) to which paragraph (2) applies,
shall be treated as having been incurred when the land was
disturbed.
''(2) Fixed price supply contract. -
''(A) In general. - In the case of any fixed price supply
contract entered into before March 1, 1984, the amendments made
by subsection (b) (enacting section 468 of this title) shall
not apply to any minerals extracted from such property which
are sold pursuant to such contract.
''(B) No extension or renegotiation. - Subparagraph (A) shall
not apply -
''(i) to any extension of any contract beyond the period
such contract was in effect on March 1, 1984, or
''(ii) to any renegotiation of, or other change in, the
terms and conditions of such contract in effect on March 1,
1984.
''(i) Transitional Rule for Accrued Vacation Pay. -
''(1) In general. - In the case of any taxpayer -
''(A) with respect to whom a deduction was allowable (other
than under section 463 of the Internal Revenue Code of 1986)
for vested accrued vacation pay for the last taxable year
ending before the date of the enactment of this Act (July 18,
1984), and
''(B) who elects the application of section 463 of such Code
for the first taxable year ending after the date of the
enactment of this Act,
then, for purposes of section 463(b) of such Code, the opening
balance of the taxpayer with respect to any vested accrued
vacation pay shall be determined under section 463(b)(1) of such
Code.
''(2) Vested accrued vacation pay. - For purposes of this
subsection, the term 'vested accrued vacation pay' means any
amount allowable under section 162(a) of such Code with respect
to vacation pay of employees of the taxpayer (determined without
regard to section 463 of such Code).''
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(69) 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.
Section 208(b) of Pub. L. 94-455 provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendment made by subsection (a) (amending this section) shall
apply to amounts paid after December 31, 1975, in taxable years
ending after such date.
''(2) Certain amounts paid before 1977. - The amendment made by
subsection (a) (amending this section) shall not apply to amounts
paid before January 1, 1977, pursuant to a binding contract or
written loan commitment which existed on September 16, 1975 (and
at all times thereafter), and which required prepayment of such
amounts by the taxpayer.''
EFFECTIVE DATE OF 1964 AMENDMENT
Section 223(b) of Pub. L. 88-272 provided that: ''Except as
provided in subsections (c) and (d) (set out below) -
''(1) the amendment made by subsection (a)(1) (amending this
section) shall apply to taxable years beginning after December
31, 1953, and ending after August 16, 1954, and
''(2) the amendment made by subsection (a)(2) (amending section
43 of the Internal Revenue Code of 1939) shall apply to taxable
years to which the Internal Revenue Code of 1939 applies.''
EFFECTIVE DATE OF 1962 AMENDMENT
Section 3(b) of Pub. L. 87-876 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply only
with respect to taxable years ending after December 31, 1962.''
EFFECTIVE DATE OF 1960 AMENDMENT
Section 6(b) of Pub. L. 86-781 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
taxable years ending after December 31, 1960.''
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.
TRANSITIONAL RULE FOR CERTAIN AMOUNTS
Section 1807(a)(8) of Pub. L. 99-514 provided that: ''For
purposes of section 461(h) of the Internal Revenue Code of 1954
(now 1986), economic performance shall be treated as occurring on
the date of a payment to an insurance company if -
''(A) such payment was made before November 23, 1985, for
indemnification against a tort liability relating to personal
injury or death caused by inhalation or ingestion of dust from
asbestos-containing insulation products,
''(B) such insurance company is unrelated to taxpayer,
''(C) such payment is not refundable, and
''(D) the taxpayer is not engaged in the mining of asbestos nor
is any member of any affiliated group which includes the taxpayer
so engaged.''
TRANSITION RULE
Section 1807(c) of Pub. L. 99-514 provided that: ''A taxpayer
shall be allowed to use the cash receipts and disbursements method
of accounting for taxable years ending after January 1, 1982, if
such taxpayer -
''(1) is a partnership which was founded in 1936,
''(2) has over 1,000 professional employees,
''(3) used a long-term contract method of accounting for a
substantial part of its income from the performance of
architectural and engineering services, and
''(4) is headquartered in Chicago, Illinois.''
ELECTION AS TO TRANSFERS IN TAXABLE YEARS BEGINNING BEFORE JAN. 1,
1964
Section 223(c) of Pub. L. 88-272 provided that:
''(1) The amendments made by subsection (a) (amending this
section and section 43 of the Internal Revenue Code of 1939) shall
not apply to any transfer of money or other property described in
subsection (a) made in a taxable year beginning before January 1,
1964, if the taxpayer elects, in the manner provided by regulations
prescribed by the Secretary of the Treasury or his delegate, to
have this paragraph apply. Such an election -
''(A) must be made within one year after the date of the
enactment of this Act (Feb. 26, 1964),
''(B) may not be revoked after the expiration of such one-year
period, and
''(C) shall apply to all transfers described in the first
sentence of this paragraph (other than transfers described in
paragraph (2)).
In the case of any transfer to which this paragraph applies, the
deduction shall be allowed only for the taxable year in which the
contest with respect to such transfer is settled.
''(2) Paragraph (1) shall not apply to any transfer if the
assessment of any deficiency which would result from the
application of the election in respect of such transfer is, on the
date of the election under paragraph (1), prevented by the
operation of any law or rule of law.
''(3) If the taxpayer makes an election under paragraph (1), and
if, on the date of such election, the assessment of any deficiency
which results from the application of the election in respect of
any transfer is not prevented by the operation of any law or rule
of law, the period within which assessment of such deficiency may
be made shall not expire earlier than 2 years after the date of the
enactment of this Act (Feb. 26, 1964).''
CERTAIN OTHER TRANSFERS IN TAXABLE YEARS BEGINNING BEFORE JAN. 1,
1964
Section 223(d) of Pub. L. 88-272 provided that: ''The amendments
made by subsection (a) (amending this section and section 43 of the
Internal Revenue Code of 1939) shall not apply to any transfer of
money or other property described in subsection (a) made in a
taxable year beginning before January 1, 1964, if -
''(1) no deduction has been allowed in respect of such transfer
for any taxable year before the taxable year in which the contest
with respect to such transfer is settled, and
''(2) refund or credit of any overpayment which would result
from the application of such amendments to such transfer is
prevented by the operation of any law or rule of law.
In the case of any transfer to which this subsection applies, the
deduction shall be allowed for the taxable year in which the
contest with respect to such transfer is settled.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 164, 167, 172, 448, 468A,
468B, 5891 of this title.
