PART VI—ALTERNATIVE MINIMUM TAX

        

Editorial Notes

Amendments

2022—Pub. L. 117–169, title I, §10101(b)(2), Aug. 16, 2022, 136 Stat. 1827, added item 56A.

§55. Alternative minimum tax imposed

(a) General rule

There is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the excess (if any) of—

(1) the tentative minimum tax for the taxable year, over

(2) the regular tax for the taxable year plus, in the case of an applicable corporation, the tax imposed by section 59A.

(b) Tentative minimum tax

For purposes of this part—

(1) Noncorporate taxpayers

In the case of a taxpayer other than a corporation—

(A) In general

The tentative minimum tax for the taxable year is the sum of—

(i) 26 percent of so much of the taxable excess as does not exceed $175,000, plus

(ii) 28 percent of so much of the taxable excess as exceeds $175,000.

The amount determined under the preceding sentence shall be reduced by the alternative minimum tax foreign tax credit for the taxable year.

(B) Taxable excess

For purposes of this subsection, the term "taxable excess" means so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.

(C) Married individual filing separate return

In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting 50 percent of the dollar amount otherwise applicable under clause (i) and clause (ii) thereof. For purposes of the preceding sentence, marital status shall be determined under section 7703.

(D) Alternative minimum taxable income

The term "alternative minimum taxable income" means the taxable income of the taxpayer for the taxable year—

(i) determined with the adjustments provided in section 56 and section 58, and

(ii) increased by the amount of the items of tax preference described in section 57.

 If a taxpayer is subject to the regular tax, such taxpayer shall be subject to the tax imposed by this section (and, if the regular tax is determined by reference to an amount other than taxable income, such amount shall be treated as the taxable income of such taxpayer for purposes of the preceding sentence).

(2) Corporations

(A) Applicable corporations

In the case of an applicable corporation, the tentative minimum tax for the taxable year shall be the excess of—

(i) 15 percent of the adjusted financial statement income for the taxable year (as determined under section 56A), over

(ii) the corporate AMT foreign tax credit for the taxable year.

(B) Other corporations

In the case of any corporation which is not an applicable corporation, the tentative minimum tax for the taxable year shall be zero.

(3) Maximum rate of tax on net capital gain of noncorporate taxpayers

The amount determined under the first sentence of paragraph (1)(A) shall not exceed the sum of—

(A) the amount determined under such first sentence computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the lesser of—

(i) the net capital gain; or

(ii) the sum of—

(I) the adjusted net capital gain, plus

(II) the unrecaptured section 1250 gain, plus

(B) 0 percent of so much of the adjusted net capital gain (or, if less, taxable excess) as does not exceed an amount equal to the excess described in section 1(h)(1)(B), plus

(C) 15 percent of the lesser of—

(i) so much of the adjusted net capital gain (or, if less, taxable excess) as exceeds the amount on which tax is determined under subparagraph (B), or

(ii) the excess described in section 1(h)(1)(C)(ii), plus

(D) 20 percent of the adjusted net capital gain (or, if less, taxable excess) in excess of the sum of the amounts on which tax is determined under subparagraphs (B) and (C), plus

(E) 25 percent of the amount of taxable excess in excess of the sum of the amounts on which tax is determined under the preceding subparagraphs of this paragraph.

Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h) but computed with the adjustments under this part.

(c) Regular tax

(1) In general

For purposes of this section, the term "regular tax" means the regular tax liability for the taxable year (as defined in section 26(b)) reduced by the foreign tax credit allowable under section 27(a).¹ Such term shall not include any increase in tax under section 45(e)(11)(C), 49(b) or 50(a) or subsection (j) or (k) of section 42.

(2) Coordination with income averaging for farmers and fishermen

Solely for purposes of this section, section 1301 (relating to averaging of farm and fishing income) shall not apply in computing the regular tax liability.

(3) Cross references

For provisions providing that certain credits are not allowable against the tax imposed by this section, see sections 30C(d)(2) and 38(c).

(d) Exemption amount

For purposes of this section—

(1) Exemption amount for taxpayers other than corporations

In the case of a taxpayer other than a corporation, the term "exemption amount" means—

(A) $78,750 in the case of—

(i) a joint return, or

(ii) a surviving spouse,

(B) $50,600 in the case of an individual who—

(i) is not a married individual, and

(ii) is not a surviving spouse,

(C) 50 percent of the dollar amount applicable under subparagraph (A) in the case of a married individual who files a separate return, and

(D) $22,500 in the case of an estate or trust.

For purposes of this paragraph, the term "surviving spouse" has the meaning given to such term by section 2(a), and marital status shall be determined under section 7703.

(2) Phase-out of exemption amount

The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount equal to 25 percent of the amount by which the alternative minimum taxable income of the taxpayer exceeds—

(A) $150,000 in the case of a taxpayer described in paragraph (1)(A),

(B) $112,500 in the case of a taxpayer described in paragraph (1)(B), and

(C) 50 percent of the dollar amount applicable under subparagraph (A) in the case of a taxpayer described in subparagraph (C) or (D) of paragraph (1).

In the case of a taxpayer described in paragraph (1)(C), alternative minimum taxable income shall be increased by the lesser of (i) 25 percent of the excess of alternative minimum taxable income (determined without regard to this sentence) over the minimum amount of such income (as so determined) for which the exemption amount under paragraph (1)(C) is zero, or (ii) such exemption amount (determined without regard to this paragraph).

(3) Inflation adjustment

(A) In general

In the case of any taxable year beginning in a calendar year after 2012, the amounts described in subparagraph (B) shall each be increased by an amount equal to—

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2011" for "calendar year 2016" in subparagraph (A)(ii) thereof.

(B) Amounts described

The amounts described in this subparagraph are—

(i) each of the dollar amounts contained in subsection (b)(1)(A),

(ii) each of the dollar amounts contained in subparagraphs (A), (B), and (D) of paragraph (1), and

(iii) each of the dollar amounts in subparagraphs (A) and (B) of paragraph (2).

(C) Rounding

Any increased amount determined under subparagraph (A) shall be rounded to the nearest multiple of $100.

(4) Special rule for taxable years beginning after 2017 and before 2026

(A) In general

In the case of any taxable year beginning after December 31, 2017, and before January 1, 2026—

(i) paragraph (1) shall be applied—

(I) by substituting "$109,400" for "$78,750" in subparagraph (A), and

(II) by substituting "$70,300" for "$50,600" in subparagraph (B),

(ii) paragraph (2) shall be applied—

(I) by substituting "$1,000,000" for "$150,000" in subparagraph (A),

(II) by substituting "50 percent of the dollar amount applicable under subparagraph (A)" for "$112,500" in subparagraph (B), and

(III) in the case of a taxpayer described in paragraph (1)(D), without regard to the substitution under subclause (I), and

(iii) subsection (j) of section 59 shall not apply.

(B) Inflation adjustment

(i) In general

In the case of any taxable year beginning in a calendar year after 2018, the amounts described in clause (ii) shall each be increased by an amount equal to—

(I) such dollar amount, multiplied by

(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2017" for "calendar year 2016" in subparagraph (A)(ii) thereof.

(ii) Amounts described

The amounts described in this clause are the $109,400 amount in subparagraph (A)(i)(I), the $70,300 amount in subparagraph (A)(i)(II), and the $1,000,000 amount in subparagraph (A)(ii)(I).

(iii) Rounding

Any increased amount determined under clause (i) shall be rounded to the nearest multiple of $100.

(iv) Coordination with current adjustments

In the case of any taxable year to which subparagraph (A) applies, no adjustment shall be made under paragraph (3) to any of the numbers which are substituted under subparagraph (A) and adjusted under this subparagraph.

(Added and amended Pub. L. 99–514, title II, §252(c), title VII, §701(a), Oct. 22, 1986, 100 Stat. 2205, 2321; Pub. L. 100–647, title I, §§1002(l)(27), 1007(a), Nov. 10, 1988, 102 Stat. 3381, 3428; Pub. L. 101–508, title XI, §§11102(a), 11813(b)(5), Nov. 5, 1990, 104 Stat. 1388–406, 1388-551; Pub. L. 102–318, title V, §521(b)(1), July 3, 1992, 106 Stat. 310; Pub. L. 102–486, title XIX, §1913(b)(2)(D), Oct. 24, 1992, 106 Stat. 3020; Pub. L. 103–66, title XIII, §13203(a)–(c)(1), Aug. 10, 1993, 107 Stat. 461, 462; Pub. L. 104–188, title I, §§1205(d)(6), 1401(b)(3), 1601(b)(2)(A), Aug. 20, 1996, 110 Stat. 1776, 1788, 1832; Pub. L. 105–34, title III, §311(b)(1), (2)(A), title IV, §401(a), title XVI, §1601(f)(1)(C), Aug. 5, 1997, 111 Stat. 834, 835, 843, 1090; Pub. L. 105–206, title VI, §§6005(d)(2), 6006(a), July 22, 1998, 112 Stat. 804, 806; Pub. L. 107–16, title VII, §701(a), (b), June 7, 2001, 115 Stat. 148; Pub. L. 108–27, title I, §106(a), title III, §301(a)(1), (2)(B), (b)(2), May 28, 2003, 117 Stat. 755, 758; Pub. L. 108–311, title I, §103(a), title IV, §406(d), Oct. 4, 2004, 118 Stat. 1168, 1189; Pub. L. 108–357, title III, §314(a), Oct. 22, 2004, 118 Stat. 1468; Pub. L. 109–58, title XIII, §§1302(b), 1322(a)(3)(H), 1341(b)(3), 1342(b)(3), Aug. 8, 2005, 119 Stat. 991, 1012, 1049, 1051; Pub. L. 109–135, title IV, §§403(h), 412(p), Dec. 21, 2005, 119 Stat. 2624, 2638; Pub. L. 109–222, title III, §301(a), May 17, 2006, 120 Stat. 353; Pub. L. 110–166, §2(a), Dec. 26, 2007, 121 Stat. 2461; Pub. L. 110–234, title XV, §15311(b), May 22, 2008, 122 Stat. 1503; Pub. L. 110–246, §4(a), title XV, §15311(b), June 18, 2008, 122 Stat. 1664, 2265; Pub. L. 110–343, div. C, title I, §102(a), Oct. 3, 2008, 122 Stat. 3863; Pub. L. 111–5, div. B, title I, §§1012(a), 1142(b)(5), 1144(b)(3), Feb. 17, 2009, 123 Stat. 319, 331, 332; Pub. L. 111–240, title II, §2013(b), Sept. 27, 2010, 124 Stat. 2555; Pub. L. 111–312, title II, §201(a), Dec. 17, 2010, 124 Stat. 3299; Pub. L. 112–240, title I, §§102(b)(2), (c)(2), 104(a), (b), (c)(2)(J), Jan. 2, 2013, 126 Stat. 2319, 2320, 2322; Pub. L. 113–295, div. A, title II, §202(c), Dec. 19, 2014, 128 Stat. 4024; Pub. L. 114–113, div. Q, title III, §334(b), Dec. 18, 2015, 129 Stat. 3108; Pub. L. 115–97, title I, §§11002(d)(1)(I), 12001(a), (b)(3)(A), (B), (4)–(6), 12003(a), Dec. 22, 2017, 131 Stat. 2060, 2092, 2093, 2095; Pub. L. 116–94, div. O, title V, §501(b), Dec. 20, 2019, 133 Stat. 3180; Pub. L. 117–169, title I, §10101(a)(1), (3)–(4)(B)(i), Aug. 16, 2022, 136 Stat. 1818, 1821.)

Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.

Editorial Notes

References in Text

Section 27, referred to in subsec. (c)(1), was amended generally by Pub. L. 115–141, div. U, title IV, §401(d)(1)(A), Mar. 23, 2018, 132 Stat. 1206, and as so amended, no longer contains a subsec. (a) designation. Text of section 27 as amended by Pub. L. 115–141 is identical to that of former section 27(a).

Codification

Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246.

Prior Provisions

A prior section 55, Pub. L. 95–600, title IV, §421(a), Nov. 6, 1978, 92 Stat. 2871; amended Pub. L. 96–222, title I, §104(a)(4)(A)–(D), (G), (H)(i), (ii), (viii), Apr. 1, 1980, 94 Stat. 215–218; Pub. L. 96–223, title II, §232(b)(2)(A), (c)(2), Apr. 2, 1980, 94 Stat. 276, 277; Pub. L. 96–603, §4(a), (b), Dec. 28, 1980, 94 Stat. 3513, 3514; Pub. L. 97–34, title I, §101(d)(1), title II, §221(b)(1)(A), title III, §331(d)(1)(A), Aug. 13, 1981, 95 Stat. 183, 246, 294; Pub. L. 97–248, title II, §201(a), Sept. 3, 1982, 96 Stat. 411; Pub. L. 97–354, §5(a)(13), Oct. 19, 1982, 96 Stat. 1693; Pub. L. 97–448, title I, §103(g)(2)(E), title III, §§305(c), 306(a)(1)(B), (C), Jan. 12, 1983, 96 Stat. 2379, 2399, 2400; Pub. L. 98–369, div. A, title IV, §§474(q), 491(d)(1), title VI, §612(e)(3), title VII, §711(a)(1), (4), (5), July 18, 1984, 98 Stat. 838, 849, 912, 942, 943; Pub. L. 99–514, title XVIII, §1847(a), Oct. 22, 1986, 100 Stat. 2856, related to alternative minimum tax for taxpayers other than corporations, prior to the general revision of this part by Pub. L. 99–514, §701(a).

Amendments

2022—Subsec. (a). Pub. L. 117–169, §10101(a)(4)(A), substituted "There" for "In the case of a taxpayer other than a corporation, there" in introductory provisions.

Subsec. (a)(2). Pub. L. 117–169, §10101(a)(3), inserted "plus, in the case of an applicable corporation, the tax imposed by section 59A" before period at end.

Subsec. (b)(1). Pub. L. 117–169, §10101(a)(4)(B)(i)(I), substituted "Noncorporate taxpayers" for "Amount of tentative tax" in heading and inserted introductory provisions.

Subsec. (b)(1)(D). Pub. L. 117–169, §10101(a)(4)(B)(i)(II), added subpar. (D).

Subsec. (b)(2). Pub. L. 117–169, §10101(a)(1), amended par. (2) generally. Prior to amendment, par. (2) defined "alternative minimum taxable income".

2019—Subsec. (d)(4)(A)(iii). Pub. L. 116–94 added cl. (iii).

2017—Subsec. (a). Pub. L. 115–97, §12001(a), substituted "In the case of a taxpayer other than a corporation, there" for "There" in introductory provisions.

Subsec. (b)(1). Pub. L. 115–97, §12001(b)(3)(A), amended par. (1) generally. Prior to amendment, par. (1) related to amount of tentative tax.

Subsec. (b)(3). Pub. L. 115–97, §12001(b)(3)(B), substituted "paragraph (1)(A)" for "paragraph (1)(A)(i)" in introductory provisions.

Subsec. (c)(1). Pub. L. 115–97, §12001(b)(4), struck out ", the section 936 credit allowable under section 27(b), and the Puerto Rico economic activity credit under section 30A" after "section 27(a)".

Subsec. (d)(2). Pub. L. 115–97, §12001(b)(5)(A), redesignated par. (3) as (2) and struck out former par. (2). Prior to amendment, text of par. (2) read as follows: "In the case of a corporation, the term 'exemption amount' means $40,000."

Subsec. (d)(2)(D). Pub. L. 115–97, §12001(b)(5)(B), struck out subpar. (D) which read as follows: "$150,000 in the case of a taxpayer described in paragraph (2)."

Subsec. (d)(3). Pub. L. 115–97, §12001(b)(5)(A), redesignated par. (4) as (3). Former par. (3) redesignated (2).

Subsec. (d)(3)(B)(i). Pub. L. 115–97, §12001(b)(5)(C)(i), substituted "(b)(1)(A)" for "(b)(1)(A)(i)".

Subsec. (d)(3)(B)(iii). Pub. L. 115–97, §12001(b)(5)(C)(ii), substituted "paragraph (2)" for "paragraph (3)".

Subsec. (d)(4). Pub. L. 115–97, §12003(a), added par. (4). Former par. (4) redesignated (3).

Subsec. (d)(4)(A)(ii). Pub. L. 115–97, §11002(d)(1)(I), substituted "for 'calendar year 2016' in subparagraph (A)(ii)" for "for 'calendar year 1992' in subparagraph (B)".

Subsec. (e). Pub. L. 115–97, §12001(b)(6), struck out subsec. (e) which related to exemption for small corporations.

2015—Subsec. (b)(4). Pub. L. 114–113 struck out par. (4) which related to the maximum rate of tax on qualified timber gain of corporations.

2014—Subsec. (d)(4)(B)(ii). Pub. L. 113–295, §202(c)(1), inserted "subparagraphs (A), (B), and (D) of" before "paragraph (1)".

Subsec. (d)(4)(C). Pub. L. 113–295, §202(c)(2), substituted "increased amount" for "increase".

2013—Subsec. (b)(1)(A)(iii). Pub. L. 112–240, §104(b)(2)(A), substituted "by substituting 50 percent of the dollar amount otherwise applicable under subclause (I) and subclause (II) thereof." for "by substituting '$87,500' for '$175,000' each place it appears."

Subsec. (b)(3)(B). Pub. L. 112–240, §102(c)(2), substituted "0 percent" for "5 percent (0 percent in the case of taxable years beginning after 2007)".

Subsec. (b)(3)(C) to (E). Pub. L. 112–240, §102(b)(2), added subpars. (C) and (D), redesignated former subpar. (D) as (E), and struck out former subpar. (C) which read as follows: "15 percent of the adjusted net capital gain (or, if less, taxable excess) in excess of the amount on which tax is determined under subparagraph (B), plus".

Subsec. (c)(3). Pub. L. 112–240, §104(c)(2)(J), substituted "30C(d)(2)" for "26(a), 30C(d)(2),".

Subsec. (d)(1)(A). Pub. L. 112–240, §104(a)(1)(A), in introductory provisions, substituted "$78,750" for "$45,000 ($72,450 in the case of taxable years beginning in 2010 and $74,450 in the case of taxable years beginning in 2011)".

Subsec. (d)(1)(B). Pub. L. 112–240, §104(a)(1)(B), in introductory provisions, substituted "$50,600" for "$33,750 ($47,450 in the case of taxable years beginning in 2010 and $48,450 in the case of taxable years beginning in 2011)".

Subsec. (d)(1)(C). Pub. L. 112–240, §104(a)(1)(C), substituted "subparagraph (A)" for "paragraph (1)(A)".

Subsec. (d)(3)(A). Pub. L. 112–240, §104(b)(2)(B)(i), struck out "or (2)" after "paragraph (1)(A)".

Subsec. (d)(3)(C), (D). Pub. L. 112–240, §104(b)(2)(B)(ii), (iii), added subpars. (C) and (D) and struck out former subpar. (C) which read as follows: "$75,000 in the case of a taxpayer described in subparagraph (C) or (D) of paragraph (1)."

Subsec. (d)(4). Pub. L. 112–240, §104(b)(1), added par. (4).

2010—Subsec. (d)(1)(A). Pub. L. 111–312, §201(a)(1), substituted "$72,450 in the case of taxable years beginning in 2010 and $74,450 in the case of taxable years beginning in 2011" for "$70,950 in the case of taxable years beginning in 2009".

Subsec. (d)(1)(B). Pub. L. 111–312, §201(a)(2), substituted "$47,450 in the case of taxable years beginning in 2010 and $48,450 in the case of taxable years beginning in 2011" for "$46,700 in the case of taxable years beginning in 2009".

Subsec. (e)(5). Pub. L. 111–240 substituted "38(c)(6)(B)" for "38(c)(3)(B)".

2009—Subsec. (c)(3). Pub. L. 111–5, §1144(b)(3), struck out "30B(g)(2)," after "sections 26(a),".

Pub. L. 111–5, §1142(b)(5), struck out "30(b)(3)," after "sections 26(a),".

Subsec. (d)(1)(A). Pub. L. 111–5, §1012(a)(1), substituted "($70,950 in the case of taxable years beginning in 2009)" for "($69,950 in the case of taxable years beginning in 2008)".

Subsec. (d)(1)(B). Pub. L. 111–5, §1012(a)(2), substituted "($46,700 in the case of taxable years beginning in 2009)" for "($46,200 in the case of taxable years beginning in 2008)".

2008—Subsec. (b)(4). Pub. L. 110–246, §15311(b), added par. (4).

Subsec. (d)(1)(A). Pub. L. 110–343, §102(a)(1), substituted "($69,950 in the case of taxable years beginning in 2008)" for "($66,250 in the case of taxable years beginning in 2007)".

Subsec. (d)(1)(B). Pub. L. 110–343, §102(a)(2), substituted "($46,200 in the case of taxable years beginning in 2008)" for "($44,350 in the case of taxable years beginning in 2007)".

2007—Subsec. (d)(1)(A). Pub. L. 110–166, §2(a)(1), substituted "($66,250 in the case of taxable years beginning in 2007)" for "($62,550 in the case of taxable years beginning in 2006)".

Subsec. (d)(1)(B). Pub. L. 110–166, §2(a)(2), substituted "($44,350 in the case of taxable years beginning in 2007)" for "($42,500 in the case of taxable years beginning in 2006)".

2006—Subsec. (d)(1)(A). Pub. L. 109–222, §301(a)(1), substituted "$62,550 in the case of taxable years beginning in 2006" for "$58,000 in the case of taxable years beginning in 2003, 2004, and 2005".

Subsec. (d)(1)(B). Pub. L. 109–222, §301(a)(2), substituted "$42,500 in the case of taxable years beginning in 2006" for "$40,250 in the case of taxable years beginning in 2003, 2004, and 2005".

2005—Subsec. (c)(1). Pub. L. 109–58, §1302(b), which directed amendment of par. (1) by inserting "45(e)(11)(C)," after "section" in last sentence, was executed by making the insertion after "section" the first place it appeared in last sentence, to reflect the probable intent of Congress.

Subsec. (c)(2). Pub. L. 109–135, §403(h), substituted "regular tax liability" for "regular tax".

Pub. L. 109–58, §1342(b)(3), which directed amendment of par. (2) by inserting "30C(d)(2)," after "30B(g)(2),", was repealed by Pub. L. 109–135, §412(p)(3).

Pub. L. 109–58, §1341(b)(3), which directed amendment of par. (2) by inserting "30B(g)(2)," after "30(b)(2),", was repealed by Pub. L. 109–135, §412(p)(2).

Subsec. (c)(3). Pub. L. 109–135, §412(p)(1), inserted "30B(g)(2), 30C(d)(2)," after "30(b)(3),".

Pub. L. 109–58, §1322(a)(3)(H), struck out "29(b)(6)," after "26(a),".

2004—Subsec. (b)(3)(B). Pub. L. 108–311, §406(d), substituted "an amount equal to the excess described in" for "the amount on which a tax is determined under".

Subsec. (c)(2), (3). Pub. L. 108–357 added par. (2) and redesignated former par. (2) as (3).

Subsec. (d)(1)(A), (B). Pub. L. 108–311, §103(a), substituted "2003, 2004, and 2005" for "2003 and 2004".

2003—Subsec. (b)(3). Pub. L. 108–27, §301(b)(2), struck out first sentence of concluding provisions which read as follows: "In the case of taxable years beginning after December 31, 2000, rules similar to the rules of section 1(h)(2) shall apply for purposes of subparagraphs (B) and (C)."

Subsec. (b)(3)(B). Pub. L. 108–27, §301(a)(1), substituted "5 percent (0 percent in the case of taxable years beginning after 2007)" for "10 percent".

Subsec. (b)(3)(C). Pub. L. 108–27, §301(a)(2)(B), substituted "15 percent" for "20 percent".

Subsec. (d)(1)(A). Pub. L. 108–27, §106(a)(1), substituted "$58,000 in the case of taxable years beginning in 2003 and 2004" for "$49,000 in the case of taxable years beginning in 2001, 2002, 2003, and 2004".

Subsec. (d)(1)(B). Pub. L. 108–27, §106(a)(2), substituted "$40,250 in the case of taxable years beginning in 2003 and 2004" for "$35,750 in the case of taxable years beginning in 2001, 2002, 2003, and 2004".

2001—Subsec. (d)(1)(A). Pub. L. 107–16, §701(a)(1), substituted "$45,000 ($49,000 in the case of taxable years beginning in 2001, 2002, 2003, and 2004)" for "$45,000".

Subsec. (d)(1)(B). Pub. L. 107–16, §701(b)(1), struck out "and" at end.

Pub. L. 107–16, §701(a)(2), substituted "$33,750 ($35,750 in the case of taxable years beginning in 2001, 2002, 2003, and 2004)" for "$33,750".

Subsec. (d)(1)(C), (D). Pub. L. 107–16, §701(b)(1), added subpars. (C) and (D) and struck out former subpar. (C) which read as follows: "$22,500 in the case of—

"(i) a married individual who files a separate return, or

"(ii) an estate or trust."

Subsec. (d)(3). Pub. L. 107–16, §701(b)(3), in concluding provisions, substituted "paragraph (1)(C)" for "paragraph (1)(C)(i)" and "the minimum amount of such income (as so determined) for which the exemption amount under paragraph (1)(C) is zero, or (ii) such exemption amount (determined without regard to this paragraph)" for "$165,000 or (ii) $22,500".

Subsec. (d)(3)(C). Pub. L. 107–16, §701(b)(2), substituted "subparagraph (C) or (D) of paragraph (1)" for "paragraph (1)(C)".

1998—Subsec. (b)(3). Pub. L. 105–206, §6005(d)(2), reenacted par. heading without change and amended text of par. (3) generally. Prior to amendment, text read as follows: "The amount determined under the first sentence of paragraph (1)(A)(i) shall not exceed the sum of—

"(A) the amount determined under such first sentence computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the lesser of—

"(i) the net capital gain, or

"(ii) the sum of—

"(I) the adjusted net capital gain, plus

"(II) the unrecaptured section 1250 gain, plus

"(B) 25 percent of the lesser of—

"(i) the unrecaptured section 1250 gain, or

"(ii) the amount of taxable excess in excess of the sum of—

"(I) the adjusted net capital gain, plus

"(II) the amount on which a tax is determined under subparagraph (A), plus

"(C) 10 percent of so much of the taxpayer's adjusted net capital gain (or, if less, taxable excess) as does not exceed the amount on which a tax is determined under section 1(h)(1)(D), plus

"(D) 20 percent of the taxpayer's adjusted net capital gain (or, if less, taxable excess) in excess of the amount on which tax is determined under subparagraph (C).

In the case of taxable years beginning after December 31, 2000, rules similar to the rules of section 1(h)(2) shall apply for purposes of subparagraphs (C) and (D). Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h)."

Subsec. (e)(1). Pub. L. 105–206, §6006(a), reenacted par. heading without change and amended text of par. (1) generally. Prior to amendment, text read as follows: "The tentative minimum tax of a corporation shall be zero for any taxable year if—

"(A) such corporation met the $5,000,000 gross receipts test of section 448(c) for its first taxable year beginning after December 31, 1996, and

"(B) such corporation would meet such test for the taxable year and all prior taxable years beginning after such first taxable year if such test were applied by substituting '$7,500,000' for '$5,000,000'."

1997—Subsec. (b)(1)(A)(ii). Pub. L. 105–34, §311(b)(2)(A), substituted "this subsection" for "clause (i)".

Subsec. (b)(3). Pub. L. 105–34, §311(b)(1), added par. (3).

Subsec. (c)(1). Pub. L. 105–34, §1601(f)(1)(C), substituted "Puerto Rico" for "Puerto Rican".

Subsec. (e). Pub. L. 105–34, §401(a), added subsec. (e).

1996—Subsec. (c)(1). Pub. L. 104–188, §1601(b)(2)(A), substituted ", the section 936 credit allowable under section 27(b), and the Puerto Rican economic activity credit under section 30A" for "and the section 936 credit allowable under section 27(b)".

Pub. L. 104–188, §1401(b)(3), struck out "shall not include any tax imposed by section 402(d) and" before "shall not include any increase in tax under section 49(b)".

Subsec. (c)(2). Pub. L. 104–188, §1205(d)(6), struck out "28(d)(2)," after "26(a),".

1993—Subsec. (b)(1). Pub. L. 103–66, §13203(a), amended heading and text of par. (1) generally. Prior to amendment, text read as follows: "The tentative minimum tax for the taxable year is—

"(A) 20 percent (24 percent in the case of a taxpayer other than a corporation) of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount, reduced by

"(B) the alternative minimum tax foreign tax credit for the taxable year."

Subsec. (d)(1). Pub. L. 103–66, §13203(b), substituted "$45,000" for "$40,000" in subpar. (A), "$33,750" for "$30,000" in subpar. (B), and "$22,500" for "$20,000" in subpar. (C).

Subsec. (d)(3). Pub. L. 103–66, §13203(c)(1), substituted "$165,000 or (ii) $22,500" for "$155,000 or (ii) $20,000" in last sentence.

1992—Subsec. (c)(1). Pub. L. 102–318 substituted "402(d)" for "402(e)".

Subsec. (c)(2). Pub. L. 102–486 substituted "29(b)(6), 30(b)(3)," for "29(b)(5),".

1990—Subsec. (b)(1)(A). Pub. L. 101–508, §11102(a), substituted "24 percent" for "21 percent".

Subsec. (c)(1). Pub. L. 101–508, §11813(b)(5), substituted "section 49(b) or 50(a)" for "section 47".

1988—Subsec. (b)(2). Pub. L. 100–647, §1007(a)(2), inserted at end "If a taxpayer is subject to the regular tax, such taxpayer shall be subject to the tax imposed by this section (and, if the regular tax is determined by reference to an amount other than taxable income, such amount shall be treated as the taxable income of such taxpayer for purposes of the preceding sentence)."

Subsec. (c)(1). Pub. L. 100–647, §1007(a)(1), inserted "and the section 936 credit allowable under section 27(b)" before period at end of first sentence.

Pub. L. 100–647, §1002(l)(27), substituted "subsection (j) or (k) of section 42" for "section 42(j)".

Subsec. (d)(3). Pub. L. 100–647, §1007(a)(3), inserted at end "In the case of a taxpayer described in paragraph (1)(C)(i), alternative minimum taxable income shall be increased by the lesser of (i) 25 percent of the excess of alternative minimum taxable income (determined without regard to this sentence) over $155,000, or (ii) $20,000."

1986—Subsec. (c)(1). Pub. L. 99–514, §252(c), inserted "or section 42(j)".

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Amendment by Pub. L. 117–169 applicable to taxable years beginning after Dec. 31, 2022, see section 10101(f) of Pub. L. 117–169, set out as a note under section 11 of this title.

Effective Date of 2019 Amendment

Amendment by Pub. L. 116–94 applicable to taxable years beginning after Dec. 31, 2017, see section 501(c)(2) of Pub. L. 116–94, set out in a note under section 1 of this title.

Effective Date of 2017 Amendment

Amendment by section 11002(d)(1)(I) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title.

Amendment by section 12001(a), (b)(3)(A), (B), (4)–(6) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115–97, set out as a note under section 11 of this title.

Pub. L. 115–97, title I, §12003(b), Dec. 22, 2017, 131 Stat. 2096, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017."

Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title III, §334(c), Dec. 18, 2015, 129 Stat. 3109, provided that: "The amendments made by this section [amending this section and section 1201 of this title] shall apply to taxable years beginning after December 31, 2015."

Effective Date of 2014 Amendment

Pub. L. 113–295, div. A, title II, §202(f), Dec. 19, 2014, 128 Stat. 4024, provided that: "The amendments made by this section [amending this section and sections 168, 642, 911, and 6431 of this title] shall take effect as if included in the provision of the American Taxpayer Relief Act of 2012 [Pub. L. 112–240] to which they relate."

Effective Date of 2013 Amendment

Amendment by section 102(b)(2), (c)(2) of Pub. L. 112–240 applicable to taxable years beginning after Dec. 31, 2012, see section 102(d)(1) of Pub. L. 112–240, set out as a note under section 1 of this title.

Amendment by section 104(a), (b), (c)(2)(J) of Pub. L. 112–240 applicable to taxable years beginning after Dec. 31, 2011, see section 104(d) of Pub. L. 112–240, set out as a note under section 23 of this title.

Effective Date of 2010 Amendment

Pub. L. 111–312, title II, §201(b), Dec. 17, 2010, 124 Stat. 3299, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2009."

Effective Date of 2009 Amendment

Pub. L. 111–5, div. B, title I, §1012(b), Feb. 17, 2009, 123 Stat. 319, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2008."

Amendment by section 1142(b)(5) of Pub. L. 111–5 applicable to vehicles acquired after Feb. 17, 2009, see section 1142(c) of Pub. L. 111–5, set out as an Effective and Termination Dates of 2009 Amendment note under section 24 of this title.

Amendment by section 1144(b)(3) of Pub. L. 111–5 applicable to taxable years beginning after Dec. 31, 2008, see section 1144(c) of Pub. L. 111–5, set out as an Effective and Termination Dates of 2009 Amendment note under section 24 of this title.

Effective Date of 2008 Amendment

Pub. L. 110–343, div. C, title I, §102(b), Oct. 3, 2008, 122 Stat. 3863, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2007."

Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as otherwise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture.

Pub. L. 110–234, title XV, §15311(d), May 22, 2008, 122 Stat. 1503, and Pub. L. 110–246, §4(a), title XV, §15311(d), June 18, 2008, 122 Stat. 1664, 2265, provided that: "The amendments made by this section [amending this section and sections 857 and 1201 of this title] shall apply to taxable years ending after the date of enactment [June 18, 2008]."

[Pub. L. 110–234 and Pub. L. 110–246 enacted identical provisions. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246, set out as a note under section 8701 of Title 7, Agriculture.]

Effective Date of 2007 Amendment

Pub. L. 110–166, §2(b), Dec. 26, 2007, 121 Stat. 2461, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2006."

Effective Date of 2006 Amendment

Pub. L. 109–222, title III, §301(b), May 17, 2006, 120 Stat. 353, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2005."

Effective Date of 2005 Amendments

Amendment by section 403(h) of Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

Amendment by section 1302(b) of Pub. L. 109–58 applicable to taxable years of cooperative organizations ending after Aug. 8, 2005, see section 1302(c) of Pub. L. 109–58, set out as a note under section 45 of this title.

Amendment by section 1322(a)(3)(H) of Pub. L. 109–58 applicable to credits determined under the Internal Revenue Code of 1986 for taxable years ending after Dec. 31, 2005, see section 1322(c)(1) of Pub. L. 109–58, set out as a note under section 45K of this title.

Amendment by section 1342(b)(3) of Pub. L. 109–58 applicable to property placed in service after Dec. 31, 2005, in taxable years ending after such date, see section 1342(c) of Pub. L. 109–58, set out as an Effective Date note under section 30C of this title.

Amendment by section 1341(b)(3) of Pub. L. 109–58 applicable to property placed in service after Dec. 31, 2005, in taxable years ending after such date, see section 1341(c) of Pub. L. 109–58, set out as an Effective Date note under section 30B of this title.

Effective and Termination Dates of 2004 Amendments

Pub. L. 108–357, title III, §314(c), Oct. 22, 2004, 118 Stat. 1469, provided that: "The amendments made by this section [amending this section and section 1301 of this title] shall apply to taxable years beginning after December 31, 2003."

Pub. L. 108–311, title I, §103(b), Oct. 4, 2004, 118 Stat. 1168, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2004."

Amendment by section 103(a) of Pub. L. 108–311 subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16, §901, to the same extent and in the same manner as the provision of such Act to which such amendment relates, see section 105 of Pub. L. 108–311, set out as a note under section 1 of this title. Title IX of Pub. L. 107–16 was repealed by Pub. L. 112–240, title I, §101(a)(1), Jan. 2, 2013, 126 Stat. 2315.

Pub. L. 108–311, title IV, §406(h), Oct. 4, 2004, 118 Stat. 1190, provided that: "The amendments made by this section [amending this section and sections 246, 529, 530, 901, 1259, and 1397E of this title] shall take effect as if included in the provisions of the Taxpayer Relief Act of 1997 [Pub. L. 105–34] to which they relate."

Effective and Termination Dates of 2003 Amendment

Pub. L. 108–27, title I, §106(b), May 28, 2003, 117 Stat. 755, provided that: "The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 2002."

Amendment by section 106(a) of Pub. L. 108–27 subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16, §901, to the same extent and in the same manner as the provision of such Act to which such amendment relates, see section 107 of Pub. L. 108–27, set out as a note under section 1 of this title. Title IX of Pub. L. 107–16 was repealed by Pub. L. 112–240, title I, §101(a)(1), Jan. 2, 2013, 126 Stat. 2315.

Amendment by section 301(a)(1), (2)(B), (b)(2) of Pub. L. 108–27 applicable to taxable years ending on or after May 6, 2003, see section 301(d) of Pub. L. 108–27, set out as a note under section 1 of this title.

Effective Date of 2001 Amendment

Pub. L. 107–16, title VII, §701(c), June 7, 2001, 115 Stat. 148, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2000."

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date of 1997 Amendment

Amendment by section 311(b)(1), (2)(A) of Pub. L. 105–34 applicable to taxable years ending after May 6, 1997, see section 311(d) of Pub. L. 105–34, set out as a note under section 1 of this title.

Pub. L. 105–34, title IV, §401(b), Aug. 5, 1997, 111 Stat. 844, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 1997."

Amendment by section 1601(f)(1)(C) of Pub. L. 105–34 effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which it relates, see section 1601(j) of Pub. L. 105–34, set out as a note under section 23 of this title.

Effective Date of 1996 Amendment

Amendment by section 1205(d)(6) 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 45K of this title.

Amendment by section 1401(b)(3) of Pub. L. 104–188 applicable to taxable years beginning after Dec. 31, 1999, with retention of certain transition rules, see section 1401(c) of Pub. L. 104–188, set out as a note under section 402 of this title.

Pub. L. 104–188, title I, §1601(c), Aug. 20, 1996, 110 Stat. 1833, provided that:

"(1) In general.—Except as provided in paragraph (2), the amendments made by this section [enacting section 30A of this title and amending this section and sections 56, 59, and 936 of this title] shall apply to taxable years beginning after December 31, 1995.

"(2) Special rule for qualified possession source investment income.—The amendments made by this section shall not apply to qualified possession source investment income received or accrued before July 1, 1996, without regard to the taxable year in which received or accrued.

"(3) Special transition rule for payment of estimated tax installment.—In determining the amount of any installment due under section 6655 of the Internal Revenue Code of 1986 after the date of the enactment of this Act [Aug. 20, 1996] and before October 1, 1996, only ½ of any increase in tax (for the taxable year for which such installment is made) by reason of the amendments made by subsections (a) and (b) [enacting section 30A of this title and amending this section and sections 56, 59, and 936 of this title] shall be taken into account. Any reduction in such installment by reason of the preceding sentence shall be recaptured by increasing the next required installment for such year by the amount of such reduction."

Effective Date of 1993 Amendment

Pub. L. 103–66, title XIII, §13203(d), Aug. 10, 1993, 107 Stat. 462, provided that: "The amendments made by this section [amending this section and section 897 of this title] shall apply to taxable years beginning after December 31, 1992."

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–486 applicable to property placed in service after June 30, 1993, see section 1913(c) of Pub. L. 102–486, set out as a note under section 53 of this title.

Amendment by Pub. L. 102–318 applicable to distributions after Dec. 31, 1992, see section 521(e) of Pub. L. 102–318, set out as a note under section 402 of this title.

Effective Date of 1990 Amendment

Pub. L. 101–508, title XI, §11102(b), Nov. 5, 1990, 104 Stat. 1388–406, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1990."

Amendment by section 11813(b)(5) 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 45K of this title.

Effective Date of 1988 Amendment

Amendment by section 1002(l)(27) 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.

Pub. L. 100–647, title I, §1007(a)(3), Nov. 10, 1988, 102 Stat. 3428, provided that the amendment made by that section is effective with respect to taxable years ending after Nov. 10, 1988.

Effective Date of 1986 Amendment

Amendment by 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.

Effective Date

Pub. L. 99–514, title VII, §701(f), Oct. 22, 1986, 100 Stat. 2343, as amended by Pub. L. 100–647, title I, §1007(f)(2), (3), Nov. 10, 1988, 102 Stat. 3433, provided that:

"(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section [enacting this section and sections 53 and 56 to 59 of this title and amending sections 5, 12, 26, 28, 29, 38, 48, 173, 174, 263, 381, 443, 703, 882, 897, 904, 936, 1016, 1363, 1366, 1561, 6154, 6425, and 6655 of this title] shall apply to taxable years beginning after December 31, 1986.

"(2) Adjustment of net operating loss.—

"(A) Individuals.—In the case of a net operating loss of an individual for a taxable year beginning after December 31, 1982, and before January 1, 1987, for purposes of determining the amount of such loss which may be carried to a taxable year beginning after December 31, 1986, for purposes of the minimum tax, such loss shall be adjusted in the manner provided in section 55(d)(2) of the Internal Revenue Code of 1954 [now 1986] as in effect on the day before the date of the enactment of this Act [Oct. 22, 1986].

"(B) Corporations.—If the minimum tax of a corporation was deferred under section 56(b) of the Internal Revenue Code of 1954 [now 1986] (as in effect on the day before the date of the enactment of this Act [Oct. 22, 1986]) for any taxable year beginning before January 1, 1987, and the amount of such tax has not been paid for any taxable year beginning before January 1, 1987, the amount of the net operating loss carryovers of such corporation which may be carried to taxable years beginning after December 31, 1986, for purposes of the minimum tax shall be reduced by the amount of tax preferences a tax on which was so deferred.

"(3) Installment sales.—Section 56(a)(6) of the Internal Revenue Code of 1986 (as amended by this section) shall not apply to any disposition to which the amendments made by section 811 of this Act [enacting section 453C of this title] (relating to allocation of dealer's indebtedness to installment obligations) do not apply by reason of section 811(c)(2) of this Act [enacting provisions set out as a note under section 453C of this title].

"(4) Exception for charitable contributions before august 16, 1986.—Section 57(a)(6) of the Internal Revenue Code of 1986 (as amended by this section) shall not apply to any deduction attributable to contributions made before August 16, 1986.

"(5) Book income.—

"(A) In general.—In the case of a corporation to which this paragraph applies, the amount of any increase for any taxable year under [former] section 56(c)(1)(A) of the Internal Revenue Code of 1986 (as added by this section) shall be reduced (but not below zero) by the excess (if any) of—

"(i) 50 percent of the excess of taxable income for the 5-taxable year period ending with the taxable year preceding the 1st taxable year to which such section applies over the adjusted net book income for such period, over

"(ii) the aggregate amounts taken into account under this paragraph for preceding taxable years.

"(B) Taxpayer to whom paragraph applies.—This paragraph applies to a taxpayer which was incorporated in Delaware on May 31, 1912.

"(C) Terms.—Any term used in this paragraph which is used in section 56 of such Code (as so added) shall have the same meaning as when used in such section.

"(6) Certain public utility.—

"(A) In the case of investment tax credits described in subparagraph (B) or (C), subsection 38(c)(3)(A)(ii) of the Internal Revenue Code of 1986 shall be applied by substituting '25 percent' for '75 percent', and section 38(c)(3)(B) of the Internal Revenue Code of 1986 shall be applied by substituting '75 percent' for '25 percent'.

"(B) If, on September 25, 1985, a regulated electric utility owned an undivided interest, within the range of 1,111 and 1,149, in the 'maximum dependable capacity, net, megawatts electric' of an electric generating unit located in Illinois or Mississippi for which a binding written contract was in effect on December 31, 1980, then any investment tax credit with respect to such unit shall be described in this subparagraph. The aggregate amount of investment tax credits with respect to the unit in Mississippi allowed solely by reason of being described in this subparagraph shall not exceed $141,000,000.

"(C) If, on September 25, 1985, a regulated electric utility owned an undivided interest, within the range of 1,104 and 1,111, in the 'maximum dependable capacity, net, megawatts electric' of an electric generating unit located in Louisiana for which a binding written contract was in effect on December 31, 1980, then any investment tax credit of such electric utility shall be described in this subparagraph. The aggregate amount of investment tax credits allowed solely by reason of being described by this subparagraph shall not exceed $20,000,000.

"(7) Agreement vessel depreciation adjustment.—

"(A) For purposes of part VI of subchapter A of chapter 1 of the Internal Revenue Code of 1986, in the case of a qualified taxpayer, alternative minimum taxable income for the taxable year shall be reduced by an amount equal to the agreement vessel depreciation adjustment.

"(B) For purposes of this paragraph, the agreement vessel depreciation adjustment shall be an amount equal to the depreciation deduction that would have been allowable for such year under section 167 of such Code with respect to agreement vessels placed in service before January 1, 1987, if the basis of such vessels had not been reduced under section 607 of the Merchant Marine Act of 1936 [see 46 U.S.C. 53510], as amended, and if depreciation with respect to such vessel had been computed using the 25-year straight-line method. The aggregate amount by which basis of a qualified taxpayer is treated as not reduced by reason of this subparagraph shall not exceed $100,000,000.

"(C) For purposes of this paragraph, the term 'qualified taxpayer' means a parent corporation incorporated in the State of Delaware on December 1, 1972, and engaged in water transportation, and includes any other corporation which is a member of the affiliated group of which the parent corporation is the common parent. No taxpayer shall be treated as a qualified corporation for any taxable year beginning after December 31, 1991."

Savings Provision

For provisions that nothing in amendment by section 11813(b)(5) 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 45K of this title.

Transitional Provisions

Pub. L. 100–647, title I, §1007(f)(1), Nov. 10, 1988, 102 Stat. 3433, provided that: "In the case of the taxable year of an estate or trust which begins before January 1, 1987, and ends on or after such date, the items of tax preference apportioned to any beneficiary of such estate or trust under section 58(c) of the Internal Revenue Code of 1954 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986 [Oct. 22, 1986]) shall be taken into account for purposes of determining the amount of the tax imposed by section 55 of the Internal Revenue Code of 1986 (as amended by the Tax Reform Act of 1986 [Pub. L. 99–514]) on such beneficiary for such beneficiary's taxable year in which such taxable year of the estate or trust ends."

Plan Amendments Not Required Until January 1, 1998

For provisions directing that if any amendments made by subtitle D [§§1401–1465] of title I of Pub. L. 104–188 require an amendment to any plan or annuity contract, such amendment shall not be required to be made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L. 104–188, set out as a note under section 401 of this title.

Plan Amendments Not Required Until January 1, 1994

For provisions directing that if any amendments made by subtitle B [§§521–523] of title V of Pub. L. 102–318 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, 1994, see section 523 of Pub. L. 102–318, set out as a note under section 401 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(a) of Pub. L. 99–514 [enacting this section] notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

High Income Taxpayer Report

Pub. L. 94–455, title XXI, §2123, Oct. 4, 1976, 90 Stat. 1915, as amended by Pub. L. 98–369, div. A, title IV, §441(b)(1), July 18, 1984, 98 Stat. 815, provided that: "The Secretary of the Treasury shall publish annually information on the amount of tax paid by individual taxpayers with high total incomes. Total income for this purpose is to be calculated and set forth by adding to adjusted gross income any items of tax preference excluded from, or deducted in arriving at, adjusted gross income, and by subtracting any investment expenses incurred in the production of such income to the extent of the investment income. These data are to include the number of such individuals with total income over $200,000 who owe no Federal income tax (after credits) and the deductions, exclusions, or credits used by them to avoid tax."

[Pub. L. 98–369, div. A, title IV, §441(b)(2), July 18, 1984, 98 Stat. 815, provided that: "The amendment made by paragraph (1) [amending section 2123 of Pub. L. 94–455, set out above] shall apply to information published after the date of the enactment of this Act [July 18, 1984]."]

¹ See References in Text note below.

§56. Adjustments in computing alternative minimum taxable income

(a) Adjustments applicable to all taxpayers

In determining the amount of the alternative minimum taxable income for any taxable year the following treatment shall apply (in lieu of the treatment applicable for purposes of computing the regular tax):

(1) Depreciation

(A) In general

(i) Property other than certain personal property

Except as provided in clause (ii), the depreciation deduction allowable under section 167 with respect to any tangible property placed in service after December 31, 1986, shall be determined under the alternative system of section 168(g). In the case of property placed in service after December 31, 1998, the preceding sentence shall not apply but clause (ii) shall continue to apply.

(ii) 150-percent declining balance method for certain property

The method of depreciation used shall be—

(I) the 150 percent declining balance method,

(II) switching to the straight line method for the 1st taxable year for which using the straight line method with respect to the adjusted basis as of the beginning of the year will yield a higher allowance.

 The preceding sentence shall not apply to any section 1250 property (as defined in section 1250(c)) (and the straight line method shall be used for such section 1250 property) or to any other property if the depreciation deduction determined under section 168 with respect to such other property for purposes of the regular tax is determined by using the straight line method.

(B) Exception for certain property

This paragraph shall not apply to property described in paragraph (1), (2), (3), or (4) of section 168(f), or in section 168(e)(3)(C)(iv).

(C) Coordination with transitional rules

(i) In general

This paragraph shall not apply to property placed in service after December 31, 1986, to which the amendments made by section 201 of the Tax Reform Act of 1986 do not apply by reason of section 203, 204, or 251(d) of such Act.

(ii) Treatment of certain property placed in service before 1987

This paragraph shall apply to any property to which the amendments made by section 201 of the Tax Reform Act of 1986 apply by reason of an election under section 203(a)(1)(B) of such Act without regard to the requirement of subparagraph (A) that the property be placed in service after December 31, 1986.

(D) Normalization rules

With respect to public utility property described in section 168(i)(10), the Secretary shall prescribe the requirements of a normalization method of accounting for this section.

(2) Mining exploration and development costs

(A) In general

With respect to each mine or other natural deposit (other than an oil, gas, or geothermal well) of the taxpayer, the amount allowable as a deduction under section 616(a) or 617(a) (determined without regard to section 291(b)) in computing the regular tax for costs paid or incurred after December 31, 1986, shall be capitalized and amortized ratably over the 10-year period beginning with the taxable year in which the expenditures were made.

(B) Loss allowed

If a loss is sustained with respect to any property described in subparagraph (A), a deduction shall be allowed for the expenditures described in subparagraph (A) for the taxable year in which such loss is sustained in an amount equal to the lesser of—

(i) the amount allowable under section 165(a) for the expenditures if they had remained capitalized, or

(ii) the amount of such expenditures which have not previously been amortized under subparagraph (A).

(3) Treatment of certain long-term contracts

In the case of any long-term contract entered into by the taxpayer on or after March 1, 1986, the taxable income from such contract shall be determined under the percentage of completion method of accounting (as modified by section 460(b)). For purposes of the preceding sentence, in the case of a contract described in section 460(e)(1), the percentage of the contract completed shall be determined under section 460(b)(1) by using the simplified procedures for allocation of costs prescribed under section 460(b)(3). The first sentence of this paragraph shall not apply to any home construction contract (as defined in section 460(e)(6)).¹

(4) Alternative tax net operating loss deduction

The alternative tax net operating loss deduction shall be allowed in lieu of the net operating loss deduction allowed under section 172.

(5) Pollution control facilities

In the case of any certified pollution control facility placed in service after December 31, 1986, the deduction allowable under section 169 (without regard to section 291) shall be determined under the alternative system of section 168(g). In the case of such a facility placed in service after December 31, 1998, such deduction shall be determined under section 168 using the straight line method.

(6) Adjusted basis

The adjusted basis of any property to which paragraph (1) or (5) applies (or with respect to which there are any expenditures to which paragraph (2) or subsection (b)(2) applies) shall be determined on the basis of the treatment prescribed in paragraph (1), (2), or (5), or subsection (b)(2), whichever applies.

(7) Section 87 not applicable

Section 87 (relating to alcohol fuel credit) shall not apply.

(b) Adjustments applicable to individuals

In determining the amount of the alternative minimum taxable income of any taxpayer (other than a corporation), the following treatment shall apply (in lieu of the treatment applicable for purposes of computing the regular tax):

(1) Limitation on deductions

(A) In general

No deduction shall be allowed—

(i) for any miscellaneous itemized deduction (as defined in section 67(b)), or

(ii) for any taxes described in paragraph (1), (2), or (3) of section 164(a) or clause (ii) of section 164(b)(5)(A).

Clause (ii) shall not apply to any amount allowable in computing adjusted gross income.

(B) Interest

In determining the amount allowable as a deduction for interest, subsections (d) and (h) of section 163 shall apply, except that—

(i) in lieu of the exception under section 163(h)(2)(D), the term "personal interest" shall not include any qualified housing interest (as defined in subsection (e)),

(ii) interest on any specified private activity bond (and any amount treated as interest on a specified private activity bond under section 57(a)(5)(B)), and any deduction referred to in section 57(a)(5)(A), shall be treated as includible in gross income (or as deductible) for purposes of applying section 163(d),

(iii) in lieu of the exception under section 163(d)(3)(B)(i), the term "investment interest" shall not include any qualified housing interest (as defined in subsection (e)), and

(iv) the adjustments of this section and sections 57 and 58 shall apply in determining net investment income under section 163(d).

(C) Treatment of certain recoveries

No recovery of any tax to which subparagraph (A)(ii) applied shall be included in gross income for purposes of determining alternative minimum taxable income.

(D) Standard deduction and deduction for personal exemptions not allowed

The standard deduction under section 63(c), the deduction for personal exemptions under section 151, and the deduction under section 642(b) shall not be allowed.

(E) Section 68 not applicable

Section 68 shall not apply.

(2) Circulation and research and experimental expenditures

(A) In general

The amount allowable as a deduction under section 173 or 174(a) in computing the regular tax for amounts paid or incurred after December 31, 1986, shall be capitalized and—

(i) in the case of circulation expenditures described in section 173, shall be amortized ratably over the 3-year period beginning with the taxable year in which the expenditures were made, or

(ii) in the case of research and experimental expenditures described in section 174(a), shall be amortized ratably over the 10-year period beginning with the taxable year in which the expenditures were made.

(B) Loss allowed

If a loss is sustained with respect to any property described in subparagraph (A), a deduction shall be allowed for the expenditures described in subparagraph (A) for the taxable year in which such loss is sustained in an amount equal to the lesser of—

(i) the amount allowable under section 165(a) for the expenditures if they had remained capitalized, or

(ii) the amount of such expenditures which have not previously been amortized under subparagraph (A).

(C) Exception for certain research and experimental expenditures

If the taxpayer materially participates (within the meaning of section 469(h)) in an activity, this paragraph shall not apply to any amount allowable as a deduction under section 174(a) for expenditures paid or incurred in connection with such activity.

(3) Treatment of incentive stock options

Section 421 shall not apply to the transfer of stock acquired pursuant to the exercise of an incentive stock option (as defined in section 422). Section 422(c)(2) shall apply in any case where the disposition and the inclusion for purposes of this part are within the same taxable year and such section shall not apply in any other case. The adjusted basis of any stock so acquired shall be determined on the basis of the treatment prescribed by this paragraph.

[(c) Repealed. Pub. L. 115–97, title I, §12001(b)(8)(A), Dec. 22, 2017, 131 Stat. 2093]

(d) Alternative tax net operating loss deduction defined

(1) In general

For purposes of subsection (a)(4), the term "alternative tax net operating loss deduction" means the net operating loss deduction allowable for the taxable year under section 172, except that—

(A) the amount of such deduction shall not exceed the sum of—

(i) the lesser of—

(I) the amount of such deduction attributable to net operating losses (other than the deduction described in clause (ii)(I)), or

(II) 90 percent of alternative minimum taxable income determined without regard to such deduction and the deduction under section 199,¹ plus

(ii) the lesser of—

(I) the amount of such deduction attributable to an applicable net operating loss with respect to which an election is made under section 172(b)(1)(H) (as in effect before its repeal by the Tax Increase Prevention Act of 2014), or

(II) alternative minimum taxable income determined without regard to such deduction and the deduction under section 199 ¹ reduced by the amount determined under clause (i), and

(B) in determining the amount of such deduction—

(i) the net operating loss (within the meaning of section 172(c)) for any loss year shall be adjusted as provided in paragraph (2), and

(ii) appropriate adjustments in the application of section 172(b)(2) shall be made to take into account the limitation of subparagraph (A).

(2) Adjustments to net operating loss computation

(A) Post-1986 loss years

In the case of a loss year beginning after December 31, 1986, the net operating loss for such year under section 172(c) shall—

(i) be determined with the adjustments provided in this section and section 58, and

(ii) be reduced by the items of tax preference determined under section 57 for such year.

An item of tax preference shall be taken into account under clause (ii) only to the extent such item increased the amount of the net operating loss for the taxable year under section 172(c).

(B) Pre-1987 years

In the case of loss years beginning before January 1, 1987, the amount of the net operating loss which may be carried over to taxable years beginning after December 31, 1986, for purposes of paragraph (2), shall be equal to the amount which may be carried from the loss year to the first taxable year of the taxpayer beginning after December 31, 1986.

(e) Qualified housing interest

For purposes of this part—

(1) In general

The term "qualified housing interest" means interest which is qualified residence interest (as defined in section 163(h)(3)) and is paid or accrued during the taxable year on indebtedness which is incurred in acquiring, constructing, or substantially improving any property which—

(A) is the principal residence (within the meaning of section 121) of the taxpayer at the time such interest accrues, or

(B) is a qualified dwelling which is a qualified residence (within the meaning of section 163(h)(4)).

Such term also includes interest on any indebtedness resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence; but only to the extent that the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness immediately before the refinancing.

(2) Qualified dwelling

The term "qualified dwelling" means any—

(A) house,

(B) apartment,

(C) condominium, or

(D) mobile home not used on a transient basis (within the meaning of section 7701(a)(19)(C)(v)),

including all structures or other property appurtenant thereto.

(3) Special rule for indebtedness incurred before July 1, 1982

The term "qualified housing interest" includes interest which is qualified residence interest (as defined in section 163(h)(3)) and is paid or accrued on indebtedness which—

(A) was incurred by the taxpayer before July 1, 1982, and

(B) is secured by property which, at the time such indebtedness was incurred, was—

(i) the principal residence (within the meaning of section 121) of the taxpayer, or

(ii) a qualified dwelling used by the taxpayer (or any member of his family (within the meaning of section 267(c)(4))).

(Added Pub. L. 99–514, title VII, §701(a), Oct. 22, 1986, 100 Stat. 2322; amended Pub. L. 100–203, title X, §§10202(d), 10243(a), Dec. 22, 1987, 101 Stat. 1330–392, 1330-423; Pub. L. 100–647, title I, §§1002(a)(12), 1007(b)(1)–(14)(A), (15)–(19), title II, §§2001(c)(3)(A), 2004(b)(2), (3), title V, §5041(b)(4), title VI, §§6079(a)(1), 6303(a), Nov. 10, 1988, 102 Stat. 3355, 3428-3432, 3594, 3599, 3674, 3709, 3755; Pub. L. 101–239, title VII, §§7205(b), 7611(a)–(f)(4), 7612(c)(1), (d)(1), 7811(d)(3), 7815(e)(2), (4), Dec. 19, 1989, 103 Stat. 2335, 2371-2374, 2408, 2419; Pub. L. 101–508, title XI, §§11103(b), 11301(b), 11531(a), (b)(1), 11704(a)(1), 11801(a)(3), (c)(2)(A)–(C), (9)(G), 11812(b)(4), Nov. 5, 1990, 104 Stat. 1388–406, 1388-449, 1388-488, 1388-490, 1388-518, 1388-520, 1388-522, 1388-523, 1388-526, 1388-535; Pub. L. 102–486, title XIX, §1915(a)(2), (b)(2), (c)(1), (2), Oct. 24, 1992, 106 Stat. 3023, 3024; Pub. L. 103–66, title XIII, §§13115(a), 13171(b), 13227(c), Aug. 10, 1993, 107 Stat. 432, 454, 493; Pub. L. 104–188, title I, §§1601(b)(2)(B), (C), 1621(b)(2), 1702(c)(1), (e)(1)(A), (g)(4), (h)(12), 1704(t)(1), (48), Aug. 20, 1996, 110 Stat. 1832, 1833, 1867, 1869, 1870, 1873, 1874, 1887, 1889; Pub. L. 105–34, title III, §312(d)(1), title IV, §§402, 403(a), title XII, §1212(a), Aug. 5, 1997, 111 Stat. 839, 844, 1000; Pub. L. 105–277, div. J, title IV, §4006(c)(2), Oct. 21, 1998, 112 Stat. 2681–912; Pub. L. 106–519, §4(1), Nov. 15, 2000, 114 Stat. 2432; Pub. L. 106–554, §1(a)(7) [title III, §314(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A-643; Pub. L. 107–147, title I, §102(c)(1), title IV, §417(5), Mar. 9, 2002, 116 Stat. 26, 56; Pub. L. 108–173, title XII, §1202(b), Dec. 8, 2003, 117 Stat. 2480; Pub. L. 108–311, title IV, §403(b)(4), Oct. 4, 2004, 118 Stat. 1187; Pub. L. 108–357, title I, §§101(b)(4), 102(b), title II, §248(b)(1), title IV, §422(b), title VIII, §835(b)(1), Oct. 22, 2004, 118 Stat. 1423, 1428, 1457, 1519, 1593; Pub. L. 109–58, title XIII, §1326(d), Aug. 8, 2005, 119 Stat. 1017; Pub. L. 109–135, title IV, §403(a)(14), (r)(2), Dec. 21, 2005, 119 Stat. 2619, 2628; Pub. L. 109–304, §17(e)(1), Oct. 6, 2006, 120 Stat. 1707; Pub. L. 110–172, §11(g)(1), (2), Dec. 29, 2007, 121 Stat. 2489, 2490; Pub. L. 110–289, div. C, title I, §3022(a)(2), July 30, 2008, 122 Stat. 2894; Pub. L. 110–343, div. C, title VII, §§706(b)(3), 708(c), Oct. 3, 2008, 122 Stat. 3922, 3925; Pub. L. 111–5, div. B, title I, §§1008(d), 1503(b), Feb. 17, 2009, 123 Stat. 318, 354; Pub. L. 111–92, §13(b), Nov. 6, 2009, 123 Stat. 2993; Pub. L. 111–148, title IX, §9013(c), Mar. 23, 2010, 124 Stat. 868; Pub. L. 113–295, div. A, title II, §§215(b), 221(a)(9), (25)(B), (30)(C), Dec. 19, 2014, 128 Stat. 4034, 4038, 4040, 4042; Pub. L. 115–97, title I, §§11027(b), 12001(b)(7), (8)(A), Dec. 22, 2017, 131 Stat. 2077, 2093; Pub. L. 115–141, div. U, title IV, §401(b)(7), (8), Mar. 23, 2018, 132 Stat. 1202; Pub. L. 116–94, div. Q, title I, §103(b), Dec. 20, 2019, 133 Stat. 3228.)

Editorial Notes

References in Text

Section 201 of the Tax Reform Act of 1986, referred to in subsecs. (a)(1)(C) and (g)(4)(A)(ii), is section 201 of Pub. L. 99–514, which amended sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title.

Sections 203, 204, and 251(d) of such Act, referred to in subsec. (a)(1)(C), are sections 203, 204, and 251(d) of the Tax Reform Act of 1986, Pub. L. 99–514. Sections 203 and 204 are set out as notes under section 168 of this title. Section 251(d) is set out as a note under section 46 of this title.

Section 460(e)(6), referred to in subsec. (a)(3), was redesignated section 460(e)(5) by Pub. L. 115–97, title I, §13102(d)(2), Dec. 22, 2017, 131 Stat. 2104.

Section 199, referred to in subsec. (d)(1)(A)(i)(II), (ii)(II), was repealed by Pub. L. 115–97, title I, §13305(a), Dec. 22, 2017, 131 Stat. 2126.

Section 172(b)(1)(H) (as in effect before its repeal by the Tax Increase Prevention Act of 2014), referred to subsec. (d)(1)(A)(ii)(I), means subpar. (H) of section 172(b)(1) of this title prior to its repeal by Pub. L. 113–295, div. A, title II, §221(a)(30)(A)(i), Dec. 19, 2014, 128 Stat. 4041.

The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (g)(4)(A)(iii), is the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986.

The FSC Repeal and Extraterritorial Income Exclusion Act of 2000, referred to in subsec. (g)(4)(C)(ii)(I), is Pub. L. 106–519, Nov. 15, 2000, 114 Stat. 2423. For complete classification of this Act to the Code, see Short Title of 2000 Amendments note set out under section 1 of this title and Tables.

Prior Provisions

A prior section 56, added Pub. L. 91–172, title III, §301(a), Dec. 30, 1969, 83 Stat. 580; amended Pub. L. 91–614, title V, §501(a), Dec. 31, 1970, 84 Stat. 1846; Pub. L. 92–178, title VI, §601(c)(4), (5), Dec. 10, 1971, 85 Stat. 558; Pub. L. 93–406, title II, §§2001(g)(2)(D), 2002(g)(4), 2005(c)(7), Sept. 2, 1974, 88 Stat. 957, 968, 991; Pub. L. 94–12, title II, §§203(b)(2), (3), 208(d)(2), (3), Mar. 29, 1975, 89 Stat. 30, 35; Pub. L. 94–455, title III, §301(a), (b), (c)(4)(B), Oct. 4, 1976, 90 Stat. 1549, 1552; Pub. L. 95–30, title II, §202(d)(2), May 23, 1977, 91 Stat. 148; Pub. L. 95–600, title I, §141(d), Nov. 6, 1978, 92 Stat. 2794; Pub. L. 95–618, title I, §101(b)(2), Nov. 9, 1978, 92 Stat. 3179; Pub. L. 96–222, title I, §101(a)(7)(L)(iii)(IV), Apr. 1, 1980, 94 Stat. 200; Pub. L. 97–34, title III, §331(c)(2), Aug. 13, 1981, 95 Stat. 293; Pub. L. 97–248, title II, §201(d)(1), formerly §201(c)(1), Sept. 3, 1982, 96 Stat. 419, renumbered §201(d)(1), Pub. L. 97–448, title III, §306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98–369, div. A, title IV, §474(r)(1), July 18, 1984, 98 Stat. 839; Pub. L. 99–514, title XI, §1171(b)(3), Oct. 22, 1986, 100 Stat. 2513, related to a corporate minimum tax, prior to the general revision of this part by Pub. L. 99–514, §701(a).

Amendments

2019—Subsec. (b)(1)(B) to (F). Pub. L. 116–94 redesignated subpars. (C) to (F) as (B) to (E), respectively, and struck out former subpar. (B). Prior to amendment, text of subpar. (B) read as follows: "In determining the amount allowable as a deduction under section 213, subsection (a) of section 213 shall be applied without regard to subsection (f) of such section. This subparagraph shall not apply to taxable years beginning after December 31, 2016, and ending before January 1, 2019".

2018—Subsec. (b)(1)(E). Pub. L. 115–141, §401(b)(7), struck out at end "The preceding sentence shall not apply to so much of the standard deduction as is determined under subparagraphs (D) and (E) of section 63(c)(1)."

Subsec. (d)(1)(A)(ii)(I). Pub. L. 115–141, §401(b)(8), inserted "(as in effect before its repeal by the Tax Increase Prevention Act of 2014)" after "section 172(b)(1)(H)".

2017—Subsec. (b)(1)(B). Pub. L. 115–97, §11027(b), inserted at end "This subparagraph shall not apply to taxable years beginning after December 31, 2016, and ending before January 1, 2019".

Subsec. (b)(2)(C), (D). Pub. L. 115–97, §12001(b)(7), redesignated subpar. (D) as (C) and struck out former subpar. (C). Prior to amendment, text of subpar. (C) read as follows: "In the case of circulation expenditures described in section 173, the adjustments provided in this paragraph shall apply also to a personal holding company (as defined in section 542)."

Subsec. (c). Pub. L. 115–97, §12001(b)(8)(A), struck out subsec. (c) which related to adjustments applicable to corporations.

Subsec. (g). Pub. L. 115–97, §12001(b)(8)(A), struck out subsec. (g) which related to adjustments based on adjusted current earnings.

2014—Subsec. (b)(1)(C)(ii) to (v). Pub. L. 113–295, §221(a)(25)(B), redesignated cls. (iii) to (v) as (ii) to (iv), respectively, and struck out former cl. (ii) which read as follows: "sections 163(d)(6) and 163(h)(5) (relating to phase-ins) shall not apply,".

Subsec. (d)(3). Pub. L. 113–295, §221(a)(30)(C), struck out par. (3). Text read as follows: "In the case of a taxpayer which has a qualified disaster loss (as defined by section 172(b)(1)(J)) for the taxable year, paragraph (1) shall be applied by increasing the amount determined under subparagraph (A)(ii)(I) thereof by the sum of the carrybacks and carryovers of such loss."

Subsec. (g)(4)(C)(iv). Pub. L. 113–295, §215(b), substituted "an organization to which part I of subchapter T (relating to tax treatment of cooperatives) applies which is engaged in the marketing of agricultural or horticultural products" for "a cooperative described in section 927(a)(4)". See 2007 Amendment note below.

Subsec. (g)(4)(F)(ii). Pub. L. 113–295, §221(a)(9), substituted "Clause (i)" for "In the case of any taxable year beginning after December 31, 1992, clause (i)".

2010—Subsec. (b)(1)(B). Pub. L. 111–148 substituted "without regard to subsection (f) of such section" for "by substituting '10 percent' for '7.5 percent' ".

2009—Subsec. (b)(1)(E). Pub. L. 111–5, §1008(d), substituted "subparagraphs (D) and (E) of section 63(c)(1)" for "section 63(c)(1)(D)".

Subsec. (d)(1)(A)(ii)(I). Pub. L. 111–92 amended subcl. (I) generally. Prior to amendment, subcl. (I) read as follows: "the amount of such deduction attributable to the sum of carrybacks of net operating losses from taxable years ending during 2001 or 2002 and carryovers of net operating losses to taxable years ending during 2001 and 2002, or".

Subsec. (g)(4)(B)(iv). Pub. L. 111–5, §1503(b), added cl. (iv).

2008—Subsec. (b)(1)(E). Pub. L. 110–343, §706(b)(3), inserted at end "The preceding sentence shall not apply to so much of the standard deduction as is determined under section 63(c)(1)(D)."

Subsec. (d)(3). Pub. L. 110–343, §708(c), added par. (3).

Subsec. (g)(4)(B)(iii). Pub. L. 110–289 added cl. (iii).

2007—Subsec. (g)(4)(C)(ii)(I). Pub. L. 110–172, §11(g)(1), substituted "921 (as in effect before its repeal by the FSC Repeal and Extraterritorial Income Exclusion Act of 2000)" for "921".

Subsec. (g)(4)(C)(iv). Pub. L. 110–172, §11(g)(2), which purported to amend subsec. (g)(4)(C)(iv) of this section, but directed the amendment of section 54(g)(4)(C)(iv) of this title, by substituting "an organization to which part I of subchapter T (relating to tax treatment of cooperatives) applies which is engaged in the marketing of agricultural or horticultural products" for "a cooperative described in section 927(a)(4)", was not executed in light of the identical amendment made by Pub. L. 113–295, §215(b), effective as if included in Pub. L. 110–172. See 2014 Amendment note above.

2006—Subsec. (c)(2). Pub. L. 109–304, in introductory provisions, substituted "chapter 535 of title 46, United States Code" for "section 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1177)", and, in subpars. (A) and (B), substituted "such chapter 535" for "such section 607".

2005—Subsec. (a)(1)(B). Pub. L. 109–58 inserted ", or in section 168(e)(3)(C)(iv)" before period at end.

Subsec. (b)(1)(A)(ii). Pub. L. 109–135, §403(r)(2), inserted "or clause (ii) of section 164(b)(5)(A)" before period at end.

Subsec. (d)(1)(A)(i)(II), (ii)(II). Pub. L. 109–135, §403(a)(14), substituted "such deduction and the deduction under section 199" for "such deduction".

2004—Subsec. (d)(1)(A)(i)(I). Pub. L. 108–311, §403(b)(4)(A), struck out "attributable to carryovers" after "other than the deduction".

Subsec. (d)(1)(A)(ii)(I). Pub. L. 108–311, §403(b)(4)(B), substituted "from taxable years" for "for taxable years" and "carryovers" for "carryforwards".

Subsec. (g)(4)(B)(i). Pub. L. 108–357, §248(b)(1), inserted "or 1357" after "section 139A" in concluding provisions.

Pub. L. 108–357, §101(b)(4), struck out "114 or" before "139A" in concluding provisions.

Subsec. (g)(4)(C)(v). Pub. L. 108–357, §102(b), added cl. (v).

Subsec. (g)(4)(C)(vi). Pub. L. 108–357, §422(b), added cl. (vi).

Subsec. (g)(6). Pub. L. 108–357, §835(b)(1), substituted "or REMIC" for "REMIC, or FASIT".

2003—Subsec. (g)(4)(B)(i). Pub. L. 108–173 inserted "or 139A" after "section 114" in concluding provisions.

2002—Subsec. (a)(1)(A)(ii). Pub. L. 107–147, §417(5), substituted "such section 1250" for "such 1250" in concluding provisions.

Subsec. (d)(1)(A). Pub. L. 107–147, §102(c)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "the amount of such deduction shall not exceed 90 percent of alternate minimum taxable income determined without regard to such deduction, and".

2000—Subsec. (a)(1)(A)(ii). Pub. L. 106–554 inserted "(and the straight line method shall be used for such 1250 property)" before "or to any other property" in concluding provisions.

Subsec. (g)(4)(B)(i). Pub. L. 106–519 inserted "or under section 114" before the period at end of first sentence in concluding provisions.

1998—Subsec. (a)(3). Pub. L. 105–277 substituted "section 460(b)(1)" for "section 460(b)(2)" and "section 460(b)(3)" for "section 460(b)(4)".

1997—Subsec. (a)(1)(A)(i). Pub. L. 105–34, §402(a), inserted at end "In the case of property placed in service after December 31, 1998, the preceding sentence shall not apply but clause (ii) shall continue to apply."

Subsec. (a)(5). Pub. L. 105–34, §402(b), inserted at end "In the case of such a facility placed in service after December 31, 1998, such deduction shall be determined under section 168 using the straight line method."

Subsec. (a)(6) to (8). Pub. L. 105–34, §403(a), redesignated pars. (7) and (8) as (6) and (7), respectively, and struck out former par. (6) which read as follows:

"(6) Installment sales of certain property.—In the case of any disposition after March 1, 1986, of any property described in section 1221(1), income from such disposition shall be determined without regard to the installment method under section 453. This paragraph shall not apply to any disposition with respect to which an election is in effect under section 453(l)(2)(B)."

Subsec. (e)(1)(A), (3)(B)(i). Pub. L. 105–34, §312(d)(1), substituted "section 121" for "section 1034".

Subsec. (g)(4)(B)(i). Pub. L. 105–34, §1212(a), inserted at end of concluding provisions "In the case of any insurance company taxable under section 831(b), this clause shall not apply to any amount not described in section 834(b)."

1996—Subsec. (b)(3). Pub. L. 104–188, §1702(h)(12), provided that the amendment made by section 11801(c)(9)(G)(ii) of Pub. L. 101–508 shall be applied as if it struck "Section 422A(c)(2)" and inserted "Section 422(c)(2)". See 1990 Amendment note below.

Subsec. (d)(1)(B)(ii). Pub. L. 101–508, §1702(e)(1)(A), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "in the case of taxable years beginning after December 31, 1986, section 172(b)(2) shall be applied by substituting '90 percent of alternative minimum taxable income determined without regard to the alternative tax net operating loss deduction' for 'taxable income' each place it appears."

Subsec. (g)(1), (2)(A). Pub. L. 104–188, §1704(t)(48), provided that section 11801(c)(2)(B) of Pub. L. 101–508 shall be applied as if "section 56(g)" appeared instead of "section 59(g)". See 1990 Amendment note below.

Subsec. (g)(4)(C)(ii)(I). Pub. L. 104–188, §1601(b)(2)(B), inserted "30A," before "936" and substituted ", (i), and (j)" for "and (i)".

Subsec. (g)(4)(C)(ii)(II). Pub. L. 104–188, §1704(t)(1), substituted "of subclause" for "of the subclause".

Subsec. (g)(4)(C)(iii)(VI). Pub. L. 104–188, §1601(b)(2)(C), added subcl. (VI).

Subsec. (g)(4)(D)(iii). Pub. L. 104–188, §1702(g)(4), inserted ", but only with respect to taxable years beginning after December 31, 1989" before period at end.

Subsec. (g)(4)(H) to (J). Pub. L. 104–188, §1702(c)(1), redesignated subpars. (I) and (J) as (H) and (I), respectively.

Subsec. (g)(6). Pub. L. 104–188, §1621(b)(2), substituted "REMIC, or FASIT" for "or REMIC".

1993—Subsec. (g)(4)(A)(i). Pub. L. 103–66, §13115(a), inserted at end "The preceding sentence shall not apply to any property placed in service after December 31, 1993, and the depreciation deduction with respect to such property shall be determined under the rules of subsection (a)(1)(A)."

Subsec. (g)(4)(C)(ii)(I). Pub. L. 103–66, §13227(c)(1), substituted "sections 936 (including subsections (a)(4) and (i) thereof) and 921" for "sections 936 and 921".

Subsec. (g)(4)(C)(iii)(IV), (V). Pub. L. 103–66, §13227(c)(2), added subcls. (IV) and (V).

Subsec. (g)(4)(J). Pub. L. 103–66, §13171(b), added subpar. (J).

1992—Subsec. (d)(1)(A). Pub. L. 102–486, §1915(c)(2), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "the amount of such deduction shall not exceed the excess (if any) of—

"(i) 90 percent of alternative minimum taxable income determined without regard to such deduction and the deduction under subsection (h), over

"(ii) the deduction under subsection (h), and".

Subsec. (g)(4)(D)(i). Pub. L. 102–486, §1915(b)(2), inserted at end "In the case of a taxpayer other than an integrated oil company (as defined in section 291(b)(4)), in the case of any oil or gas well, this clause shall not apply in the case of amounts paid or incurred in taxable years beginning after December 31, 1992."

Subsec. (g)(4)(F). Pub. L. 102–486, §1915(a)(2), amended subpar. (F) generally. Prior to amendment, subpar. (F) read as follows: "The allowance for depletion with respect to any property placed in service in a taxable year beginning after 1989 shall be cost depletion determined under section 611."

Subsec. (h). Pub. L. 102–486, §1915(c)(1), struck out subsec. (h) which related to adjustment based on energy preferences.

1990—Subsec. (a)(1)(D). Pub. L. 101–508, §11812(b)(4), substituted "section 168(i)(10)" for "section 167(l)(3)(A)".

Subsec. (b)(1)(F). Pub. L. 101–508, §11103(b), added subpar. (F).

Subsec. (b)(3). Pub. L. 101–508, §11801(c)(9)(G)(i), substituted "section 422" for "section 422A".

Pub. L. 101–508, §11801(c)(9)(G)(ii), which directed the substitution of "section 422(c)(2)" for "section 422A(c)(2)", was executed by substituting "Section 422(c)(2)" for "Section 422A(c)(2)". See 1996 Amendment note above.

Subsec. (c)(1). Pub. L. 101–508, §11801(c)(2)(A), substituted heading for one which read: "Adjustment for book income or adjusted current earnings" and amended text generally. Prior to amendment, text read as follows:

"(A) Book income adjustment.—For taxable years beginning in 1987, 1988, and 1989, alternative minimum taxable income shall be adjusted as provided under subsection (f).

"(B) Adjusted current earnings.—For taxable years beginning after 1989, alternative minimum taxable income shall be adjusted as provided under subsection (g)."

Subsec. (d)(1)(A). Pub. L. 101–508, §11531(b)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "the amount of such deduction shall not exceed 90 percent of alternative minimum taxable income determined without regard to such deduction, and".

Subsec. (f). Pub. L. 101–508, §11801(a)(3), struck out subsec. (f) which related to adjustments for book income of corporations with respect to minimum taxable income, adjusted net book income, adjustments for certain taxes, special rules for related corporations for consolidated returns, treatment of dividends, statements covering different periods, special rule for cooperatives, treatment and limitation of taxes on dividends from 936 corporations, rules for Alaska native corporations, special rules for life insurance companies, exclusion of certain income from transfer of stock for debt, secretarial authority to adjust items, applicable financial statements, earnings and profits used, special rules for more than one statement and exception for certain corporations.

Subsec. (g)(1), (2)(A). Pub. L. 101–508, §11801(c)(2)(B), which directed that pars. (1) and (2) "of section 59(g) are each amended by striking 'beginning after 1989' ", was executed to pars. (1) and (2)(A) of subsec. (g) of this section after "any taxable year". See 1996 Amendment note above.

Subsec. (g)(4)(C)(iii). Pub. L. 101–508, §11801(c)(2)(C), substituted heading for one which read: "Special rule for dividends from section 936 companies" and amended text generally. Prior to amendment, text read as follows: "In the case of any dividend received from a corporation eligible for the credit provided by section 936, rules similar to the rules of subparagraph (F) of subsection (f)(1) shall apply, except that '75 percent' shall be substituted for '50 percent' in clause (i) thereof."

Subsec. (g)(4)(D)(ii). Pub. L. 101–508, §11704(a)(1), substituted "years" for "year".

Subsec. (g)(4)(F) to (H). Pub. L. 101–508, §11301(b), redesignated subpars. (G) and (H) as (F) and (G), respectively, and struck out former subpar. (F) which provided that acquisition expenses for life insurance companies be capitalized and amortized in accordance with the treatment generally required under generally accepted accounting principles as if this subparagraph applied to all taxable years.

Subsec. (h). Pub. L. 101–508, §11531(a), added subsec. (h).

1989—Subsec. (a)(3). Pub. L. 101–239, §7815(e)(2)(B), substituted "The first sentence of this paragraph shall not" for "The preceding sentence shall not".

Pub. L. 101–239, §7815(e)(2)(A), made clarifying amendment to directory language of Pub. L. 100–647, §5041(b)(4), see 1988 Amendment note below.

Pub. L. 101–239, §7612(c)(1), struck out "with respect to which the requirements of clauses (i) and (ii) of section 460(e)(1)(B) are met" after "section 460(e)(6))".

Subsec. (b)(2)(D). Pub. L. 101–239, §7612(d)(1), added subpar. (D).

Subsec. (b)(3). Pub. L. 101–239, §7811(d)(3), inserted after first sentence "Section 422A(c)(2) shall apply in any case where the disposition and the inclusion for purposes of this part are within the same taxable year and such section shall not apply in any other case." and substituted "this paragraph" for "the preceding sentence" in last sentence.

Subsec. (g)(4)(A)(i). Pub. L. 101–239, §7611(a)(1)(A), amended cl. (i) generally. Prior to amendment cl. (i) read as follows: "The depreciation deduction with respect to any property placed in service in a taxable year beginning after 1989 shall be determined under whichever of the following methods yields deductions with a smaller present value:

"(I) The alternative system of section 168(g), or

"(II) The method used for book purposes."

Subsec. (g)(4)(A)(iii). Pub. L. 101–239, §7611(a)(2), inserted "and which is placed in service in a taxable year beginning before 1990" after "thereof) applies".

Subsec. (g)(4)(A)(v) to (vii). Pub. L. 101–239, §7611(a)(1)(B), redesignated cl. (vii) as (v), and struck out former cl. (v), which related to use of slower method if used for book purposes, and cl. (vi), which related to election to have cumulative limitation.

Subsec. (g)(4)(B)(i). Pub. L. 101–239, §7611(f)(2), inserted at end "The preceding sentence shall not apply in the case of any amount excluded from gross income under section 108 (or the corresponding provisions of prior law)."

Subsec. (g)(4)(B)(iii). Pub. L. 101–239, §7611(f)(3), repealed cl. (iii) which read as follows: "In the case of any annuity contract, the income on such contract (as determined under section 72(u)(2)) shall be treated as includible in gross income for such year. The preceding sentence shall not apply to any annuity contract which is held under a plan described in section 403(a) or which is described in section 72(u)(3)(C)."

Subsec. (g)(4)(C)(ii). Pub. L. 101–239, §7611(d), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "Clause (i) shall not apply to any deduction allowable under section 243 or 245 for a 100-percent dividend—

"(I) if the corporation receiving such dividend and the corporation paying such dividend could not be members of the same affiliated group under section 1504 by reason of section 1504(b),

"(II) but only to the extent such dividend is attributable to income of the paying corporation which is subject to tax under this chapter (determined after the application of sections 936 and 921).

For purposes of the preceding sentence, the term '100 percent dividend' means any dividend if the percentage used for purposes of determining the amount allowable as a deduction under section 243 or 245 with respect to such dividend is 100 percent."

Subsec. (g)(4)(C)(iv). Pub. L. 101–239, §7611(e), added cl. (iv).

Subsec. (g)(4)(D). Pub. L. 101–239, §7611(b), amended subpar. (D) generally, in cl. (i), substituting provisions directing that adjustments in section 312(n)(2)(A) be applied, for provisions directing adjustments in section 312(n) be applied, with certain exceptions, in cl. (ii), substituting provisions directing that sections 173 and 248 not apply to expenditures paid or incurred in taxable years beginning after December 31, 1989, for material relating to special rule for intangible drilling costs and mineral exploration and development costs, and adding cls. (iii) and (iv).

Subsec. (g)(4)(D)(i)(IV), (V). Pub. L. 101–239, §7815(e)(4), added subcl. (IV) relating to inapplicability of pars. (6) to (8) and struck out former subcls. (IV) and (V), which read as follows:

"(IV) paragraph (6) shall apply only to contracts entered into on or after March 1, 1986, and

"(V) paragraphs (7) and (8) shall not apply."

Subsec. (g)(4)(G). Pub. L. 101–239, §7611(c), amended subpar. (G) generally. Prior to amendment, subpar. (G) read as follows: "The allowances for depletion with respect to any property placed in service in a taxable year beginning after 1989, shall be determined under whichever of the following methods yields deductions with a smaller present value:

"(i) cost depletion determined under section 611, or

"(ii) the method used for book purposes."

Subsec. (g)(4)(H). Pub. L. 101–239, §7205(b), added cl. (ii) and concluding provision and struck out former cl. (ii) and concluding provision which read as follows:

"(ii)(I) the aggregate adjusted bases of the assets of such corporation (immediately after the change), exceed

"(II) the value of the stock of such corporation (as determined for purposes of section 382), properly adjusted for liabilities and other relevant items,

then the adjusted basis of each asset of such corporation (as of such time) shall be its proportionate share (determined on the basis of respective fair market values) of the amount referred to in clause (ii)(II)."

Subsec. (g)(4)(H)(i). Pub. L. 101–239, §7611(f)(1), substituted "in a taxable year beginning after 1989" for "after the date of the enactment of the Tax Reform Act of 1986".

Subsec. (g)(5)(A). Pub. L. 101–239, §7611(f)(4), redesignated subpar. (B) as (A) and struck out former subpar. (A) which defined "book purposes".

Subsec. (g)(5)(B). Pub. L. 101–239, §7611(f)(4), redesignated subpar. (D) as (B). Former subpar. (B) redesignated (A).

Subsec. (g)(5)(C). Pub. L. 101–239, §7611(f)(4), struck out subpar. (C) which read as follows: "Present value.—Present value shall be determined as of the time the property is placed in service (or, if later, as of the beginning of the first taxable year beginning after 1989) and under regulations prescribed by the Secretary."

Subsec. (g)(5)(D). Pub. L. 101–239, §7611(f)(4), redesignated subpar. (D) as (B).

1988—Subsec. (a)(1)(A)(i). Pub. L. 100–647, §1007(b)(15), substituted "personal" for "real" in heading.

Subsec. (a)(1)(C)(i). Pub. L. 100–647, §1002(a)(12), inserted "by reason of section 203, 204, or 251(d) of such Act" after "do not apply".

Subsec. (a)(3). Pub. L. 100–647, §5041(b)(4), as amended by Pub. L. 101–239, §7815(e)(2)(A), inserted at end "The preceding sentence shall not apply to any home construction contract (as defined in section 460(e)(6)) with respect to which the requirements of clauses (i) and (ii) of section 460(e)(1)(B) are met."

Pub. L. 100–647, §1007(b)(1), inserted at end "For purposes of the preceding sentence, in the case of a contract described in section 460(e)(1), the percentage of the contract completed shall be determined under section 460(b)(2) by using the simplified procedures for allocation of costs prescribed under section 460(b)(4)."

Subsec. (a)(8). Pub. L. 100–647, §1007(b)(19), added par. (8).

Subsec. (b)(1). Pub. L. 100–647, §1007(b)(16), struck out "itemized" after "Limitation on" in heading.

Subsec. (b)(1)(C)(ii). Pub. L. 100–647, §2004(b)(2), substituted "163(h)(5)" for "163(h)(6)".

Subsec. (b)(1)(C)(iii). Pub. L. 100–647, §1007(b)(4), substituted "specified private activity bond" for "specified activity bond" before "under", and "57(a)(5)(B)" for "56(a)(5)(B)".

Subsec. (b)(1)(C)(iv), (v). Pub. L. 100–647, §1007(b)(3), added cls. (iv) and (v).

Subsec. (b)(1)(E). Pub. L. 100–647, §1007(b)(2), substituted "and deduction for personal exemptions not allowed" for "not allowed" in heading and amended text generally. Prior to amendment, text read as follows: "The standard deduction provided in section 63(c) shall not be allowed."

Subsec. (b)(3). Pub. L. 100–647, §1007(b)(14)(A), added par. (3).

Subsec. (c)(1). Pub. L. 100–647, §1007(b)(13)(A), substituted "adjusted current earnings" for "adjusted earnings and profits" in heading.

Subsec. (c)(1)(B). Pub. L. 100–647, §1007(b)(13)(B), substituted "Adjusted current earnings" for "Adjusted earnings and profits" in heading.

Subsec. (d)(2)(A). Pub. L. 100–647, §1007(b)(5), struck out "(other than subsection (a)(6) thereof)" after "for such year" in cl. (ii) and inserted sentence at end providing that an item of tax preference shall be taken into account under clause (ii).

Subsec. (e)(1). Pub. L. 100–647, §2004(b)(3)(A), substituted "improving" for "rehabilitating" in introductory text.

Pub. L. 100–647, §1007(b)(6)(A)(i), inserted "qualified residence interest (as defined in section 163(h)(3)) and is" after "interest which is" in introductory text.

Subsec. (e)(1)(A). Pub. L. 100–647, §2004(b)(3)(B), struck out "or is paid" after "accrues".

Subsec. (e)(1)(B). Pub. L. 100–647, §1007(b)(6)(A)(ii), substituted "section 163(h)(4)" for "section 163(h)(3)".

Subsec. (e)(3). Pub. L. 100–647, §1007(b)(6)(B), substituted "interest which is qualified residence interest (as defined in section 163(h)(3)) and is paid or accrued" for "interest paid or accrued".

Subsec. (f)(2)(B). Pub. L. 100–647, §2001(c)(3)(A), inserted at end "No adjustment shall be made under this subparagraph for the tax imposed by section 59A."

Pub. L. 100–647, §1007(b)(7), inserted "(otherwise eligible for the credit provided by section 901 without regard to section 901(j))" after "any such taxes".

Subsec. (f)(2)(F). Pub. L. 100–647, §1007(b)(11)(A), substituted "Treatment of taxes on dividends from 936 corporations" for "Treatment of dividends from 936 corporations" in heading and amended text generally, substituting cls. (i) to (iii) for former cls. (i) and (ii).

Subsec. (f)(2)(I), (J). Pub. L. 100–647, §6303(a), added subpar. (I) and redesignated former subpar. (I) as (J).

Subsec. (f)(3)(A)(iii). Pub. L. 100–647, §1007(b)(8), inserted "for a substantial nontax purpose" after "an income statement".

Subsec. (f)(3)(B). Pub. L. 100–647, §1007(b)(9), substituted "this subsection" for "paragraph (3)(A)" in penultimate sentence.

Subsec. (f)(3)(C). Pub. L. 100–647, §1007(b)(10), inserted at end "If the taxpayer has 2 or more statements described in the clause (or subclause) with the lowest number designation, the applicable financial statement shall be the one of such statements specified in regulations."

Subsec. (g)(4)(A)(vi), (vii). Pub. L. 100–647, §1007(b)(17), added cls. (vi) and (vii).

Subsec. (g)(4)(B)(iii). Pub. L. 100–647, §6079(a)(1), amended last sentence generally, inserting "which is" after "any annuity contract" and "or which is described in section 72(u)(3)(C)" after "in section 403(a)".

Pub. L. 100–647, §1007(b)(12), inserted at end "The preceding sentence shall not apply to any annuity contract held under a plan described in section 403(a)."

Subsec. (g)(4)(C)(iii). Pub. L. 100–647, §1007(b)(11)(B), substituted "clause (i)" for "clause (ii)(I)".

Subsec. (g)(4)(I). Pub. L. 100–647, §1007(b)(18), added subpar. (I).

1987—Subsec. (a)(6). Pub. L. 100–203, §10202(d), amended par. (6) generally. Prior to amendment, par. (6) read as follows: "In the case of any—

"(A) disposition after March 1, 1986, of property described in section 1221(1), or

"(B) other disposition if an obligation arising from such disposition would be an applicable installment obligation (as defined in section 453C(e)) to which section 453C applies,

income from such disposition shall be determined without regard to the installment method under section 453 or 453A and all payments to be received for the disposition shall be deemed received in the taxable year of the disposition. This paragraph shall not apply to any disposition with respect to which an election is in effect under section 453C(e)(4)."

Subsec. (f)(2)(H), (I). Pub. L. 100–203, §10243(a), added subpar. (H) and redesignated former subpar. (H) as (I).

Statutory Notes and Related Subsidiaries

Effective Date of 2019 Amendment

Pub. L. 116–94, div. Q, title I, §103(c), Dec. 20, 2019, 133 Stat. 3228, provided that: "The amendments made by this section [amending this section and section 213 of this title] shall apply to taxable years ending after December 31, 2018."

Effective Date of 2017 Amendment

Pub. L. 115–97, title I, §11027(c), Dec. 22, 2017, 131 Stat. 2077, provided that: "The amendment made by this section [amending this section and section 213 of this title] shall apply to taxable years beginning after December 31, 2016."

Amendment by section 12001(b)(7), (8)(A) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115–97, set out as a note under section 11 of this title.

Effective Date of 2014 Amendment

Pub. L. 113–295, div. A, title II, §215(c), Dec. 19, 2014, 128 Stat. 4034, provided that: "The amendments made by this section [amending this section and section 911 of this title] shall take effect as if included in the provisions of the Tax Technical Corrections Act of 2007 [Pub. L. 110–172] to which they relate."

Amendment by section 221(a)(9), (25)(B), (30)(C) of Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date of 2010 Amendment

Pub. L. 111–148, title IX, §9013(d), Mar. 23, 2010, 124 Stat. 868, provided that: "The amendments made by this section [amending this section and section 213 of this title] shall apply to taxable years beginning after December 31, 2012."

Effective Date of 2009 Amendment

Pub. L. 111–92, §13(e), (f), Nov. 6, 2009, 123 Stat. 2994, 2995, as amended by Pub. L. 113–295, div. A, title II, §220(bb), Dec. 19, 2014, 128 Stat. 4037, provided that:

"(e) Effective Dates.—

"(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 172 and 810 of this title] shall apply to net operating losses arising in taxable years ending after December 31, 2007.

"(2) Alternative tax net operating loss deduction.—The amendment made by subsection (b) [amending this section] shall apply to taxable years ending after December 31, 2002.

"(3) Loss from operations of life insurance companies.—The amendment made by subsection (c) [amending section 810 of this title] shall apply to losses from operations arising in taxable years ending after December 31, 2007.

"(4) Transitional rule.—In the case of any net operating loss (or, in the case of a life insurance company, any loss from operations) for a taxable year ending before the date of the enactment of this Act [Nov. 6, 2009]—

"(A) any election made under section 172(b)(3) or [former] 810(b)(3) of the Internal Revenue Code of 1986 with respect to such loss may (notwithstanding such section) be revoked before the due date (including extension of time) for filing the return for the taxpayer's last taxable year beginning in 2009, and

"(B) any application under section 6411(a) of such Code with respect to such loss shall be treated as timely filed if filed before such due date.

"(f) Exception for TARP Recipients.—The amendments made by this section [amending this section and sections 172 and 810 of this title] shall not apply to—

"(1) any taxpayer if—

"(A) the Federal Government acquired before the date of the enactment of this Act [Nov. 6, 2009] an equity interest in the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008 [div. A of Pub. L. 110–343, see Tables for classification],

"(B) the Federal Government acquired before such date of enactment any warrant (or other right) to acquire any equity interest with respect to the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008, or

"(C) such taxpayer receives after such date of enactment funds from the Federal Government in exchange for an interest described in subparagraph (A) or (B) pursuant to a program established under title I of division A of the Emergency Economic Stabilization Act of 2008 [see Tables for classification] (unless such taxpayer is a financial institution (as defined in section 3 of such Act [12 U.S.C. 5202]) and the funds are received pursuant to a program established by the Secretary of the Treasury for the stated purpose of increasing the availability of credit to small businesses using funding made available under such Act [Pub. L. 110–343, see Tables for classification]), or

"(2) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, and

"(3) any taxpayer which at any time in 2008 or 2009 was or is a member of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, determined without regard to subsection (b) thereof) as a taxpayer described in paragraph (1) or (2)."

Pub. L. 111–5, div. B, title I, §1008(e), Feb. 17, 2009, 123 Stat. 318, provided that: "The amendments made by this section [amending this section and sections 63 and 164 of this title] shall apply to purchases on or after the date of the enactment of this Act [Feb. 17, 2009] in taxable years ending after such date."

Pub. L. 111–5, div. B, title I, §1503(c), Feb. 17, 2009, 123 Stat. 355, provided that: "The amendments made by this section [amending this section and section 57 of this title] shall apply to obligations issued after December 31, 2008."

Effective Date of 2008 Amendment

Pub. L. 110–343, div. C, title VII, §706(d), Oct. 3, 2008, 122 Stat. 3923, provided that:

"(1) In general.—Except as provided by paragraph (2), the amendments made by this section [amending this section and sections 63, 139, 165, 172, 1033, and 7508A of this title] shall apply to disasters declared in taxable years beginning after December 31, 2007.

"(2) Increase in limitation on individual loss per casualty.—The amendment made by subsection (c) [amending section 165 of this title] shall apply to taxable years beginning after December 31, 2008."

Pub. L. 110–343, div. C, title VII, §708(e), Oct. 3, 2008, 122 Stat. 3925, provided that: "The amendments made by this section [amending this section and section 172 of this title] shall apply to losses arising in taxable years beginning after December 31, 2007, in connection with disasters declared after such date."

Pub. L. 110–289, div. C, title I, §3022(d)(1), July 30, 2008, 122 Stat. 2894, provided that: "The amendments made by subsection (a) [amending this section and section 57 of this title] shall apply to bonds issued after the date of the enactment of this Act [July 30, 2008]."

Effective Date of 2005 Amendments

Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

Pub. L. 109–58, title XIII, §1326(e), Aug. 8, 2005, 119 Stat. 1017, provided that:

"(1) In general.—The amendments made by this section [amending this section and section 168 of this title] shall apply to property placed in service after April 11, 2005.

"(2) Exception.—The amendments made by this section [amending this section and section 168 of this title] shall not apply to any property with respect to which the taxpayer or a related party has entered into a binding contract for the construction thereof on or before April 11, 2005, or, in the case of self-constructed property, has started construction on or before such date."

Effective Date of 2004 Amendments

Pub. L. 108–357, title I, §101(c), Oct. 22, 2004, 118 Stat. 1423, provided that: "The amendments made by this section [amending this section and sections 275, 864, 903, and 999 of this title and repealing sections 114 and 941 to 943 of this title] shall apply to transactions after December 31, 2004."

Pub. L. 108–357, title I, §102(e), Oct. 22, 2004, 118 Stat. 1429, as amended by Pub. L. 109–135, title IV, §403(a)(19), Dec. 21, 2005, 119 Stat. 2619, provided that:

"(1) In general.—The amendments made by this section [enacting section 199 of this title and amending this section and sections 86, 135, 137, 219, 221, 222, 246, 469, 613, and 1402 of this title] shall apply to taxable years beginning after December 31, 2004.

"(2) Application to pass-thru entities, etc.—In determining the deduction under [former] section 199 of the Internal Revenue Code of 1986 (as added by this section), items arising from a taxable year of a partnership, S corporation, estate, or trust beginning before January 1, 2005, shall not be taken into account for purposes of subsection (d)(1) of such section."

Pub. L. 108–357, title II, §248(c), Oct. 22, 2004, 118 Stat. 1457, provided that: "The amendments made by this section [enacting subchapter R of this chapter and amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Oct. 22, 2004]."

Pub. L. 108–357, title IV, §422(d), Oct. 22, 2004, 118 Stat. 1519, provided that: "The amendments made by this section [enacting section 965 of this title and amending this section] shall apply to taxable years ending on or after the date of the enactment of this Act [Oct. 22, 2004]."

Pub. L. 108–357, title VIII, §835(c), Oct. 22, 2004, 118 Stat. 1594, provided that:

"(1) In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 382, 582, 856, 860G, 1202, and 7701 of this title and repealing part V of subchapter M of this chapter] shall take effect on January 1, 2005.

"(2) Exception for existing fasits.—Paragraph (1) shall not apply to any FASIT in existence on the date of the enactment of this Act [Oct. 22, 2004] to the extent that regular interests issued by the FASIT before such date continue to remain outstanding in accordance with the original terms of issuance."

Pub. L. 108–311, title IV, §403(f), Oct. 4, 2004, 118 Stat. 1188, provided that: "The amendments made by this section [amending this section, sections 137, 168, 172, and 1400L of this title, section 1306 of Title 29, Labor, and provisions set out as a note under this section] shall take effect as if included in the provisions of the Job Creation and Worker Assistance Act of 2002 [Pub. L. 107–147] to which they relate."

Effective Date of 2003 Amendment

Pub. L. 108–173, title XII, §1202(d), Dec. 8, 2003, 117 Stat. 2480, provided that: "The amendments made by this section [enacting section 139A of this title and amending this section] shall apply to taxable years ending after the date of the enactment of this Act [Dec. 8, 2003]."

Effective Date of 2002 Amendment

Pub. L. 107–147, title I, §102(c)(2), Mar. 9, 2002, 116 Stat. 26, as amended Pub. L. 108–311, title IV, §403(b)(3), Oct. 4, 2004, 118 Stat. 1187, provided that: "The amendment made by this subsection [amending this section] shall apply to taxable years ending after December 31, 1990."

Effective Date of 2000 Amendments

Pub. L. 106–554, §1(a)(7) [title III, §314(g)], Dec. 21, 2000, 114 Stat. 2763, 2763A-643, provided that: "The amendments made by this section [amending this section and sections 403, 414, 415, 3405, 6211 and 7436 of this title and provisions set out as a note under section 1 of this title] shall take effect as if included in the provisions of the Taxpayer Relief [Act] of 1997 [Pub. L. 105–34] to which they relate."

Pub. L. 106–519, §5, Nov. 15, 2000, 114 Stat. 2433, as amended by Pub. L. 109–222, title V, §513(a), May 17, 2006, 120 Stat. 366, provided that:

"(a) In General.—The amendments made by this Act [enacting sections 114 and 941 to 943 of this title, amending this section and sections 275, 864, 903, and 999 of this title, and repealing sections 921 to 927 of this title] shall apply to transactions after September 30, 2000.

"(b) No New FSCs; Termination of Inactive FSCs.—

"(1) No new fscs.—No corporation may elect after September 30, 2000, to be a FSC (as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act).

"(2) Termination of inactive fscs.—If a FSC has no foreign trade income (as defined in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC for purposes of such Code for any taxable year beginning after such period.

"(c) Transition Period for Existing Foreign Sales Corporations.—

"(1) In general.—In the case of a FSC (as so defined) in existence on September 30, 2000, and at all times thereafter, the amendments made by this Act shall not apply to any transaction in the ordinary course of trade or business involving a FSC which occurs before January 1, 2002.

"(2) Election to have amendments apply earlier.—A taxpayer may elect to have the amendments made by this Act apply to any transaction by a FSC or any related person to which such amendments would apply but for the application of paragraph (1). Such election shall be effective for the taxable year for which made and all subsequent taxable years, and, once made, may be revoked only with the consent of the Secretary of the Treasury.

"(3) Exception for old earnings and profits of certain corporations.—

"(A) In general.—In the case of a foreign corporation to which this paragraph applies—

"(i) earnings and profits of such corporation accumulated in taxable years ending before October 1, 2000, shall not be included in the gross income of the persons holding stock in such corporation by reason of section 943(e)(4)(B)(i); and

"(ii) rules similar to the rules of clauses (ii), (iii), and (iv) of section 953(d)(4)(B) shall apply with respect to such earnings and profits.

  The preceding sentence shall not apply to earnings and profits acquired in a transaction after September 30, 2000, to which section 381 applies unless the distributor or transferor corporation was immediately before the transaction a foreign corporation to which this paragraph applies.

"(B) Existing fscs.—This paragraph shall apply to any controlled foreign corporation (as defined in section 957) if—

"(i) such corporation is a FSC (as so defined) in existence on September 30, 2000;

"(ii) such corporation is eligible to make the election under section 943(e) by reason of being described in paragraph (2)(B) of such section; and

"(iii) such corporation makes such election not later than for its first taxable year beginning after December 31, 2001.

"(C) Other corporations.—This paragraph shall apply to any controlled foreign corporation (as defined in section 957), and such corporation shall (notwithstanding any provision of section 943(e)) be treated as an applicable foreign corporation for purposes of section 943(e), if—

"(i) such corporation is in existence on September 30, 2000;

"(ii) as of such date, such corporation is wholly owned (directly or indirectly) by a domestic corporation (determined without regard to any election under section 943(e));

"(iii) for each of the 3 taxable years preceding the first taxable year to which the election under section 943(e) by such controlled foreign corporation applies—

     "(I) all of the gross income of such corporation is subpart F income (as defined in section 952), including by reason of section 954(b)(3)(B); and

     "(II) in the ordinary course of such corporation's trade or business, such corporation regularly sold (or paid commissions) to a FSC which on September 30, 2000, was a related person to such corporation;

"(iv) such corporation has never made an election under section 922(a)(2) (as in effect before the date of the enactment of this paragraph [Nov. 15, 2000]) to be treated as a FSC; and

"(v) such corporation makes the election under section 943(e) not later than for its first taxable year beginning after December 31, 2001.

  The preceding sentence shall cease to apply as of the date that the domestic corporation referred to in clause (ii) ceases to wholly own (directly or indirectly) such controlled foreign corporation.

"(4) Related person.—For purposes of this subsection, the term 'related person' has the meaning given to such term by section 943(b)(3).

"(5) Section references.—Except as otherwise expressly provided, any reference in this subsection to a section or other provision shall be considered to be a reference to a section or other provision of the Internal Revenue Code of 1986, as amended by this Act.

"(d) Special Rules Relating to Leasing Transactions.—

"(1) Sales income.—If foreign trade income in connection with the lease or rental of property described in section 927(a)(1)(B) of such Code (as in effect before the amendments made by this Act) is treated as exempt foreign trade income for purposes of section 921(a) of such Code (as so in effect), such property shall be treated as property described in section 941(c)(1)(B) of such Code (as added by this Act) for purposes of applying section 941(c)(2) of such Code (as so added) to any subsequent transaction involving such property to which the amendments made by this Act apply.

"(2) Limitation on use of gross receipts method.—If any person computed its foreign trade income from any transaction with respect to any property on the basis of a transfer price determined under the method described in section 925(a)(1) of such Code (as in effect before the amendments made by this Act), then the qualifying foreign trade income (as defined in section 941(a) of such Code, as in effect after such amendment) of such person (or any related person) with respect to any other transaction involving such property (and to which the amendments made by this Act apply) shall be zero."

[Pub. L. 109–222, title V, §513(c), May 17, 2006, 120 Stat. 366, provided that: "The amendments made by this section [amending section 5 of Pub. L. 106–519, set out above, and provisions set out as a note under section 114 of this title] shall apply to taxable years beginning after the date of the enactment of this Act [May 17, 2006]."]

Effective Date of 1997 Amendment

Amendment by section 312(d)(1) of Pub. L. 105–34 applicable to sales and exchanges after May 6, 1997, with certain exceptions, see section 312(d) of Pub. L. 105–34, set out as a note under section 121 of this title.

Pub. L. 105–34, title IV, §403(b), Aug. 5, 1997, 111 Stat. 844, provided that:

"(1) In general.—The amendment made by this section [amending this section] shall apply to dispositions in taxable years beginning after December 31, 1987.

"(2) Special rule for 1987.—In the case of taxable years beginning in 1987, the last sentence of section 56(a)(6) of the Internal Revenue Code of 1986 (as in effect for such taxable years) shall be applied by inserting 'or in the case of a taxpayer using the cash receipts and disbursements method of accounting, any disposition described in section 453C(e)(1)(B)(ii)' after 'section 453C(e)(4)'."

Pub. L. 105–34, title XII, §1212(b), Aug. 5, 1997, 111 Stat. 1000, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1997."

Effective Date of 1996 Amendment

Amendment by section 1601(b)(2)(B), (C) of Pub. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, except as otherwise provided, see section 1601(c) of Pub. L. 104–188, set out as a note under section 55 of this title.

Amendment by section 1621(b)(2) of Pub. L. 104–188 effective Sept. 1, 1997, see section 1621(d) of Pub. L. 104–188, set out as a note under section 26 of this title.

Amendment by section 1702(c)(1), (e)(1)(A), (g)(4), and (h)(12) of Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.

Effective Date of 1993 Amendment

Pub. L. 103–66, title XIII, §13115(b), Aug. 10, 1993, 107 Stat. 432, provided that:

"(1) In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to property placed in service after December 31, 1993.

"(2) Coordination with transitional rules.—The amendments made by this section shall not apply to any property to which paragraph (1) of section 56(a) of the Internal Revenue Code of 1986 does not apply by reason of subparagraph (C)(i) thereof."

Amendment by section 13171(b) of Pub. L. 103–66 applicable to contributions made after June 30, 1992, except that in case of any contribution of capital gain property which is not tangible personal property, such amendment applicable only if the contribution is made after Dec. 31, 1992, see section 13171(d) of Pub. L. 103–66, set out as a note under section 53 of this title.

Pub. L. 103–66, title XIII, §13227(f), Aug. 10, 1993, 107 Stat. 494, provided that: "The amendments made by this section [amending this section and sections 904, 936, and 7652 of this title] shall apply to taxable years beginning after December 31, 1993; except that the amendment made by subsection (e) [amending section 7652 of this title] shall take effect on October 1, 1993."

Effective Date of 1992 Amendment

Pub. L. 102–486, title XIX, §1915(d), Oct. 24, 1992, 106 Stat. 3024, provided that: "The amendments made by this section [amending this section and sections 57, 59, and 59A of this title] shall apply to taxable years beginning after December 31, 1992."

Effective Date of 1990 Amendment

Amendment by section 11103(b) of Pub. L. 101–508 applicable to taxable years beginning after Dec. 31, 1990, see section 11103(e) of Pub. L. 101–508, set out as a note under section 1 of this title.

Pub. L. 101–508, title XI, §11301(d)(2), Nov. 5, 1990, 104 Stat. 1388–449, provided that:

"(A) In general.—The amendment made by subsection (b) [amending this section] shall apply to taxable years beginning on or after September 30, 1990, except that, in the case of a small insurance company, such amendment shall apply to taxable years beginning after December 31, 1989. For purposes of this paragraph, the term 'small insurance company' means any insurance company which meets the requirements of [former] section 806(a)(3) of the Internal Revenue Code of 1986; except that paragraph (2) of [former] section 806(c) of such Code shall not apply.

"(B) Special rules for year which includes september 30, 1990.—In the case of any taxable year which includes September 30, 1990, the amount of acquisition expenses which is required to be capitalized under [former] section 56(g)(4)(F) of the Internal Revenue Code of 1986 (as in effect before the amendment made by subsection (b)) by a company which is not a small insurance company shall be the amount which bears the same ratio to the amount which (but for this subparagraph) would be so required to be capitalized as the number of days in such taxable year before September 30, 1990, bears to the total number of days in such taxable year. A similar reduction shall be made in the amount amortized for such taxable year under such [former] section 56(g)(4)(F)."

Pub. L. 101–508, title XI, §11531(c), Nov. 5, 1990, 104 Stat. 1388–490, provided that: "The amendments made by this section [amending this section and sections 59 and 59A of this title] shall apply to taxable years beginning after December 31, 1990."

Pub. L. 101–508, title XI, §11704(b), Nov. 5, 1990, 104 Stat. 1388–520, provided that: "The amendments made by this section [amending this section, sections 172, 351, 413, 461, 469, 597, 857, 860D, 860G, 892, 927, 936, 1017, 1245, 1441, 2056A, 2642, 3231, 4091, 4093, 5061, 6013, 6038A, 6039D, 6045, 6323, 6332, 6655, 7519, 7522, 7608, and 7701 of this title, and provisions set out as a note under section 231n of Title 45, Railroads] shall take effect on the date of the enactment of this Act."

Amendment by section 11812(b)(4) of Pub. L. 101–508 applicable to property placed in service after Nov. 5, 1990, but not applicable to any property to which section 168 of this title does not apply by reason of subsec. (f)(5) of section 168, and not applicable to rehabilitation expenditures described in section 252(f)(5) of Pub. L. 99–514, see section 11812(c) of Pub. L. 101–508, set out as a note under section 42 of this title.

Effective Date of 1989 Amendment

Pub. L. 101–239, title VII, §7205(c), Dec. 19, 1989, 103 Stat. 2336, provided that:

"(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and section 382 of this title] shall apply to ownership changes and acquisitions after October 2, 1989, in taxable years ending after such date.

"(2) Binding contract.—The amendments made by this section shall not apply to any ownership change or acquisition pursuant to a written binding contract in effect on October 2, 1989, and at all times thereafter before such change or acquisition.

"(3) Bankruptcy proceedings.—In the case of a reorganization described in section 368(a)(1)(G) of the Internal Revenue Code of 1986, or an exchange of debt for stock in a title 11 or similar case (as defined in section 368(a)(3) of such Code), the amendments made by this section shall not apply to any ownership change resulting from such a reorganization or proceeding if a petition in such case was filed with the court before October 3, 1989.

"(4) Subsidiaries of bankrupt parent.—The amendments made by this section shall not apply to any built-in loss of a corporation which is a member (on October 2, 1989) of an affiliated group the common parent of which (on such date) was subject to title 11 or similar case (as defined in section 368(a)(3) of such Code). The preceding sentence shall apply only if the ownership change or acquisition is pursuant to the plan approved in such proceeding and is before the date 2 years after the date on which the petition which commenced such proceeding was filed."

Pub. L. 101–239, title VII, §7611(g), Dec. 19, 1989, 103 Stat. 2373, provided that:

"(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 59 and 312 of this title] shall apply to taxable years beginning after December 31, 1989.

"(2) Intangible drilling costs.—The amendments made by subsection (f)(5) [amending sections 59 and 312 of this title] shall apply to costs paid or incurred in taxable years beginning after December 31, 1989.

"(3) Regulations on earnings and profits rules.—Not later than March 15, 1991, the Secretary of the Treasury or his delegate shall prescribe initial regulations providing guidance as to which items of income are included in adjusted current earnings under [former] section 56(g)(4)(B)(i) of the Internal Revenue Code of 1986 and which items of deduction are disallowed under [former] section 56(g)(4)(C) of such Code."

Pub. L. 101–239, title VII, §7612(c)(2), Dec. 19, 1989, 103 Stat. 2374, provided that: "The amendment made by paragraph (1) [amending this section] shall apply to contracts entered into in taxable years beginning after September 30, 1990."

Pub. L. 101–239, title VII, §7612(d)(2), Dec. 19, 1989, 103 Stat. 2374, provided that: "The amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after December 31, 1990."

Amendment by sections 7811(d)(3) and 7815(e)(2), (4) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.

Effective Date of 1988 Amendment

Pub. L. 100–647, title I, §1007(b)(14)(C), Nov. 10, 1988, 102 Stat. 3430, provided that: "The amendments made by this paragraph [amending this section and section 57 of this title] shall apply with respect to options exercised after December 31, 1987."

Amendment by sections 1002(a)(12) and 1007(b)(1)–(13), (15)–(19) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

Pub. L. 100–647, title II, §2001(e), Nov. 10, 1988, 102 Stat. 3597, provided that: "Except as otherwise provided in this section, the amendments made by this section [amending this section, sections 59A, 882, 4041, 4081, 4091, 4662, 4672, 6416, 6421, and 6427 of this title, and provisions set out as a note under section 4081 of this title] shall take effect as if included in the provision of the Superfund Revenue Act of 1986 [Pub. L. 99–499, title V] to which it relates."

Pub. L. 100–647, title II, §2004(u), Nov. 10, 1988, 102 Stat. 3610, provided that: "Except as otherwise provided in this section, any amendment made by this section [amending this section, sections 163, 244, 280H, 301, 304, 355, 384, 444, 453, 453A, 469, 514, 811, 812, 816, 842, 904, 1201, 1363, 1503, 1561, 4093, 5113, 5123, 5276, 5881, 6427, 6655, 7519, and 7704 of this title, and provisions set out as notes under sections 21, 219, 243, 301, 304, 444, 453, 1503, and 7704 of this title] shall take effect as if included in the provisions of the Revenue Act of 1987 [Pub. L. 100–203, title X] to which such amendment relates."

Amendment by section 5041(b)(4) of Pub. L. 100–647 applicable to contracts entered into on or after June 21, 1988, but not applicable to any contract resulting from the acceptance of a bid made before June 21, 1988, if the bid could not have been revoked or altered at any time on or after June 21, 1988, and not applicable in the case of a qualified ship contract (as defined in section 10203(b)(2)(B) of Pub. L. 100–203, set out as a note under section 460 of this title), see section 5041(e) of Pub. L. 100–647, set out as a note under section 460 of this title.

Pub. L. 100–647, title VI, §6079(a)(2), Nov. 10, 1988, 102 Stat. 3709, provided that: "The amendment made by paragraph (1) [amending this section] shall take effect as if included in the amendments made by section 701 of the Reform Act [Pub. L. 99–514]."

Pub. L. 100–647, title VI, §6303(b), Nov. 10, 1988, 102 Stat. 3756, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1986."

Effective Date of 1987 Amendment

Amendment by section 10202(d) of Pub. L. 100–203 applicable to dispositions in taxable years beginning after Dec. 31, 1986, with coordination with Tax Reform Act of 1986, see section 10202(e)(4), (5) of Pub. L. 100–203, set out as a note under section 453 of this title.

Pub. L. 100–203, title X, §10243(b), Dec. 22, 1987, 101 Stat. 1330–424, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1987."

Effective Date

Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99–514, set out as a note under section 55 of this title.

Savings Provision

For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.

For provisions that nothing in amendment by sections 11801 and 11812 of Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.

Coordination With Heartland Disaster Relief

Pub. L. 110–343, div. C, title VII, §712, Oct. 3, 2008, 122 Stat. 3929, as amended by Pub. L. 113–295, div. A, title II, §211(c)(3), Dec. 19, 2014, 128 Stat. 4033, provided that: "The amendments made by this subtitle [subtitle B (§§706–712) of title VII of div. C of Pub. L. 110–343, enacting section 198A of this title and amending this section and sections 63, 139, 143, 165, 168, 172, 179, 1033, and 7508A of this title], other than the amendments made by sections 706(a)(2) [amending sections 139, 165, 172, 1033, and 7508A of this title], 710 [amending section 168 of this title], and 711 [amending section 179 of this title], shall not apply to any disaster described in section 702(b)(1)(A) [122 Stat. 3912], or to any expenditure or loss resulting from such disaster."

Application of Former Subsection (g)(1) and (3) to Taxable Years Beginning in 1991 and 1992

Pub. L. 104–188, title I, §1702(e)(1)(B), Aug. 20, 1996, 110 Stat. 1870, provided that: "For purposes of applying [former] sections 56(g)(1) and 56(g)(3) of the Internal Revenue Code of 1986 with respect to taxable years beginning in 1991 and 1992, the reference in such sections to the alternative tax net operating loss deduction shall be treated as including a reference to the deduction under [former] section 56(h) of such Code as in effect before the amendments made by section 1915 of the Energy Policy Act of 1992 [Pub. L. 102–486]."

Installment Sales; Taxable Years Beginning in 1987

Pub. L. 101–239, title VII, §7821(a)(5), Dec. 19, 1989, 103 Stat. 2424, provided that: "In the case of taxable years beginning in 1987, the reference to section 453 contained in section 56(a)(6) of the Internal Revenue Code of 1986 shall be treated as including a reference to section 453A."

Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(a) of Pub. L. 99–514 [enacting this section] notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

Study of Book and Earnings and Profits Adjustments

Pub. L. 99–514, title VII, §702, Oct. 22, 1986, 100 Stat. 2345, required Secretary of the Treasury or his delegate to conduct a study of operation and effect of provisions of section 56(f) and former section 56(g) of the Internal Revenue Code of 1986, prior to repeal by Pub. L. 101–508, title XI, §11832(4), Nov. 5, 1990, 104 Stat. 1388–559.

¹ See References in Text note below.

§56A. Adjusted financial statement income

(a) In general

For purposes of this part, the term "adjusted financial statement income" means, with respect to any corporation for any taxable year, the net income or loss of the taxpayer set forth on the taxpayer's applicable financial statement for such taxable year, adjusted as provided in this section.

(b) Applicable financial statement

For purposes of this section, the term "applicable financial statement" means, with respect to any taxable year, an applicable financial statement (as defined in section 451(b)(3) or as specified by the Secretary in regulations or other guidance) which covers such taxable year.

(c) General adjustments

(1) Statements covering different taxable years

Appropriate adjustments shall be made in adjusted financial statement income in any case in which an applicable financial statement covers a period other than the taxable year.

(2) Special rules for related entities

(A) Consolidated financial statements

If the financial results of a taxpayer are reported on the applicable financial statement for a group of entities, rules similar to the rules of section 451(b)(5) shall apply.

(B) Consolidated returns

Except as provided in regulations prescribed by the Secretary, if the taxpayer is part of an affiliated group of corporations filing a consolidated return for any taxable year, adjusted financial statement income for such group for such taxable year shall take into account items on the group's applicable financial statement which are properly allocable to members of such group.

(C) Treatment of dividends and other amounts

In the case of any corporation which is not included on a consolidated return with the taxpayer, adjusted financial statement income of the taxpayer with respect to such other corporation shall be determined by only taking into account the dividends received from such other corporation (reduced to the extent provided by the Secretary in regulations or other guidance) and other amounts which are includible in gross income or deductible as a loss under this chapter (other than amounts required to be included under sections 951 and 951A or such other amounts as provided by the Secretary) with respect to such other corporation.

(D) Treatment of partnerships

(i) In general

Except as provided by the Secretary, if the taxpayer is a partner in a partnership, adjusted financial statement income of the taxpayer with respect to such partnership shall be adjusted to only take into account the taxpayer's distributive share of adjusted financial statement income of such partnership.

(ii) Adjusted financial statement income of partnerships

For the purposes of this part, the adjusted financial statement income of a partnership shall be the partnership's net income or loss set forth on such partnership's applicable financial statement (adjusted under rules similar to the rules of this section).

(3) Adjustments to take into account certain items of foreign income

(A) In general

If, for any taxable year, a taxpayer is a United States shareholder of one or more controlled foreign corporations, the adjusted financial statement income of such taxpayer with respect to such controlled foreign corporation (as determined under paragraph (2)(C)) shall be adjusted to also take into account such taxpayer's pro rata share (determined under rules similar to the rules under section 951(a)(2)) of items taken into account in computing the net income or loss set forth on the applicable financial statement (as adjusted under rules similar to those that apply in determining adjusted financial statement income) of each such controlled foreign corporation with respect to which such taxpayer is a United States shareholder.

(B) Negative adjustments

In any case in which the adjustment determined under subparagraph (A) would result in a negative adjustment for such taxable year—

(i) no adjustment shall be made under this paragraph for such taxable year, and

(ii) the amount of the adjustment determined under this paragraph for the succeeding taxable year (determined without regard to this paragraph) shall be reduced by an amount equal to the negative adjustment for such taxable year.

(4) Effectively connected income

In the case of a foreign corporation, to determine adjusted financial statement income, the principles of section 882 shall apply.

(5) Adjustments for certain taxes

Adjusted financial statement income shall be appropriately adjusted to disregard any Federal income taxes, or income, war profits, or excess profits taxes (within the meaning of section 901) with respect to a foreign country or possession of the United States, which are taken into account on the taxpayer's applicable financial statement. To the extent provided by the Secretary, the preceding sentence shall not apply to income, war profits, or excess profits taxes (within the meaning of section 901) that are imposed by a foreign country or possession of the United States and taken into account on the taxpayer's applicable financial statement if the taxpayer does not choose to have the benefits of subpart A of part III of subchapter N for the taxable year. The Secretary shall prescribe such regulations or other guidance as may be necessary and appropriate to provide for the proper treatment of current and deferred taxes for purposes of this paragraph, including the time at which such taxes are properly taken into account.

(6) Adjustment with respect to disregarded entities

Adjusted financial statement income shall be adjusted to take into account any adjusted financial statement income of a disregarded entity owned by the taxpayer.

(7) Special rule for cooperatives

In the case of a cooperative to which section 1381 applies, the adjusted financial statement income (determined without regard to this paragraph) shall be reduced by the amounts referred to in section 1382(b) (relating to patronage dividends and per-unit retain allocations) to the extent such amounts were not otherwise taken into account in determining adjusted financial statement income.

(8) Rules for Alaska native corporations

Adjusted financial statement income shall be appropriately adjusted to allow—

(A) cost recovery and depletion attributable to property the basis of which is determined under section 21(c) of the Alaska Native Claims Settlement Act (43 U.S.C. 1620(c)), and

(B) deductions for amounts payable made pursuant to section 7(i) or section 7(j) of such Act (43 U.S.C. 1606(i) and 1606(j)) only at such time as the deductions are allowed for tax purposes.

(9) Amounts attributable to elections for direct payment of certain credits

Adjusted financial statement income shall be appropriately adjusted to disregard any amount treated as a payment against the tax imposed by subtitle A pursuant to an election under section 48D(d) or 6417, to the extent such amount was not otherwise taken into account under paragraph (5).

(10) Consistent treatment of mortgage servicing income of taxpayer other than a regulated investment company

(A) In general

Adjusted financial statement income shall be adjusted so as not to include any item of income in connection with a mortgage servicing contract any earlier than when such income is included in gross income under any other provision of this chapter.

(B) Rules for amounts not representing reasonable compensation

The Secretary shall provide regulations to prevent the avoidance of taxes imposed by this chapter with respect to amounts not representing reasonable compensation (as determined by the Secretary) with respect to a mortgage servicing contract.

(11) Adjustment with respect to defined benefit pensions

(A) In general

Except as otherwise provided in rules prescribed by the Secretary in regulations or other guidance, adjusted financial statement income shall be—

(i) adjusted to disregard any amount of income, cost, or expense that would otherwise be included on the applicable financial statement in connection with any covered benefit plan,

(ii) increased by any amount of income in connection with any such covered benefit plan that is included in the gross income of the corporation under any other provision of this chapter, and

(iii) reduced by deductions allowed under any other provision of this chapter with respect to any such covered benefit plan.

(B) Covered benefit plan

For purposes of this paragraph, the term "covered benefit plan" means—

(i) a defined benefit plan (other than a multiemployer plan described in section 414(f)) if the trust which is part of such plan is an employees' trust described in section 401(a) which is exempt from tax under section 501(a),

(ii) any qualified foreign plan (as defined in section 404A(e)), or

(iii) any other defined benefit plan which provides post-employment benefits other than pension benefits.

(12) Tax-exempt entities

In the case of an organization subject to tax under section 511, adjusted financial statement income shall be appropriately adjusted to only take into account any adjusted financial statement income—

(A) of an unrelated trade or business (as defined in section 513) of such organization, or

(B) derived from debt-financed property (as defined in section 514) to the extent that income from such property is treated as unrelated business taxable income.

(13) Depreciation

Adjusted financial statement income shall be—

(A) reduced by depreciation deductions allowed under section 167 with respect to property to which section 168 applies to the extent of the amount allowed as deductions in computing taxable income for the taxable year, and

(B) appropriately adjusted—

(i) to disregard any amount of depreciation expense that is taken into account on the taxpayer's applicable financial statement with respect to such property, and

(ii) to take into account any other item specified by the Secretary in order to provide that such property is accounted for in the same manner as it is accounted for under this chapter.

(14) Qualified wireless spectrum

(A) In general

Adjusted financial statement income shall be—

(i) reduced by amortization deductions allowed under section 197 with respect to qualified wireless spectrum to the extent of the amount allowed as deductions in computing taxable income for the taxable year, and

(ii) appropriately adjusted—

(I) to disregard any amount of amortization expense that is taken into account on the taxpayer's applicable financial statement with respect to such qualified wireless spectrum, and

(II) to take into account any other item specified by the Secretary in order to provide that such qualified wireless spectrum is accounted for in the same manner as it is accounted for under this chapter.

(B) Qualified wireless spectrum

For purposes of this paragraph, the term "qualified wireless spectrum" means wireless spectrum which—

(i) is used in the trade or business of a wireless telecommunications carrier, and

(ii) was acquired after December 31, 2007, and before the date of enactment of this section.

(15) Secretarial authority to adjust items

The Secretary shall issue regulations or other guidance to provide for such adjustments to adjusted financial statement income as the Secretary determines necessary to carry out the purposes of this section, including adjustments—

(A) to prevent the omission or duplication of any item, and

(B) to carry out the principles of part II of subchapter C of this chapter (relating to corporate liquidations), part III of subchapter C of this chapter (relating to corporate organizations and reorganizations), and part II of subchapter K of this chapter (relating to partnership contributions and distributions).

(d) Deduction for financial statement net operating loss

(1) In general

Adjusted financial statement income (determined after application of subsection (c) and without regard to this subsection) shall be reduced by an amount equal to the lesser of—

(A) the aggregate amount of financial statement net operating loss carryovers to the taxable year, or

(B) 80 percent of adjusted financial statement income computed without regard to the deduction allowable under this subsection.

(2) Financial statement net operating loss carryover

A financial statement net operating loss for any taxable year shall be a financial statement net operating loss carryover to each taxable year following the taxable year of the loss. The portion of such loss which shall be carried to subsequent taxable years shall be the amount of such loss remaining (if any) after the application of paragraph (1).

(3) Financial statement net operating loss defined

For purposes of this subsection, the term "financial statement net operating loss" means the amount of the net loss (if any) set forth on the corporation's applicable financial statement (determined after application of subsection (c) and without regard to this subsection) for taxable years ending after December 31, 2019.

(e) Regulations and other guidance

The Secretary shall provide for such regulations and other guidance as necessary to carry out the purposes of this section, including regulations and other guidance relating to the effect of the rules of this section on partnerships with income taken into account by an applicable corporation.

(Added Pub. L. 117–169, title I, §10101(b)(1), Aug. 16, 2022, 136 Stat. 1822.)

Editorial Notes

References in Text

The date of enactment of this section, referred to in subsec. (c)(14)(B)(ii), is the date of enactment of Pub. L. 117–169, which was approved Aug. 16, 2022.

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to taxable years beginning after Dec. 31, 2022, see section 10101(f) of Pub. L. 117–169, set out as an Effective Date of 2022 Amendment note under section 11 of this title.

§57. Items of tax preference

(a) General rule

For purposes of this part, the items of tax preference determined under this section are—

(1) Depletion

With respect to each property (as defined in section 614), the excess of the deduction for depletion allowable under section 611 for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year). This paragraph shall not apply to any deduction for depletion computed in accordance with section 613A(c).

(2) Intangible drilling costs

(A) In general

With respect to all oil, gas, and geothermal properties of the taxpayer, the amount (if any) by which the amount of the excess intangible drilling costs arising in the taxable year is greater than 65 percent of the net income of the taxpayer from oil, gas, and geothermal properties for the taxable year.

(B) Excess intangible drilling costs

For purposes of subparagraph (A), the amount of the excess intangible drilling costs arising in the taxable year is the excess of—

(i) the intangible drilling and development costs paid or incurred in connection with oil, gas, and geothermal wells (other than costs incurred in drilling a nonproductive well) allowable under section 263(c) or 291(b) for the taxable year, over

(ii) the amount which would have been allowable for the taxable year if such costs had been capitalized and straight line recovery of intangibles (as defined in subsection (b)) had been used with respect to such costs.

(C) Net income from oil, gas, and geothermal properties

For purposes of subparagraph (A), the amount of the net income of the taxpayer from oil, gas, and geothermal properties for the taxable year is the excess of—

(i) the aggregate amount of gross income (within the meaning of section 613(a)) from all oil, gas, and geothermal properties of the taxpayer received or accrued by the taxpayer during the taxable year, over

(ii) the amount of any deductions allocable to such properties reduced by the excess described in subparagraph (B) for such taxable year.

(D) Paragraph applied separately with respect to geothermal properties and oil and gas properties

This paragraph shall be applied separately with respect to—

(i) all oil and gas properties which are not described in clause (ii), and

(ii) all properties which are geothermal deposits (as defined in section 613(e)(2)).

(E) Exception for independent producers

In the case of any oil or gas well—

(i) In general

This paragraph shall not apply to any taxpayer which is not an integrated oil company (as defined in section 291(b)(4)).

(ii) Limitation on benefit

The reduction in alternative minimum taxable income by reason of clause (i) for any taxable year shall not exceed 40 percent of the alternative minimum taxable income for such year determined without regard to clause (i) and the alternative tax net operating loss deduction under section 56(a)(4).

[(3) Repealed. Pub. L. 100–647, title I, §1007(b)(14)(B), Nov. 10, 1988, 102 Stat. 3430]

[(4) Repealed. Pub. L. 104–188, title I, §1616(b)(3), Aug. 20, 1996, 110 Stat. 1856]

(5) Tax-exempt interest

(A) In general

Interest on specified private activity bonds reduced by any deduction (not allowable in computing the regular tax) which would have been allowable if such interest were includible in gross income.

(B) Treatment of exempt-interest dividends

Under regulations prescribed by the Secretary, any exempt-interest dividend (as defined in section 852(b)(5)(A)) shall be treated as interest on a specified private activity bond to the extent of its proportionate share of the interest on such bonds received by the company paying such dividend.

(C) Specified private activity bonds

(i) In general

For purposes of this part, the term "specified private activity bond" means any private activity bond (as defined in section 141) which is issued after August 7, 1986, and the interest on which is not includible in gross income under section 103.

(ii) Exception for qualified 501(c)(3) bonds

For purposes of clause (i), the term "private activity bond" shall not include any qualified 501(c)(3) bond (as defined in section 145).

(iii) Exception for certain housing bonds

For purposes of clause (i), the term "private activity bond" shall not include any bond issued after the date of the enactment of this clause if such bond is—

(I) an exempt facility bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide qualified residential rental projects (as defined in section 142(d)),

(II) a qualified mortgage bond (as defined in section 143(a)), or

(III) a qualified veterans' mortgage bond (as defined in section 143(b)).

 The preceding sentence shall not apply to any refunding bond unless such preceding sentence applied to the refunded bond (or in the case of a series of refundings, the original bond).

(iv) Exception for refundings

For purposes of clause (i), the term "private activity bond" shall not include any refunding bond (whether a current or advance refunding) if the refunded bond (or in the case of a series of refundings, the original bond) was issued before August 8, 1986.

(v) Certain bonds issued before September 1, 1986

For purposes of this subparagraph, a bond issued before September 1, 1986, shall be treated as issued before August 8, 1986, unless such bond would be a private activity bond if—

(I) paragraphs (1) and (2) of section 141(b) were applied by substituting "25 percent" for "10 percent" each place it appears,

(II) paragraphs (3), (4), and (5) of section 141(b) did not apply, and

(III) subparagraph (B) of section 141(c)(1) did not apply.

(vi) Exception for bonds issued in 2009 and 2010

(I) In general

For purposes of clause (i), the term "private activity bond" shall not include any bond issued after December 31, 2008, and before January 1, 2011.

(II) Treatment of refunding bonds

For purposes of subclause (I), a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).

(III) Exception for certain refunding bonds

Subclause (II) shall not apply to any refunding bond which is issued to refund any bond which was issued after December 31, 2003, and before January 1, 2009.

(6) Accelerated depreciation or amortization on certain property placed in service before January 1, 1987

The amounts which would be treated as items of tax preference with respect to the taxpayer under paragraphs (2), (3), (4), and (12) of this subsection (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986). The preceding sentence shall not apply to any property to which section 56(a)(1) or (5) applies.

(7) Exclusion for gains on sale of certain small business stock

An amount equal to 7 percent of the amount excluded from gross income for the taxable year under section 1202.

(b) Straight line recovery of intangibles defined

For purposes of paragraph (2) of subsection (a)—

(1) In general

The term "straight line recovery of intangibles", when used with respect to intangible drilling and development costs for any well, means (except in the case of an election under paragraph (2)) ratable amortization of such costs over the 120-month period beginning with the month in which production from such well begins.

(2) Election

If the taxpayer elects with respect to the intangible drilling and development costs for any well, the term "straight line recovery of intangibles" means any method which would be permitted for purposes of determining cost depletion with respect to such well and which is selected by the taxpayer for purposes of subsection (a)(2).

(Added Pub. L. 99–514, title VII, §701(a), Oct. 22, 1986, 100 Stat. 2333; amended Pub. L. 100–647, title I, §1007(b)(14)(B), (c), Nov. 10, 1988, 102 Stat. 3430, 3432; Pub. L. 101–508, title XI, §§11344, 11801(c)(12)(A), 11815(b)(3), Nov. 5, 1990, 104 Stat. 1388–472, 1388-527, 1388-558; Pub. L. 102–227, title I, §112, Dec. 11, 1991, 105 Stat. 1689; Pub. L. 102–486, title XIX, §1915(a)(1), (b)(1), Oct. 24, 1992, 106 Stat. 3023, 3024; Pub. L. 103–66, title XIII, §§13113(b)(1), 13171(a), Aug. 10, 1993, 107 Stat. 429, 454; Pub. L. 104–188, title I, §1616(b)(3), Aug. 20, 1996, 110 Stat. 1856; Pub. L. 105–34, title III, §311(b)(2)(B), Aug. 5, 1997, 111 Stat. 835; Pub. L. 105–206, title VI, §6005(d)(3), July 22, 1998, 112 Stat. 805; Pub. L. 108–27, title III, §301(b)(3), May 28, 2003, 117 Stat. 759; Pub. L. 110–289, div. C, title I, §3022(a)(1), July 30, 2008, 122 Stat. 2893; Pub. L. 111–5, div. B, title I, §1503(a), Feb. 17, 2009, 123 Stat. 354; Pub. L. 113–295, div. A, title II, §221(a)(10), (11), Dec. 19, 2014, 128 Stat. 4038.)

Editorial Notes

References in Text

The date of the enactment of this clause, referred to in subsec. (a)(5)(C)(iii), is the date of enactment of Pub. L. 110–289, which was approved July 30, 2008.

The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (a)(6), is the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986.

Prior Provisions

A prior section 57, added Pub. L. 91–172, title III, §301(a), Dec. 30, 1969, 83 Stat. 581; amended Pub. L. 92–178, title III, §§303(b), 304(a)(1), (b)(1), (d), Dec. 10, 1971, 85 Stat. 522–524; Pub. L. 94–455, title III, §301(c)(1)–(4)(A), (C), title XIX, §§1901(b)(33)(A), (B), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1550–1552, 1800, 1834; Pub. L. 95–30, title I, §101(d)(5), title III, §308(a), title IV, §402(a)(5), May 23, 1977, 91 Stat. 133, 153, 155; Pub. L. 95–600, title III, §301(b)(2), title IV, §§402(b)(1), 421(b), title VII, §701(b)(1), (3), (4), (f)(3)(D), Nov. 6, 1978, 92 Stat. 2820, 2868, 2874, 2898, 2899, 2901; Pub. L. 95–618, title IV, §402(b), Nov. 9, 1978, 92 Stat. 3202; Pub. L. 96–222, title I, §§104(a)(4)(E), (F), 107(a)(1)(A), Apr. 1, 1980, 94 Stat. 217, 222; Pub. L. 96–596, §3(a), Dec. 24, 1980, 94 Stat. 3475; Pub. L. 97–34, title I, §121(c)(1), title II, §§205, 212(d)(2)(B), Aug. 13, 1981, 95 Stat. 197, 223, 239; Pub. L. 97–248, title II, §§201(b), 204(b), Sept. 3, 1982, 96 Stat. 416, 426; Pub. L. 97–354, §5(a)(14), (15), Oct. 19, 1982, 96 Stat. 1693; Pub. L. 97–448, title I, §102(b)(1)(A), (3), (4), Jan. 12, 1983, 96 Stat. 2369, 2370; Pub. L. 98–369, div. A, title I, §§16(b), 68(c), 111(e)(5)–(7), title V, §555(a)(2), title VII, §§711(a)(3)(A), 722(a)(1), July 18, 1984, 98 Stat. 505, 588, 633, 897, 942, 972; Pub. L. 99–121, title I, §103(b)(1)(B), (7), Oct. 11, 1985, 99 Stat. 509, 510; Pub. L. 99–272, title XIII, §13208(a), Apr. 7, 1986, 100 Stat. 321; Pub. L. 99–514, title XVIII, §§1804(k)(3)(B)–(D), 1809(a)(3), Oct. 22, 1986, 100 Stat. 2809, 2819, related to items of tax preference, prior to the general revision of this part by Pub. L. 99–514, §701(a).

Amendments

2014—Subsec. (a)(1). Pub. L. 113–295, §221(a)(10), substituted "This paragraph" for "Effective with respect to taxable years beginning after December 31, 1992, this paragraph".

Subsec. (a)(2)(E)(i). Pub. L. 113–295, §221(a)(11)(A), substituted "This paragraph" for "In the case of any taxable year beginning after December 31, 1992, this paragraph".

Subsec. (a)(2)(E)(ii). Pub. L. 113–295, §221(a)(11)(B), struck out "(30 percent in case of taxable years beginning in 1993)" after "40 percent".

2009—Subsec. (a)(5)(C)(vi). Pub. L. 111–5 added cl. (vi).

2008—Subsec. (a)(5)(C)(iii) to (v). Pub. L. 110–289 added cl. (iii) and redesignated former cls. (iii) and (iv) as (iv) and (v), respectively.

2003—Subsec. (a)(7). Pub. L. 108–27 substituted "7 percent" for "42 percent" after "An amount equal to" and struck out last sentence which read as follows: "In the case of stock the holding period of which begins after December 31, 2000 (determined with the application of the last sentence of section 1(h)(2)(B)), the preceding sentence shall be applied by substituting '28 percent' for '42 percent'."

1998—Subsec. (a)(7). Pub. L. 105–206 inserted at end "In the case of stock the holding period of which begins after December 31, 2000 (determined with the application of the last sentence of section 1(h)(2)(B)), the preceding sentence shall be applied by substituting '28 percent' for '42 percent'."

1997—Subsec. (a)(7). Pub. L. 105–34 substituted "42 percent" for "one-half".

1996—Subsec. (a)(4). Pub. L. 104–188 struck out par. (4) which read as follows: "Reserves for losses on bad debts of financial institutions.—In the case of a financial institution to which section 593 applies, the amount by which the deduction allowable for the taxable year for a reasonable addition to a reserve for bad debts exceeds the amount that would have been allowable had the institution maintained its bad debt reserve for all taxable years on the basis of actual experience."

1993—Subsec. (a)(6), (7). Pub. L. 103–66, §13171(a), redesignated pars. (7) and (8) as (6) and (7), respectively, and struck out heading and text of former par. (6). Text read as follows:

"(A) In general.—The amount by which the deduction allowable under section 170 or 642(c) would be reduced if all capital gain property were taken into account at its adjusted basis.

"(B) Capital gain property.—For purposes of subparagraph (A), the term 'capital gain property' has the meaning given to such term by section 170(b)(1)(C)(iv). Such term shall not include any property to which an election under section 170(b)(1)(C)(iii) applies. In the case of any taxable year beginning in 1991, such term shall not include any tangible personal property. In the case of a contribution made before July 1, 1992, in a taxable year beginning in 1992, such term shall not include any tangible personal property."

Subsec. (a)(8). Pub. L. 103–66, §13171(a), redesignated par. (8) as (7).

Pub. L. 103–66, §13113(b)(1), added par. (8).

1992—Subsec. (a)(1). Pub. L. 102–486, §1915(a)(1), inserted at end "Effective with respect to taxable years beginning after December 31, 1992, this paragraph shall not apply to any deduction for depletion computed in accordance with section 613A(c)."

Subsec. (a)(2)(E). Pub. L. 102–486, §1915(b)(1), added subpar. (E).

1991—Subsec. (a)(6)(B). Pub. L. 102–227 inserted at end "In the case of a contribution made before July 1, 1992, in a taxable year beginning in 1992, such term shall not include any tangible personal property."

1990—Subsec. (a)(2)(D)(ii). Pub. L. 101–508, §11815(b)(3), substituted "section 613(e)(2)" for "section 613(e)(3)".

Subsec. (a)(4). Pub. L. 101–508, §11801(c)(12)(A), struck out "585 or" after "section".

Subsec. (a)(6)(B). Pub. L. 101–508, §11344, inserted at end "In the case of any taxable year beginning in 1991, such term shall not include any tangible personal property."

1988—Subsec. (a)(3). Pub. L. 100–647, §1007(b)(14)(B), struck out par. (3) which related to incentive stock options.

Subsec. (a)(5)(C)(i). Pub. L. 100–647, §1007(c)(2), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: "For purposes of this part, the term 'specified private activity bonds' means any private activity bond (as defined in section 141) issued after August 7, 1986."

Subsec. (a)(5)(C)(iii). Pub. L. 100–647, §1007(c)(1), inserted "(whether a current or advance refunding)" after "any refunding bond".

Subsec. (a)(6)(A). Pub. L. 100–647, §1007(c)(3), inserted "or 642(c)" after "section 170".

Statutory Notes and Related Subsidiaries

Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date of 2009 Amendment

Amendment by Pub. L. 111–5 applicable to obligations issued after Dec. 31, 2008, see section 1503(c) of Pub. L. 111–5, set out as a note under section 56 of this title.

Effective Date of 2008 Amendment

Amendment by Pub. L. 110–289 applicable to bonds issued after July 30, 2008, see section 3022(d)(1) of Pub. L. 110–289, set out as a note under section 56 of this title.

Effective Date of 2003 Amendment

Amendment by Pub. L. 108–27 applicable to dispositions on or after May 6, 2003, see section 301(d)(3) of Pub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date of 1997 Amendment

Amendment by Pub. L. 105–34 applicable to taxable years ending after May 6, 1997, see section 311(d) of Pub. L. 105–34, set out as a note under section 1 of this title.

Effective Date of 1996 Amendment

Amendment by Pub. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, see section 1616(c) of Pub. L. 104–188, set out as a note under section 593 of this title.

Effective Date of 1993 Amendment

Amendment by section 13113(b)(1) of Pub. L. 103–66 applicable to stock issued after Aug. 10, 1993, see section 13113(e) of Pub. L. 103–66, set out as a note under section 53 of this title.

Amendment by section 13171(a) of Pub. L. 103–66 applicable to contributions made after June 30, 1992, except that in case of any contribution of capital gain property which is not tangible personal property, such amendment applicable only if the contribution is made after Dec. 31, 1992, see section 13171(d) of Pub. L. 103–66, set out as a note under section 53 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–486 applicable to taxable years beginning after Dec. 31, 1992, see section 1915(d) of Pub. L. 102–486, set out as a note under section 56 of this title.

Effective Date of 1988 Amendment

Amendment by section 1007(b)(14)(B) of Pub. L. 100–647 applicable with respect to options exercised after Dec. 31, 1987, see section 1007(b)(14)(C) of Pub. L. 100–647, set out as a note under section 56 of this title.

Amendment by section 1007(c) 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

Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, but subsec. (a)(6) not to apply to any deduction attributable to contributions made before Aug. 16, 1986, see section 701(f) of Pub. L. 99–514, set out as a note under section 55 of this title.

Savings Provision

For provisions that nothing in amendment by sections 11801 and 11815 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 45K of this title.

Transitional Provisions

Pub. L. 100–647, title I, §1007(f)(4), Nov. 10, 1988, 102 Stat. 3433, provided that:

"(A) If any property to which this paragraph applies is placed in service in a taxable year which begins before January 1, 1987, and ends on or after August 1, 1986, the item of tax preference determined under section 57(a) of the Internal Revenue Code of 1954 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986 [Oct. 22, 1986]) with respect to such property shall be the excess of—

"(i) the amount allowable as a deduction for depreciation or amortization for such taxable year, over

"(ii) the amount which would be determined for such taxable year under the rules of paragraph (1) or (5) (whichever is appropriate) of section 56(a) of the Internal Revenue Code of 1954 (as amended by the Tax Reform Act of 1986 [Pub. L. 99–514]).

"(B) This paragraph shall apply to any property—

"(i) which is described in paragraph (4) or (12) of section 57(a) of the Internal Revenue Code of 1954 (as so in effect), and

"(ii) to which paragraph (1) or (5) of section 56(a) of the Internal Revenue Code of 1986 would apply if the taxable year referred to in subparagraph (A) began after December 31, 1986."

Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(a) of Pub. L. 99–514 [enacting this section] notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

§58. Denial of certain losses

(a) Denial of farm loss

(1) In general

For purposes of computing the amount of the alternative minimum taxable income for any taxable year of a taxpayer other than a corporation—

(A) Disallowance of farm loss

No loss of the taxpayer for such taxable year from any tax shelter farm activity shall be allowed.

(B) Deduction in succeeding taxable year

Any loss from a tax shelter farm activity disallowed under subparagraph (A) shall be treated as a deduction allocable to such activity in the 1st succeeding taxable year.

(2) Tax shelter farm activity

For purposes of this subsection, the term "tax shelter farm activity" means—

(A) any farming syndicate as defined in section 461(k), and

(B) any other activity consisting of farming which is a passive activity (within the meaning of section 469(c)).

(3) Determination of loss

In determining the amount of the loss from any tax shelter farm activity, the adjustments of sections 56 and 57 shall apply.

(b) Disallowance of passive activity loss

In computing the alternative minimum taxable income of the taxpayer for any taxable year, section 469 shall apply, except that in applying section 469—

(1) the adjustments of sections 56 and 57 shall apply, and

(2) in lieu of applying section 469(j)(7), the passive activity loss of a taxpayer shall be computed without regard to qualified housing interest (as defined in section 56(e)).

(c) Special rules

For purposes of this section—

(1) Special rule for insolvent taxpayers

(A) In general

The amount of losses to which subsection (a) or (b) applies shall be reduced by the amount (if any) by which the taxpayer is insolvent as of the close of the taxable year.

(B) Insolvent

For purposes of this paragraph, the term "insolvent" means the excess of liabilities over the fair market value of assets.

(2) Loss allowed for year of disposition of farm shelter activity

If the taxpayer disposes of his entire interest in any tax shelter farm activity during any taxable year, the amount of the loss attributable to such activity (determined after carryovers under subsection (a)(1)(B)) shall (to the extent otherwise allowable) be allowed for such taxable year in computing alternative minimum taxable income and not treated as a loss from a tax shelter farm activity.

(Added Pub. L. 99–514, title VII, §701(a), Oct. 22, 1986, 100 Stat. 2335; amended Pub. L. 100–203, title X, §10212(b), Dec. 22, 1987, 101 Stat. 1330–406; Pub. L. 100–647, title I, §1007(d), Nov. 10, 1988, 102 Stat. 3432; Pub. L. 113–295, div. A, title II, §221(a)(58)(E), (60)(B), Dec. 19, 2014, 128 Stat. 4047, 4048; Pub. L. 115–97, title I, §12001(b)(9), Dec. 22, 2017, 131 Stat. 2093; Pub. L. 115–141, div. U, title IV, §401(a)(30), Mar. 23, 2018, 132 Stat. 1185.)

Editorial Notes

Prior Provisions

A prior section 58, added Pub. L. 91–172, title III, §301(a), Dec. 30, 1969, 83 Stat. 583; amended Pub. L. 92–178, title III, §308(a), Dec. 10, 1971, 85 Stat. 524; Pub. L. 94–455, title III, §301(d), title XIX, §§1901(b)(40), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1553, 1803, 1834; Pub. L. 95–600, title IV, §§421(c), 423(a), title VII, §701(b)(2), Nov. 6, 1978, 92 Stat. 2875, 2877, 2898; Pub. L. 96–222, title I, §107(a)(1)(C), Apr. 1, 1980, 94 Stat. 222; Pub. L. 97–248, title II, §201(c)(1), §201(d)(3), formerly §201(c)(3), Sept. 3, 1982, 96 Stat. 417, 419, renumbered §201(d)(3), Pub. L. 97–448, title III, §306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 97–354, §§3(c), 5(a)(16), Oct. 19, 1982, 96 Stat. 1688, 1693; Pub. L. 97–448, title I, §102(b)(2), Jan. 12, 1983, 96 Stat. 2369; Pub. L. 98–369, div. A, title VII, §711(a)(2), (3)(B), July 18, 1984, 98 Stat. 942; Pub. L. 99–514, title XVIII, §1875(a), Oct. 22, 1986, 100 Stat. 2894, related to rules for application of minimum tax for tax preferences, prior to the general revision of this part by Pub. L. 99–514, §701(a).

Amendments

2018—Subsec. (a)(2)(A). Pub. L. 115–141 substituted "461(k)" for "461(j)".

2017—Subsec. (a)(3), (4). Pub. L. 115–97 redesignated par. (4) as (3) and struck out former par. (3). Prior to amendment, text of par. (3) read as follows: "For purposes of paragraph (1), a personal service corporation (within the meaning of section 469(j)(2)) shall be treated as a taxpayer other than a corporation."

2014—Subsec. (a)(2)(A). Pub. L. 113–295, §221(a)(58)(E), substituted "section 461(j)" for "section 464(c)".

Subsec. (b). Pub. L. 113–295, §221(a)(60)(B), inserted "and" at end of par. (1), redesignated par. (3) as (2) and struck out former par. (2) which read as follows: "the provisions of section 469(m) (relating to phase-in of disallowance) shall not apply, and".

1988—Subsec. (a)(2). Pub. L. 100–647, §1007(d)(1), struck out "(as modified by section 461(i)(4)(A))" after "section 464(c)" in subpar. (A) and substituted "section 469(c)" for "section 469(d), without regard to paragraph (1)(B) thereof" in subpar. (B).

Subsec. (a)(3). Pub. L. 100–647, §1007(d)(2), substituted "469(j)(2)" for "469(g)(1)(C)".

Subsec. (a)(4). Pub. L. 100–647, §1007(d)(3), added par. (4).

Subsec. (b). Pub. L. 100–647, §1007(d)(4), added pars. (1) to (3) and struck out former pars. (1) to (3) which read as follows:

"(1) the adjustments of section 56 shall apply,

"(2) any deduction to the extent such deduction is an item of tax preference under section 57(a) shall not be taken into account, and

"(3) the provisions of section 469(m) (relating to phase-in of disallowance) shall not apply."

1987—Subsec. (b)(3). Pub. L. 100–203 substituted "section 469(m)" for "section 469(l)".

Statutory Notes and Related Subsidiaries

Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115–97, set out as a note under section 11 of this title.

Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 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

Section 10212(c) of Pub. L. 100–203 provided that: "The amendments made by this section [amending this section and sections 163 and 469 of this title] shall take effect as if included in the amendments made by section 501 of the Tax Reform Act of 1986 [section 501 of Pub. L. 99–514, see section 501(c) of Pub. L. 99–514, set out as an Effective Date note under section 469 of this title]."

Effective Date

Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99–514, set out as a note under section 55 of this title.

Applicability of 1986 Repeal

Pub. L. 101–239, title VII, §7811(d)(1)(B), Dec. 19, 1989, 103 Stat. 2408, provided that: "The repeal of section 58(h) of the Internal Revenue Code of 1954 by the Tax Reform Act of 1986 [Pub. L. 99–514] shall be effective only with respect to items of tax preference arising in taxable years beginning after December 31, 1986."

Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(a) of Pub. L. 99–514 [enacting this section] notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

§59. Other definitions and special rules

(a) Alternative minimum tax foreign tax credit

For purposes of this part—

(1) In general

The alternative minimum tax foreign tax credit for any taxable year shall be the credit which would be determined under section 27 for such taxable year if—

(A) the pre-credit tentative minimum tax were the tax against which such credit was taken for purposes of section 904 for the taxable year and all prior taxable years beginning after December 31, 1986,

(B) section 904 were applied on the basis of alternative minimum taxable income instead of taxable income, and

(C) the determination of whether any income is high-taxed income for purposes of section 904(d)(2) were made on the basis of the applicable rate specified in section 55(b)(1) in lieu of the highest rate of tax specified in section 1.

(2) Pre-credit tentative minimum tax

For purposes of this subsection, the term "pre-credit tentative minimum tax" means the amount determined under the first sentence of section 55(b)(1)(A).

(3) Election to use simplified section 904 limitation

(A) In general

In determining the alternative minimum tax foreign tax credit for any taxable year to which an election under this paragraph applies—

(i) subparagraph (B) of paragraph (1) shall not apply, and

(ii) the limitation of section 904 shall be based on the proportion which—

(I) the taxpayer's taxable income (as determined for purposes of the regular tax) from sources without the United States (but not in excess of the taxpayer's entire alternative minimum taxable income), bears to

(II) the taxpayer's entire alternative minimum taxable income for the taxable year.

(B) Election

(i) In general

An election under this paragraph may be made only for the taxpayer's first taxable year which begins after December 31, 1997, and for which the taxpayer claims an alternative minimum tax foreign tax credit.

(ii) Election revocable only with consent

An election under this paragraph, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.

[(b) Repealed. Pub. L. 115–97, title I, §12001(b)(10), Dec. 22, 2017, 131 Stat. 2093]

(c) Treatment of estates and trusts

In the case of any estate or trust, the alternative minimum taxable income of such estate or trust and any beneficiary thereof shall be determined by applying part I of subchapter J with the adjustments provided in this part.

(d) Apportionment of differently treated items in case of certain entities

(1) In general

The differently treated items for the taxable year shall be apportioned (in accordance with regulations prescribed by the Secretary)—

(A) Regulated investment companies and real estate investment trusts

In the case of a regulated investment company to which part I of subchapter M applies or a real estate investment company to which part II of subchapter M applies, between such company or trust and shareholders and holders of beneficial interest in such company or trust.

(B) Common trust funds

In the case of a common trust fund (as defined in section 584(a)), pro rata among the participants of such fund.

(2) Differently treated items

For purposes of this section, the term "differently treated item" means any item of tax preference or any other item which is treated differently for purposes of this part than for purposes of computing the regular tax.

(e) Optional 10-year writeoff of certain tax preferences

(1) In general

For purposes of this title, any qualified expenditure to which an election under this paragraph applies shall be allowed as a deduction ratably over the 10-year period (3-year period in the case of circulation expenditures described in section 173) beginning with the taxable year in which such expenditure was made (or, in the case of a qualified expenditure described in paragraph (2)(C), over the 60-month period beginning with the month in which such expenditure was paid or incurred).

(2) Qualified expenditure

For purposes of this subsection, the term "qualified expenditure" means any amount which, but for an election under this subsection, would have been allowable as a deduction (determined without regard to section 291) for the taxable year in which paid or incurred under—

(A) section 173 (relating to circulation expenditures),

(B) section 174(a) (relating to research and experimental expenditures),

(C) section 263(c) (relating to intangible drilling and development expenditures),

(D) section 616(a) (relating to development expenditures), or

(E) section 617(a) (relating to mining exploration expenditures).

(3) Other sections not applicable

Except as provided in this subsection, no deduction shall be allowed under any other section for any qualified expenditure to which an election under this subsection applies.

(4) Election

(A) In general

An election may be made under paragraph (1) with respect to any portion of any qualified expenditure.

(B) Revocable only with consent

Any election under this subsection may be revoked only with the consent of the Secretary.

(C) Partners and shareholders of S corporations

In the case of a partnership, any election under paragraph (1) shall be made separately by each partner with respect to the partner's allocable share of any qualified expenditure. A similar rule shall apply in the case of an S corporation and its shareholders.

(5) Dispositions

(A) Application of section 1254

In the case of any disposition of property to which section 1254 applies (determined without regard to this section), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 1254, be treated as a deduction allowable under section 263(c), 616(a), or 617(a), whichever is appropriate.

(B) Application of section 617(d)

In the case of any disposition of mining property to which section 617(d) applies (determined without regard to this subsection), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 617(d), be treated as a deduction allowable under section 617(a).

(6) Amounts to which election apply not treated as tax preference

Any portion of any qualified expenditure to which an election under paragraph (1) applies shall not be treated as an item of tax preference under section 57(a) and section 56 shall not apply to such expenditure.

[(f) Repealed. Pub. L. 115–97, title I, §12001(b)(10), Dec. 22, 2017, 131 Stat. 2093]

(g) Tax benefit rule

The Secretary may prescribe regulations under which differently treated items shall be properly adjusted where the tax treatment giving rise to such items will not result in the reduction of the taxpayer's regular tax for the taxable year for which the item is taken into account or for any other taxable year.

(h) Coordination with certain limitations

The limitations of sections 704(d), 465, and 1366(d) (and such other provisions as may be specified in regulations) shall be applied for purposes of computing the alternative minimum taxable income of the taxpayer for the taxable year with the adjustments of sections 56, 57, and 58.

(i) Special rule for amounts treated as tax preference

For purposes of this subtitle (other than this part), any amount shall not fail to be treated as wholly exempt from tax imposed by this subtitle solely by reason of being included in alternative minimum taxable income.

(j) Treatment of unearned income of minor children

(1) In general

In the case of a child to whom section 1(g) applies, the exemption amount for purposes of section 55 shall not exceed the sum of—

(A) such child's earned income (as defined in section 911(d)(2)) for the taxable year, plus

(B) $5,000.

(2) Inflation adjustment

In the case of any taxable year beginning in a calendar year after 1998, the dollar amount in paragraph (1)(B) shall be increased by an amount equal to the product of—

(A) such dollar amount, and

(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "1997" for "2016" in subparagraph (A)(ii) thereof.

If any increase determined under the preceding sentence is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.

(k) Applicable corporation

For purposes of this part—

(1) Applicable corporation defined

(A) In general

The term "applicable corporation" means, with respect to any taxable year, any corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) which meets the average annual adjusted financial statement income test of subparagraph (B) for one or more taxable years which—

(i) are prior to such taxable year, and

(ii) end after December 31, 2021.

(B) Average annual adjusted financial statement income test

For purposes of this subsection—

(i) a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and

(ii) in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if—

(I) the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and

(II) the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.

(C) Exception

Notwithstanding subparagraph (A), the term "applicable corporation" shall not include any corporation which otherwise meets the requirements of subparagraph (A) if—

(i) such corporation—

(I) has a change in ownership, or

(II) has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and

(ii) the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation.

The preceding sentence shall not apply to any corporation if, after the Secretary makes the determination described in clause (ii), such corporation meets the average annual adjusted financial statement income test of subparagraph (B) for any taxable year beginning after the first taxable year for which such determination applies.

(D) Special rules for determining applicable corporation status

Solely for purposes of determining whether a corporation is an applicable corporation under this paragraph, all adjusted financial statement income of persons treated as a single employer with such corporation under subsection (a) or (b) of section 52 shall be treated as adjusted financial statement income of such corporation, and adjusted financial statement income of such corporation shall be determined without regard to paragraphs (2)(D)(i) and (11) of section 56A(c).

(E) Other special rules

(i) Corporations in existence for less than 3 years

If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied on the basis of the period during which such corporation was in existence.

(ii) Short taxable years

Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period.

(iii) Treatment of predecessors

Any reference in this subparagraph to a corporation shall include a reference to any predecessor of such corporation.

(2) Special rule for foreign-parented multinational groups

(A) In general

If a corporation is a member of a foreign-parented multinational group for any taxable year, then, solely for purposes of determining whether such corporation meets the average annual adjusted financial statement income test under paragraph (1)(B)(ii)(I) for such taxable year, the adjusted financial statement income of such corporation for such taxable year shall include the adjusted financial statement income of all members of such group. Solely for purposes of this subparagraph, adjusted financial statement income shall be determined without regard to paragraphs (2)(D)(i), (3), (4), and (11) of section 56A(c).

(B) Foreign-parented multinational group

For purposes of subparagraph (A), the term "foreign-parented multinational group" means, with respect to any taxable year, two or more entities if—

(i) at least one entity is a domestic corporation and another entity is a foreign corporation,

(ii) such entities are included in the same applicable financial statement with respect to such year, and

(iii) either—

(I) the common parent of such entities is a foreign corporation, or

(II) if there is no common parent, the entities are treated as having a common parent which is a foreign corporation under subparagraph (D).

(C) Foreign corporations engaged in a trade or business within the United States

For purposes of this paragraph, if a foreign corporation is engaged in a trade or business within the United States, such trade or business shall be treated as a separate domestic corporation that is wholly owned by the foreign corporation.

(D) Other rules

The Secretary shall, applying the principles of this section, prescribe rules for the application of this paragraph, including rules for the determination of—

(i) the entities (if any) which are to be to be treated under subparagraph (B)(iii)(II) as having a common parent which is a foreign corporation,

(ii) the entities to be included in a foreign-parented multinational group, and

(iii) the common parent of a foreign-parented multinational group.

(3) Regulations or other guidance

The Secretary shall provide regulations or other guidance for the purposes of carrying out this subsection, including regulations or other guidance—

(A) providing a simplified method for determining whether a corporation meets the requirements of paragraph (1), and

'(B) ¹ addressing the application of this subsection to a corporation that experiences a change in ownership.

(l) Corporate AMT foreign tax credit

(1) In general

For purposes of this part, if an applicable corporation chooses to have the benefits of subpart A of part III of subchapter N for any taxable year, the corporate AMT foreign tax credit for the taxable year of the applicable corporation is an amount equal to sum of—

(A) the lesser of—

(i) the aggregate of the applicable corporation's pro rata share (as determined under section 56A(c)(3)) of the amount of income, war profits, and excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States which are—

(I) taken into account on the applicable financial statement of each controlled foreign corporation with respect to which the applicable corporation is a United States shareholder, and

(II) paid or accrued (for Federal income tax purposes) by each such controlled foreign corporation, or

(ii) the product of the amount of the adjustment under section 56A(c)(3) and the percentage specified in section 55(b)(2)(A)(i), and

(B) in the case of an applicable corporation that is a domestic corporation, the amount of income, war profits, and excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States to the extent such taxes are—

(i) taken into account on the applicable corporation's applicable financial statement, and

(ii) paid or accrued (for Federal income tax purposes) by the applicable corporation.

(2) Carryover of excess tax paid

For any taxable year for which an applicable corporation chooses to have the benefits of subpart A of part III of subchapter N, the excess of the amount described in paragraph (1)(A)(i) over the amount described in paragraph (1)(A)(ii) shall increase the amount described in paragraph (1)(A)(i) in any of the first 5 succeeding taxable years to the extent not taken into account in a prior taxable year.

(3) Regulations or other guidance

The Secretary shall provide for such regulations or other guidance as is necessary to carry out the purposes of this subsection.

(Added Pub. L. 99–514, title VII, §701(a), Oct. 22, 1986, 100 Stat. 2336; amended Pub. L. 100–647, title I, §§1007(e), 1014(e)(5)(A), Nov. 10, 1988, 102 Stat. 3432, 3561; Pub. L. 101–239, title VII, §§7611(f)(5)(B), (6), 7612(e)(1), 7811(d)(1)(A), (j)(7), Dec. 19, 1989, 103 Stat. 2373, 2374, 2408, 2412; Pub. L. 101–508, title XI, §§11101(d)(3), 11531(b)(2), 11702(d), 11801(c)(2)(D), Nov. 5, 1990, 104 Stat. 1388–405, 1388-490, 1388-514, 1388-523; Pub. L. 102–486, title XIX, §1915(c)(3), Oct. 24, 1992, 106 Stat. 3024; Pub. L. 104–188, title I, §§1601(b)(2)(D), 1702(a)(1), 1703(e), 1704(m)(3), Aug. 20, 1996, 110 Stat. 1833, 1868, 1875, 1883; Pub. L. 105–34, title X, §1057(a), title XI, §1103(a), title XII, §1201(b)(1), Aug. 5, 1997, 111 Stat. 945, 966, 994; Pub. L. 105–206, title VI, §§6011(a), 6023(2), July 22, 1998, 112 Stat. 817, 824; Pub. L. 108–357, title IV, §421(a)(1), Oct. 22, 2004, 118 Stat. 1514; Pub. L. 115–97, title I, §§11002(d)(4), 12001(b)(3)(C), (10), Dec. 22, 2017, 131 Stat. 2061, 2093; Pub. L. 115–141, div. U, title IV, §401(d)(1)(D)(ii), Mar. 23, 2018, 132 Stat. 1206; Pub. L. 117–169, title I, §§10101(a)(2), (c), 13904(a), Aug. 16, 2022, 136 Stat. 1818, 1827, 2014.)

Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.

Editorial Notes

Amendments

2022—Subsec. (k). Pub. L. 117–169, §10101(a)(2), added subsec. (k).

Subsec. (k)(1)(D). Pub. L. 117–169, §13904(a), amended subpar. (D) generally. Prior to amendment, text of subpar. (D) read as follows:

"(i) In general.—Solely for purposes of determining whether a corporation is an applicable corporation under this paragraph, all adjusted financial statement income of persons treated as a single employer with such corporation under subsection (a) or (b) of section 52 (determined with the modifications described in clause (ii)) shall be treated as adjusted financial statement income of such corporation, and adjusted financial statement income of such corporation shall be determined without regard to paragraphs (2)(D)(i) and (11) of section 56A(c).

"(ii) Modifications.—For purposes of this subparagraph—

"(I) section 52(a) shall be applied by substituting 'component members' for 'members', and

"(II) for purposes of applying section 52(b), the term 'trade or business' shall include any activity treated as a trade or business under paragraph (5) or (6) of section 469(c) (determined without regard to the phrase 'To the extent provided in regulations' in such paragraph (6)).

"(iii) Component member.—For purposes of this subparagraph, the term 'component member' has the meaning given such term by section 1563(b), except that the determination shall be made without regard to section 1563(b)(2)."

Subsec. (l). Pub. L. 117–169, §10101(c), added subsec. (l).

2018—Subsec. (a)(1). Pub. L. 115–141 substituted "27" for "27(a)" in introductory provisions.

2017—Subsec. (a)(1)(C). Pub. L. 115–97, §12001(b)(3)(C)(i), substituted "section 55(b)(1) in lieu of the highest rate of tax specified in section 1" for "subparagraph (A)(i) or (B)(i) of section 55(b)(1) (whichever applies) in lieu of the highest rate of tax specified in section 1 or 11 (whichever applies)".

Subsec. (a)(2). Pub. L. 115–97, §12001(b)(3)(C)(ii), substituted "means the amount determined under the first sentence of section 55(b)(1)(A)." for "means—

"(A) in the case of a taxpayer other than a corporation, the amount determined under the first sentence of section 55(b)(1)(A)(i), or

"(B) in the case of a corporation, the amount determined under section 55(b)(1)(B)(i)."

Subsec. (b). Pub. L. 115–97, §12001(b)(10), struck out subsec. (b). Text read as follows: "In the case of any corporation for which a credit is allowable for the taxable year under section 30A or 936, alternative minimum taxable income shall not include any income with respect to which a credit is determined under section 30A or 936."

Subsec. (f). Pub. L. 115–97, §12001(b)(10), struck out subsec. (f). Text read as follows: "Except as otherwise provided in this part, section 291 (relating to cutback of corporate preferences) shall apply before the application of this part."

Subsec. (j)(2)(B). Pub. L. 115–97, §11002(d)(4), substituted "for '2016' in subparagraph (A)(ii)" for "for '1992' in subparagraph (B)".

2004—Subsec. (a)(2) to (4). Pub. L. 108–357 redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which related to limitation on alternative minimum tax foreign tax credit and carryback and carryforward of excess.

1998—Subsec. (a)(3), (4). Pub. L. 105–206, §6011(a), redesignated par. (3), relating to election to use simplified section 904 limitation, as (4).

Subsec. (b). Pub. L. 105–206, §6023(2), substituted "credits under section 30A or 936" for "section 936 credit" in heading.

1997—Subsec. (a)(2)(C). Pub. L. 105–34, §1057(a), struck out subpar. (C) which read as follows:

"(C) Exception.—Subparagraph (A) shall not apply to any domestic corporation if—

"(i) more than 50 percent of the stock of such domestic corporation (by vote and value) is owned by United States persons who are not members of an affiliated group (as defined in section 1504 of such Code) which includes such corporation,

"(ii) all of the activities of such corporation are conducted in 1 foreign country with which the United States has an income tax treaty in effect and such treaty provides for the exchange of information between such foreign country and the United States,

"(iii) all of the current earnings and profits of such corporation are distributed at least annually (other than current earnings and profits retained for normal maintenance or capital replacements or improvements of an existing business), and

"(iv) all of such distributions by such corporation to United States persons are used by such persons in a trade or business conducted in the United States."

Subsec. (a)(3). Pub. L. 105–34, §1103(a), added par. (3) relating to election to use simplified section 904 limitation.

Subsec. (j). Pub. L. 105–34, §1201(b)(1), amended subsec. (j) generally, restating limitation on exemption amount, adding provisions for inflation adjustment of such amount, and deleting provisions relating to limitation based on parental minimum tax and unused parental minimum tax exemption.

1996—Subsec. (a)(1)(A). Pub. L. 104–188, §1703(e)(1), substituted "the pre-credit tentative minimum tax" for "the amount determined under section 55(b)(1)(A)".

Subsec. (a)(1)(C). Pub. L. 104–188, §1703(e)(2), substituted "specified in subparagraph (A)(i) or (B)(i) of section 55(b)(1) (whichever applies)" for "specified in section 55(b)(1)(A)".

Subsec. (a)(2)(A)(i). Pub. L. 104–188, §1703(e)(1), substituted "the pre-credit tentative minimum tax" for "the amount determined under section 55(b)(1)(A)".

Subsec. (a)(2)(A)(ii). Pub. L. 104–188, §1703(e)(3), substituted "which would be the pre-credit tentative minimum tax" for "which would be determined under section 55(b)(1)(A)".

Subsec. (a)(3). Pub. L. 104–188, §1703(e)(4), added par. (3).

Subsec. (b). Pub. L. 104–188, §1601(b)(2)(D), substituted "section 30A or 936, alternative minimum taxable income shall not include any income with respect to which a credit is determined under section 30A or 936." for "section 936, alternative minimum taxable income shall not include any amount with respect to which the requirements of subparagraph (A) or (B) of section 936(a)(1) are met."

Subsec. (j)(1)(B). Pub. L. 104–188, §1704(m)(3), substituted "twice the amount in effect for the taxable year under section 63(c)(5)(A)" for "$1,000".

Subsec. (j)(3)(B). Pub. L. 104–188, §1702(a)(1), substituted "section 1(g)(3)(B)" for "section 1(i)(3)(B)".

1992—Subsec. (a)(2)(A)(ii). Pub. L. 102–486 substituted "and section 57(a)(2)(E)" for "and the alternative tax energy preference deduction under section 56(h)".

1990—Subsec. (a)(1)(B) to (D). Pub. L. 101–508, §11801(c)(2)(D), inserted "and" at end of subpar. (B), redesignated subpar. (D) as (C), and struck out former subpar. (C) which read as follows: "for purposes of section 904, any increase in alternative minimum taxable income by reason of section 56(c)(1)(A) (relating to adjustment for book income) shall have the same proportionate source (and character) as alternative minimum taxable income determined without regard to such increase, and".

Subsec. (a)(2)(A)(ii). Pub. L. 101–508, §11531(b)(2), inserted before period at end "and the alternative tax energy preference deduction under section 56(h)".

Subsec. (j). Pub. L. 101–508, §11101(d)(3)(A), substituted "section 1(g)" for "section 1(i)" in pars. (1), (2)(A), (B)(i)(I), (II), (D), and (3).

Subsec. (j)(1)(B). Pub. L. 101–508, §11702(d)(1), inserted "(or, if greater, the child's share of the unused parental minimum tax exemption)" before period at end.

Subsec. (j)(2)(C). Pub. L. 101–508, §11101(d)(3)(B), substituted "section 1(g)(3)(B)" for "section 1(i)(3)(B)".

Subsec. (j)(2)(D). Pub. L. 101–508, §11702(d)(3), substituted "paragraphs (3)(D), (5), and (6)" for "paragraphs (5) and (6)".

Subsec. (j)(3). Pub. L. 101–508, §11702(d)(2), added par. (3).

1989—Subsec. (a)(2)(C). Pub. L. 101–239, §7612(e)(1), added subpar. (C).

Subsec. (e)(1). Pub. L. 101–239, §7611(f)(5)(B), inserted before period at end "(or, in the case of a qualified expenditure described in paragraph (2)(C), over the 60-month period beginning with the month in which such expenditure was paid or incurred)".

Subsec. (g). Pub. L. 101–239, §7811(d)(1)(A), substituted "for the taxable year for which the item is taken into account or for any other taxable year" for "for any taxable year".

Subsec. (i). Pub. L. 101–239, §7611(f)(6), substituted "amounts" for "interest" in heading and "any amount shall" for "interest shall" in text.

Subsec. (j)(2)(D). Pub. L. 101–239, §7811(j)(7), substituted "Other rules" for "Others rules" in heading.

1988—Subsec. (a)(1)(D). Pub. L. 100–647, §1007(e)(3), added subpar. (D).

Subsec. (e)(2). Pub. L. 100–647, §1007(e)(1), inserted "(determined without regard to section 291)" after "as a deduction".

Subsec. (h). Pub. L. 100–647, §1007(e)(2), substituted "taxable year with the adjustments of sections 56, 57, and 58" for "taxable year—

"(1) with the adjustments of section 56, and

"(2) by not taking into account any deduction to the extent such deduction is an item of tax preference under section 57(a)".

Subsec. (i). Pub. L. 100–647, §1007(e)(4), inserted "(other than this part)" after "of this subtitle" and substituted "subtitle" for "title" before "solely".

Subsec. (j). Pub. L. 100–647, §1014(e)(5)(A), added subsec. (j).

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Amendment by section 10101(a)(2), (c) of Pub. L. 117–169 applicable to taxable years beginning after Dec. 31, 2022, see section 10101(f) of Pub. L. 117–169, set out as a note under section 11 of this title.

Effective Date of 2017 Amendment

Amendment by section 11002(d)(4) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title.

Amendment by section 12001(b)(3)(C), (10) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115–97, set out as a note under section 11 of this title.

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to taxable years beginning after Dec. 31, 2004, see section 421(b) of Pub. L. 108–357, set out as a note under section 53 of this title.

Effective Date of 1998 Amendment

Amendment by section 6023(2) of Pub. L. 105–206 effective July 22, 1998, see section 6023(32) of Pub. L. 105–206, set out as a note under section 34 of this title.

Amendment by section 6011(a) of Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date of 1997 Amendment

Pub. L. 105–34, title X, §1057(b), Aug. 5, 1997, 111 Stat. 945, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 5, 1997]."

Pub. L. 105–34, title XI, §1103(b), Aug. 5, 1997, 111 Stat. 966, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 1997."

Pub. L. 105–34, title XII, §1201(c), Aug. 5, 1997, 111 Stat. 994, provided that: "The amendments made by this section [amending this section and sections 63 and 6103 of this title] shall apply to taxable years beginning after December 31, 1997."

Effective Date of 1996 Amendment

Amendment by section 1601(b)(2)(D) of Pub. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, except as otherwise provided, see section 1601(c) of Pub. L. 104–188, set out as a note under section 55 of this title.

Amendment by section 1702(a)(1) of Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.

Amendment by section 1703(e) of Pub. L. 104–188 effective as if included in the provision of the Revenue Reconciliation Act of 1993, Pub. L. 103–66, §§13001–13444, to which such amendment relates, see section 1703(o) of Pub. L. 104–188, set out as a note under section 39 of this title.

Amendment by section 1704(m)(3) of Pub. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, see section 1704(m)(4) of Pub. L. 104–188, set out as a note under section 1 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–486 applicable to taxable years beginning after Dec. 31, 1992, see section 1915(d) of Pub. L. 102–486, set out as a note under section 56 of this title.

Effective Date of 1990 Amendment

Amendment by section 11101(d)(3) of Pub. L. 101–508 applicable to taxable years beginning after Dec. 31, 1990, see section 11101(e) of Pub. L. 101–508, set out as a note under section 1 of this title.

Amendment by section 11531(b)(2) of Pub. L. 101–508 applicable to taxable years beginning after Dec. 31, 1990, see section 11531(c) of Pub. L. 101–508, set out as a note under section 56 of this title.

Pub. L. 101–508, title XI, §11702(j), Nov. 5, 1990, 104 Stat. 1388–516, provided that: "Any amendment made by this section [amending this section and sections 135, 216, 355, 367, 447, 453B, 468B, 2056, 2056A, 2523, 4980B, and 6114 of this title] shall take effect as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988 [Pub. L. 100–647] to which such amendment relates."

Effective Date of 1989 Amendment

Amendment by section 7611(f)(6) of Pub. L. 101–239 applicable to taxable years beginning after Dec. 31, 1989, see section 7611(g)(1) of Pub. L. 101–239, set out as a note under section 56 of this title.

Amendment by section 7611(f)(5)(B) of Pub. L. 101–239 applicable to costs paid or incurred in taxable years beginning after Dec. 31, 1989, see section 7611(g)(2) of Pub. L. 101–239, set out as a note under section 56 of this title.

Pub. L. 101–239, title VII, §7612(e)(2), Dec. 19, 1989, 103 Stat. 2375, provided that:

"(A) In general.—The amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after March 31, 1990.

"(B) Special rule for year which includes march 31, 1990.—In the case of any taxable year (of a corporation described in subparagraph (C) of section 59(a)(2) of the Internal Revenue Code of 1986 (as added by paragraph (1))) which begins after December 31, 1989, and includes March 31, 1990, the amount determined under clause (ii) of section 59(a)(2)(A) of such Code shall be an amount which bears the same ratio to the amount which would have been determined under such clause without regard to this subparagraph as the number of days in such taxable year on or before March 31, 1990, bears to the total number of days in such taxable year."

Amendment by section 7811(d)(1)(A), (j)(7) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.

Effective Date of 1988 Amendment

Amendment by section 1007(e) 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.

Pub. L. 100–647, title I, §1014(e)(5)(B), Nov. 10, 1988, 102 Stat. 3562, provided that: "The amendment made by subparagraph (A) [amending this section] shall apply to taxable years beginning after December 31, 1988."

Effective Date

Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99–514, set out as a note under section 55 of this title.

Savings Provision

For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.

For provisions that nothing in amendment by section 11801 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 45K of this title.

Consideration of Certain Taxes Treated as Paid or Accrued Under Section 904(c) in Determination of Alternative Minimum Tax Foreign Tax Credit

Pub. L. 100–647, title I, §1007(f)(5), Nov. 10, 1988, 102 Stat. 3434, provided that: "In determining the amount of the alternative minimum tax foreign tax credit under section 59 of the 1986 Code, there shall not be taken into account any taxes paid or accrued in a taxable year beginning after December 31, 1986, which are treated under section 904(c) of the 1986 Code as paid or accrued in a taxable year beginning on or before December 31, 1986."

Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(a) of Pub. L. 99–514 [enacting this section] notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

¹ So in original.