26 U.S.C. § 263
No deduction shall be allowed for-
Notwithstanding subsection (a), and except as provided in subsection (i), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Concurrent Resolution 50, Seventy-ninth Congress. Such regulations shall also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(2)) to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells. This subsection shall not apply with respect to any costs to which any deduction is allowed under section 59(e) or 291.
In the case of expenditures in connection with the rehabilitation of a unit of railroad rolling stock (except a locomotive) used by a domestic common carrier by railroad which would, but for this subsection, be properly chargeable to capital account, such expenditures, if during any 12-month period they do not exceed an amount equal to 20 percent of the basis of such unit in the hands of the taxpayer, shall, at the election of the taxpayer, be treated (notwithstanding subsection (a)) as deductible repairs under section 162 or 212. An election under this subsection shall be made for any taxable year at such time and in such manner as the Secretary prescribes by regulations. An election may not be made under this subsection for any taxable year to which an election under subsection (e) applies to railroad rolling stock (other than locomotives).
In the case of a domestic common carrier by rail (including a railroad switching or terminal company) which uses the retirement-replacement method of accounting for depreciation of its railroad track, expenditures for acquiring and installing replacement ties of any material (and fastenings related to such ties) shall be accorded the same tax accounting treatment as expenditures for replacement ties of wood (and fastenings related to such ties).
No deduction shall be allowed for interest and carrying charges properly allocable to personal property which is part of a straddle (as defined in section 1092(c)). Any amount not allowed as a deduction by reason of the preceding sentence shall be chargeable to the capital account with respect to the personal property to which such amount relates.
For purposes of paragraph (1), the term "interest and carrying charges" means the excess of-
For purposes of subparagraph (A), the term "interest" includes any amount paid or incurred in connection with personal property used in a short sale.
This subsection shall not apply in the case of any hedging transaction (as defined in section 1256(e)).
In the case of any short sale, this subsection shall be applied after subsection (h).
In the case of any obligation to which section 1277 or 1282 applies, this subsection shall be applied after section 1277 or 1282.
If-
then no deduction shall be allowed for such payment. The basis of the stock used to close the short sale shall be increased by the amount not allowed as a deduction by reason of the preceding sentence.
If the payment described in paragraph (1)(A) is in respect of an extraordinary dividend, paragraph (1)(B) shall be applied by substituting "the day 1 year after the date of such short sale" for "the 45th day after the date of such short sale".
For purposes of this subsection, the term "extraordinary dividend" has the meaning given to such term by section 1059(c); except that such section shall be applied by treating the amount realized by the taxpayer in the short sale as his adjusted basis in the stock.
The running of any period of time applicable under paragraph (1)(B) (as modified by paragraph (2)) shall be suspended during any period in which-
Paragraph (1) shall apply only to the extent that the payments or distributions with respect to any short sale exceed the amount which-
Subparagraph (A) shall not apply if one or more payments or distributions is in respect of an extraordinary dividend.
In the case of any short sale, this subsection shall be applied before subsection (g).
In the case of intangible drilling and development costs paid or incurred with respect to an oil, gas, or geothermal well located outside the United States-
This subsection shall not apply to costs paid or incurred with respect to a nonproductive well.
26 U.S.C. § 263
EDITORIAL NOTES
AMENDMENTS2018-Subsec. (a)(1)(F), (G). Pub. L. 115-141, §401(a) (60), substituted comma for semicolon at end. Subsec. (a)(1)(H) to (L). Pub. L. 115-141, §401(a) (61), redesignated subpars. (I) to (L) as (H) to (K), respectively. 2014-Subsec. (a)(1)(H). Pub. L. 113-295, §221(a) (34)(D), struck out subpar. (H) which read as follows: "expenditures for which a deduction is allowed under section 179A,". Subsec. (g)(2)(B)(iii). Pub. L. 113-295, §221(a) (41)(G), struck out ", 244," after "section 243". 2006-Subsec. (a)(1)(L). Pub. L. 109-432 added subpar. (L). 2005-Subsec. (a)(1)(J). Pub. L. 109-58, §1323(b)(2), added subpar. (J).Subsec. (a)(1)(K). Pub. L. 109-58, §1331(b)(4), added subpar. (K). 2004-Subsec. (a)(1)(I). Pub. L. 108-357 added subpar. (I).Subsec. (g)(2)(B)(ii). Pub. L. 108-311 substituted "1276" for "1278".1997-Subsec. (a)(1)(H). Pub. L. 105-34 added subpar. (H).1990-Subsec. (b). Pub. L. 101-508, §11801(a) (16), struck out subsec. (b) "Expenditures for advertising and good will" which read as follows: "If a corporation has, for the purpose of computing its excess profits tax credit under chapter 2E or subchapter D of chapter 1 of the Internal Revenue Code of 1939 claimed the benefits of the election provided in section 733 or section 451 of such code, as the case may be, no deduction shall be allowable under section 162 to such corporation for expenditures for advertising or the promotion of good will which, under the rules and regulations prescribed under section 733 or section 451 of such code, as the case may be, may be regarded as capital investments."Subsec. (c). Pub. L. 101-508, §11815(b)(3), substituted "section 613(e)(2)" for "section 613(e)(3)".1988-Subsec. (c). Pub. L. 100-647 substituted "section 59(e)" for "section 59(d)". 1986-Subsec. (a)(1)(E) to (H). Pub. L. 99-514, §402(b)(1), struck out subpar. (E) relating to nonapplication of par. (1) to expenditures by farmers for clearing land deductible under section 182, and redesignated subpars. (F) to (H) as (E) to (G), respectively. Subsec. (c). Pub. L. 99-514, §701(e)(4)(D), substituted "59(d)" for "58(i)".Pub. L. 99-514, §411(b)(1)(B), inserted "and except as provided in subsection (i),".Subsec. (g)(2)(B)(iv). Pub. L. 99-541, §1808(b), added cl. (iv). Subsec. (i). Pub. L. 99-514, §411(b)(1)(A), added subsec. (i).1984-Subsec. (g)(2). Pub. L. 98-369, §102(e)(7), amended par. (2) generally, striking out "charges for temporary use of the personal property in a short sale, or" after "(including" in subpar. (A)(ii), substituting "any amount treated as ordinary income under section 1271(a)(3)(A), 1278, or 1281(a) with respect to such property for the taxable year, and" for "any amount treated as ordinary income under section 1232(a)(3)(A) with respect to such property for the taxable year" in subpar. (B)(ii), and adding subpar. (B)(iii).Subsec. (g)(4). Pub. L. 98-369, §102(e)(8), added par. (4).Subsec. (h). Pub. L. 98-369, §56(a), added subsec. (h). 1983-Subsec. (g)(2)(A)(ii). Pub. L. 97-448, §105(b)(1), substituted "all other amounts (including charges for temporary use of the personal property in a short sale, or to insure, store, or transport the personal property) paid or incurred to carry the personal property, over" for "amounts paid or incurred to insure, store, or transport the personal property, over".Subsec. (g)(2)(B)(ii). Pub. L. 97-448, §306(a)(9)(A), substituted "section 1232(a)(3)(A)" for "section 1232(a)(4)(A)".1982-Subsec. (c). Pub. L. 97-248, §204(c)(1), inserted provision that this subsection not apply with respect to any costs to which any deduction is allowed under section 58(i) or 291.1981-Subsec. (a)(1)(H). Pub. L. 97-34, §202(d)(1), added subpar. (H).Subsec. (e). Pub. L. 97-34, §201(c), struck out subsec. (e) which related to the allowance of repair expenses or specified repair, rehabilitation, or improvement expenditures.Subsec. (g). Pub. L. 97-34, §502, added subsec. (g).1980-Subsec. (a)(1)(G). Pub. L. 96-223 added subpar. (G).1978-Subsec. (c). Pub. L. 95-618 inserted "and geothermal wells" after "gas wells" in heading and in text inserted provision that such regulations also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(3)) to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells.1976-Subsec. (a)(1)(F). Pub. L. 94-455, §2122(b)(2), added subpar. (F).Subsec. (a)(3). Pub. L. 94-455, §1904(b)(10)(A)(i)(I), struck out par. (3) which provided that no deduction be allowed for amounts paid as tax under section 4911 (relating to imposition of interest equalization tax) except as provided in subsec. (d).Subsec. (d). Pub. L. 94-455, §§1904(b)(10)(A)(i)(I), (II), 1906(b)(13)(A), redesignated subsec. (e) as (d) and struck out "or his delegate" after "Secretary" and substituted "subsection (e)" for "subsection (f)". Former subsec. (d) was struck out.Subsec. (e). Pub. L. 94-455, §§1904(b)(10)(A)(i)(I), 1906(b)(13)(A), redesignated subsec. (f) as (e) and struck out "or his delegate" after "Secretary". Former subsec. (e) redesignated (d).Subsec. (f). Pub. L. 94-455, §§1701(a), 1904(b)(10)(A)(i)(I), added subsec. (f). Former subsec. (f) redesignated (e).1971-Subsec. (e). Pub. L. 92-178, §109(c), substituted "shall, at the election of the taxpayer, be treated" for "shall be treated" and inserted provisions respecting making of election under this subsection for any taxable year at such time and in such manner as Secretary or his delegate prescribed by regulation and prohibiting making of election for any taxable year to which an election under subsec. (f) applies to railroad rolling stock (other than locomotives). Subsec. (f). Pub. L. 92-178, §109(b), added subsec. (f).1969-Subsec. (e). Pub. L. 91-172 added subsec. (e).1965-Subsec. (a)(3). Pub. L. 89-243, §4(p)(1), inserted "Except as provided in subsection (d)", and struck out "except to the extent that any amount attributable to the amount paid as tax is included in gross income for the taxable year" after parenthetical provision.Subsec. (d). Pub. L. 89-243, §4(p)(2), added subsec. (d).1964-Subsec. (a)(3). Pub. L. 88-563 added par. (3). 1962-Subsec. (a)(1)(E). Pub. L. 87-834 added subpar. (E).1960-Subsec. (a)(1)(D). Pub. L. 86-779 added subpar. (D).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2014 AMENDMENT Amendment by section 221(a)(41)(G) of Pub. L. 113-295 not applicable to preferred stock issued before Oct. 1, 1942 (determined in the same manner as under section 247 of this title as in effect before its repeal by Pub. L. 113-295), see section 221(a)(41)(K) of Pub. L. 113-295, set out as a note under section 172 of this title.Except as otherwise provided in section 221(a) of Pub. L. 113-295, 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 2006 AMENDMENT Amendment by Pub. L. 109-432 applicable to costs paid or incurred after Dec. 20, 2006, see section 404(c) of Pub. L. 109-432, set out as an Effective Date note under section 179E of this title.
EFFECTIVE DATE OF 2005 AMENDMENT Amendment by section 1323(b)(2) of Pub. L. 109-58 applicable to properties placed in service after Aug. 8, 2005, see section 1323(c) of Pub. L. 109-58, set out as an Effective Date note under section 179C of this title.Amendment by section 1331(b)(4) of Pub. L. 109-58 applicable to property placed in service after Dec. 31, 2005, see section 1331(d) of Pub. L. 109-58, set out as an Effective Date note under section 179D of this title.
EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108-357 applicable to expenses paid or incurred after Dec. 31, 2002, in taxable years ending after such date, see section 338(c) of Pub. L. 108-357, set out as an Effective Date note under section 179B of this title.
EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105-34, §1604(a)(4), Aug. 5, 1997, 111 Stat. 1097, provided that: "The amendments made by this subsection [amending this section and sections 312 and 1245 of this title] shall take effect as if included in the amendments made by section 1913 of the Energy Policy Act of 1992 [Pub. L. 102-486]."
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 1986 AMENDMENT Amendment by section 402(b)(1) of Pub. L. 99-514 applicable to amounts paid or incurred after Dec. 31, 1985, in taxable years ending after such date, see section 402(c) of Pub. L. 99-514 set out as an Effective Date of Repeal note under former section 182 of this title.Pub. L. 99-514, title IV, §411(c), Oct. 22, 1986, 100 Stat. 2227, provided that: "(1) IN GENERAL.-The amendments made by this section [amending this section and sections 243, 291, 381, 616, and 617 of this title] shall apply to costs paid or incurred after December 31, 1986, in taxable years ending after such date."(2) TRANSITION RULE.-The amendments made by this section shall not apply with respect to intangible drilling and development costs incurred by United States companies pursuant to a minority interest in a license for Netherlands or United Kingdom North Sea development if such interest was acquired on or before December 31, 1985." Amendment by section 701(e)(4)(D) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99-514, set out as an Effective Date note under section 55 of this title.Amendment by section 1808(b) of Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 56(a) of Pub. L. 98-369 applicable to short sales after July 18, 1984, in taxable years ending after that date, see section 56(d) of Pub. L. 98-369, set out as a note under section 163 of this title. Amendment by section 102(e)(7), (8) of Pub. L. 98-369 applicable to positions established after July 18, 1984, in taxable years ending after that date, except as otherwise provided, see section 102(f), (g) of Pub. L. 98-369, set out as a note under section 1256 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT Pub. L. 97-448, title I, §105(b)(2), Jan. 12, 1983, 96 Stat. 2385, provided that: "The amendment made by paragraph (1) [amending this section] shall apply to property acquired, and positions established, by the taxpayer after September 22, 1982, in taxable years ending after such date."Amendment by section 306 of Pub. L. 97-448 effective as if included in the provisions of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248, to which such amendment relates, see section 311(d) of Pub. L. 97-448, set out as a note under section 31 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97-248 applicable to taxable years beginning after December 31, 1982, see section 204(d)(1) of Pub. L. 97-248, set out as an Effective Date note under section 291 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT Amendment by sections 201(c) and 202(d)(1) of Pub. L. 97-34 applicable to property placed in service after Dec. 31, 1980, in taxable years ending after that date, see section 209(a) of Pub. L. 97-34, set out as an Effective Date note under section 168 of this title.Amendment by section 502 of Pub. L. 97-34 applicable to property acquired and positions established by the taxpayer after June 23, 1981, in taxable years ending after such date, and applicable when so elected with respect to property held on June 23, 1981, see section 508 of Pub. L. 97-34, set out as an Effective Date note under section 1092 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96-223 applicable to taxable years beginning after Dec. 31, 1979, see section 251(b) of Pub. L. 96-223, set out as an Effective Date note under section 193 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95-618, title IV, §402(e), Nov. 9, 1978, 92 Stat. 3203, as amended by Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:"(1) IN GENERAL.-The amendments made by this section [amending this section and sections 57, 465, 751, and 1254 of this title] shall apply with respect to wells commenced on or after October 1, 1978, in taxable years ending on or after such date."(2) ELECTION.-The taxpayer may elect to capitalize or deduct any costs to which section 263(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] applies by reason of the amendments made by this section [amending this section and sections 57, 465, 751, and 1254 of this title]. Any such election shall be made before the expiration of the time for filing claim for credit or refund of any overpayment of tax imposed by chapter 1 of such Code [section 1 et seq. of this title] with respect to the taxpayer's first taxable year to which the amendments made by this section apply and for which he pays or incurs costs to which such section 263(c) applies by reason of the amendments made by this section. Any election under this paragraph may be changed or revoked at any time before the expiration of the time referred to in the preceding sentence, but after the expiration of such time such election may not be changed or revoked."
EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94-455, title XIX, §1904(b)(10)(A)(vii), Oct. 4, 1976, 90 Stat. 1817, provided that: "The amendments made by this subparagraph [amending this section and sections 6011, 6611, and 6651 of this title and repealing sections 6076 and 6680 of this title] shall apply with respect to acquisitions of stock or debt obligations made after June 30, 1974, except that the repeal of paragraph (2) of section 6011(d) under clause (ii) shall apply with respect to loans and commitments made after such date."Amendment by section 2122(b)(2) of Pub. L. 94-455, as amended by Pub. L. 96-167, §9(c), Dec. 29, 1979, 93 Stat. 1278, applicable to taxable years beginning after Dec. 31, 1976, see section 2122(c) of Pub. L. 94-455, as amended, set out as an Effective Date note under section 190 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT Pub. L. 92-178, title I, §109(d)(2), (3), Dec. 10, 1971, 85 Stat. 509, provided that:"(2) The amendment made by subsection (b) [amending this section] shall apply to taxable years ending after December 31, 1970."(3) The amendments made by subsection (c) [amending this section] shall apply to taxable years beginning after December 31, 1969."
EFFECTIVE DATE OF 1969 AMENDMENT Pub. L. 91-172, title VII, §706(b), Dec. 30, 1969, 83 Stat. 674, provided that: "The amendment made by subsection (a) [amending this section] shall apply with respect to taxable years beginning after December 31, 1969."
EFFECTIVE DATE OF 1965 AMENDMENT Pub. L. 89-243, §4(p)(3), Oct. 9, 1965, 79 Stat. 965, provided that: "The amendments made by this subsection [amending this section] shall apply to taxable years ending after September 2, 1964."Pub. L. 89-243, §4(q), Oct. 9, 1965, 79 Stat. 965, provided in part that: "Except as otherwise specifically provided in this section and in the amendments made by this section [amending this section and sections 4912, 4914, 4916, 4917, 4919, 4920, and 4931 of this title], such amendments shall apply with respect to acquisitions of stock and debt obligations made after February 10, 1965."
EFFECTIVE DATE OF 1962 AMENDMENT Pub. L. 87-834, §21(d), Oct. 16, 1962, 76 Stat. 1064, provided that: "The amendments made by this section [enacting section 182 of this title and amending this section] shall apply with respect to taxable years beginning after December 31, 1962."
EFFECTIVE DATE OF 1960 AMENDMENT Amendment by Pub. L. 86-779 applicable to taxable years beginning after Dec. 31, 1959, see section 6(d) of Pub. L. 86-779, set out as an Effective Date note under section 180 of this title.
SHORT TITLE OF 1965 AMENDMENTPub. L. 89-243, §1(a), Oct. 9, 1965, 79 Stat. 954, provided that: "This Act [amending this section and sections 4912, 4914, 4916, 4917, 4919, 4920, and 4931 of this title, and enacting provisions set out as notes under sections 6011 and 6076 of this title] may be cited as the 'Interest Equalization Tax Extension Act of 1965'."
SHORT TITLE OF 1964 AMENDMENTPub. L. 88-563, §1(a), Sept. 2, 1964, 78 Stat. 809, provided that: "This Act [enacting sections 4911 to 4920, 4931, 6076, 6680, 6681, and 7241 of this title, amending this section and sections 1232, 6011, and 6103 of this title, and enacting provisions set out as notes under section 6011 of this title] may be cited as the 'Interest Equalization Tax Act'."
SAVINGS PROVISIONFor provisions that nothing in amendment by Pub. L. 101-508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508, set out as a note under section 45K of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION TO TREATY OBLIGATIONS OF UNITED STATESFor applicability of amendment by section 701(e)(4)(D) of Pub. L. 99-514 notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100-647 be treated as if it had been included in the provision of Pub. L. 99-514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under section 861 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101-1147 and 1171-1177] or title XVIII [§§1800-1899A] of Pub. L. 99-514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99-514, as amended, set out as a note under section 401 of this title.
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- stock
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- taxpayer
- The term "taxpayer" means any person subject to any internal revenue tax.
- transaction
- The term "transaction" includes a series of transactions.