§45G. Railroad track maintenance credit

(a) General rule

For purposes of section 38, the railroad track maintenance credit determined under this section for the taxable year is an amount equal to 40 percent (50 percent in the case of any taxable year beginning before January 1, 2023) of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year.

(b) Limitation

(1) In general

The credit allowed under subsection (a) for any taxable year shall not exceed the product of-

(A) $3,500, multiplied by

(B) the sum of-

(i) the number of miles of railroad track owned or leased by the eligible taxpayer as of the close of the taxable year, and

(ii) the number of miles of railroad track assigned for purposes of this subsection to the eligible taxpayer by a Class II or Class III railroad which owns or leases such railroad track as of the close of the taxable year.

(2) Assignments

With respect to any assignment of a mile of railroad track under paragraph (1)(B)(ii)-

(A) such assignment may be made only once per taxable year of the Class II or Class III railroad and shall be treated as made as of the close of such taxable year,

(B) such mile may not be taken into account under this section by such railroad for such taxable year, and

(C) such assignment shall be taken into account for the taxable year of the assignee which includes the date that such assignment is treated as effective.

(c) Eligible taxpayer

For purposes of this section, the term "eligible taxpayer" means-

(1) any Class II or Class III railroad, and

(2) any person who transports property using the rail facilities of a Class II or Class III railroad or who furnishes railroad-related property or services to a Class II or Class III railroad, but only with respect to miles of railroad track assigned to such person by such Class II or Class III railroad for purposes of subsection (b).

(d) Qualified railroad track maintenance expenditures

For purposes of this section, the term "qualified railroad track maintenance expenditures" means gross expenditures (whether or not otherwise chargeable to capital account) for maintaining railroad track (including roadbed, bridges, and related track structures) owned or leased as of January 1, 2015, by a Class II or Class III railroad (determined without regard to any consideration for such expenditures given by the Class II or Class III railroad which made the assignment of such track).

(e) Other definitions and special rules

(1) Class II or Class III railroad

For purposes of this section, the terms "Class II railroad" and "Class III railroad" have the respective meanings given such terms by the Surface Transportation Board.

(2) Controlled groups

Rules similar to the rules of paragraph (1) of section 41(f) shall apply for purposes of this section.

(3) Basis adjustment

For purposes of this subtitle, if a credit is allowed under this section with respect to any railroad track, the basis of such track shall be reduced by the amount of the credit so allowed.

(Added Pub. L. 108–357, title II, §245(a), Oct. 22, 2004, 118 Stat. 1447 ; amended Pub. L. 109–135, title IV, §403(f), Dec. 21, 2005, 119 Stat. 2623 ; Pub. L. 109–432, div. A, title IV, §423(a), Dec. 20, 2006, 120 Stat. 2973 ; Pub. L. 110–343, div. C, title III, §316(a), Oct. 3, 2008, 122 Stat. 3872 ; Pub. L. 111–312, title VII, §734(a), Dec. 17, 2010, 124 Stat. 3318 ; Pub. L. 112–240, title III, §306(a), Jan. 2, 2013, 126 Stat. 2329 ; Pub. L. 113–295, div. A, title I, §116(a), Dec. 19, 2014, 128 Stat. 4014 ; Pub. L. 114–113, div. Q, title I, §162(a), (b), Dec. 18, 2015, 129 Stat. 3066 ; Pub. L. 115–123, div. D, title I, §40302(a), Feb. 9, 2018, 132 Stat. 145 ; Pub. L. 116–94, div. Q, title I, §112(a), Dec. 20, 2019, 133 Stat. 3228 ; Pub. L. 116–260, div. EE, title I, §105(a), (b), Dec. 27, 2020, 134 Stat. 3041 .)

Editorial Notes

Amendments

2020-Subsec. (a). Pub. L. 116–260, §105(b), substituted "40 percent (50 percent in the case of any taxable year beginning before January 1, 2023)" for "50 percent".

Subsec. (f). Pub. L. 116–260, §105(a), struck out subsec. (f). Text read as follows: "This section shall apply to qualified railroad track maintenance expenditures paid or incurred during taxable years beginning after December 31, 2004, and before January 1, 2023."

2019-Subsec. (f). Pub. L. 116–94 substituted "January 1, 2023" for "January 1, 2018".

2018-Subsec. (f). Pub. L. 115–123 substituted "January 1, 2018" for "January 1, 2017".

2015-Subsec. (d). Pub. L. 114–113, §162(b), substituted "January 1, 2015" for "January 1, 2005".

Subsec. (f). Pub. L. 114–113, §162(a), substituted "January 1, 2017" for "January 1, 2015".

2014-Subsec. (f). Pub. L. 113–295 substituted "January 1, 2015" for "January 1, 2014".

2013-Subsec. (f). Pub. L. 112–240 substituted "January 1, 2014" for "January 1, 2012".

2010-Subsec. (f). Pub. L. 111–312 substituted "January 1, 2012" for "January 1, 2010".

2008-Subsec. (f). Pub. L. 110–343 substituted "January 1, 2010" for "January 1, 2008".

2006-Subsec. (d). Pub. L. 109–432 inserted "gross" after "means" and "(determined without regard to any consideration for such expenditures given by the Class II or Class III railroad which made the assignment of such track)" before period at end.

2005-Subsec. (b). Pub. L. 109–135, §403(f)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: "The credit allowed under subsection (a) for any taxable year shall not exceed the product of-

"(1) $3,500, and

"(2) the number of miles of railroad track owned or leased by the eligible taxpayer as of the close of the taxable year.

A mile of railroad track may be taken into account by a person other than the owner only if such mile is assigned to such person by the owner for purposes of this subsection. Any mile which is so assigned may not be taken into account by the owner for purposes of this subsection."

Subsec. (c)(2). Pub. L. 109–135, §403(f)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: "any person who transports property using the rail facilities of a person described in paragraph (1) or who furnishes railroad-related property or services to such a person."

Statutory Notes and Related Subsidiaries

Effective Date of 2020 Amendment

Pub. L. 116–260, div. EE, title I, §105(c), Dec. 27, 2020, 134 Stat. 3041 , provided that: "The amendments made by this section [amending this section] shall apply to taxable years ending after the date of the enactment of this Act [Dec. 27, 2020]."

Effective Date of 2019 Amendment

Pub. L. 116–94, div. Q, title I, §112(c), Dec. 20, 2019, 133 Stat. 3229 , provided that: "The amendment made by this section [amending this section] shall apply to expenditures paid or incurred during taxable years beginning after December 31, 2017."

Effective Date of 2018 Amendment

Pub. L. 115–123, div. D, title I, §40302(b), Feb. 9, 2018, 132 Stat. 145 , provided that:

"(1) In general.-The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2016.

"(2) Safe harbor assignments.-Assignments, including related expenditures paid or incurred, under paragraph (2) of section 45G(b) of the Internal Revenue Code of 1986 for taxable years ending after January 1, 2017, and before January 1, 2018, shall be treated as effective as of the close of such taxable year if made pursuant to a written agreement entered into no later than 90 days following the date of the enactment of this Act [Feb. 9, 2018]."

Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title I, §162(c), Dec. 18, 2015, 129 Stat. 3066 , provided that:

"(1) Extension.-The amendment made by subsection (a) [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2014.

"(2) Modification.-The amendment made by subsection (b) [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2015."

Effective Date of 2014 Amendment

Pub. L. 113–295, div. A, title I, §116(b), Dec. 19, 2014, 128 Stat. 4014 , provided that: "The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2013."

Effective Date of 2013 Amendment

Pub. L. 112–240, title III, §306(b), Jan. 2, 2013, 126 Stat. 2329 , provided that: "The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2011."

Effective Date of 2010 Amendment

Pub. L. 111–312, title VII, §734(b), Dec. 17, 2010, 124 Stat. 3318 , provided that: "The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2009."

Effective Date of 2008 Amendment

Pub. L. 110–343, div. C, title III, §316(c)(1), Oct. 3, 2008, 122 Stat. 3872 , provided that: "The amendment made by subsection (a) [amending this section] shall apply to expenditures paid or incurred during taxable years beginning after December 31, 2007."

Effective Date of 2006 Amendment

Pub. L. 109–432, div. A, title IV, §423(b), Dec. 20, 2006, 120 Stat. 2973 , provided that: "The amendment made by this section [amending this section] shall take effect as if included in the amendment made by section 245(a) of the American Jobs Creation Act of 2004 [Pub. L. 108–357]."

Effective Date of 2005 Amendment

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.

Effective Date

Section applicable to taxable years beginning after Dec. 31, 2004, see section 245(e) of Pub. L. 108–357, set out as an Effective Date of 2004 Amendment note under section 38 of this title.

Safe Harbor Assignments

Pub. L. 116–94, div. Q, title I, §112(b), Dec. 20, 2019, 133 Stat. 3228 , provided that: "Any assignment, including related expenditures paid or incurred, under section 45G(b)(2) of the Internal Revenue Code of 1986 for a taxable year beginning on or after January 1, 2018, and ending before January 1, 2020, shall be treated as effective as of the close of such taxable year if made pursuant to a written agreement entered into no later than 90 days following the date of the enactment of this Act [Dec. 20, 2019]."