26 U.S.C. § 163
There shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness.
If personal property or educational services are purchased under a contract-
then the payments made during the taxable year under the contract shall be treated for purposes of this section as if they included interest equal to 6 percent of the average unpaid balance under the contract during the taxable year. For purposes of the preceding sentence, the average unpaid balance is the sum of the unpaid balance outstanding on the first day of each month beginning during the taxable year, divided by 12. For purposes of this paragraph, the term "educational services" means any service (including lodging) which is purchased from an educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization.
In the case of any contract to which paragraph (1) applies, the amount treated as interest for any taxable year shall not exceed the aggregate carrying charges which are properly attributable to such taxable year.
For purposes of this subtitle, any annual or periodic rental under a redeemable ground rent (excluding amounts in redemption thereof) shall be treated as interest on an indebtedness secured by a mortgage.
In the case of a taxpayer other than a corporation, the amount allowed as a deduction under this chapter for investment interest for any taxable year shall not exceed the net investment income of the taxpayer for the taxable year.
The amount not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as investment interest paid or accrued by the taxpayer in the succeeding taxable year.
For purposes of this subsection-
The term "investment interest" means any interest allowable as a deduction under this chapter (determined without regard to paragraph (1)) which is paid or accrued on indebtedness properly allocable to property held for investment.
The term "investment interest" shall not include-
For purposes of this paragraph, the term "interest" includes any amount allowable as a deduction in connection with personal property used in a short sale.
For purposes of this subsection-
The term "net investment income" means the excess of-
The term "investment income" means the sum of-
Such term shall include qualified dividend income (as defined in section 1(h)(11)(B)) only to the extent the taxpayer elects to treat such income as investment income for purposes of this subsection.
The term "investment expenses" means the deductions allowed under this chapter (other than for interest) which are directly connected with the production of investment income.
Investment income and investment expenses shall not include any income or expenses taken into account under section 469 in computing income or loss from a passive activity.
For purposes of this subsection-
The term "property held for investment" shall include-
In the case of property described in subparagraph (A)(i), expenses shall be allocated to such property in the same manner as under section 469.
For purposes of this paragraph, the terms "activity", "passive activity", and "materially participate" have the meanings given such terms by section 469.
The portion of the original issue discount with respect to any debt instrument which is allowable as a deduction to the issuer for any taxable year shall be equal to the aggregate daily portions of the original issue discount for days during such taxable year.
For purposes of this subsection-
The term "debt instrument" has the meaning given such term by section 1275(a)(1).
The daily portion of the original issue discount for any day shall be determined under section 1272(a) (without regard to paragraph (7) thereof and without regard to section 1273(a)(3)).
In the case of an obligor of a short-term obligation (as defined in section 1283(a)(1)(A)) who uses the cash receipts and disbursements method of accounting, the original issue discount (and any other interest payable) on such obligation shall be deductible only when paid.
If any debt instrument having original issue discount is held by a related foreign person, any portion of such original issue discount shall not be allowable as a deduction to the issuer until paid. The preceding sentence shall not apply to the extent that the original issue discount is effectively connected with the conduct by such foreign related person of a trade or business within the United States unless such original issue discount is exempt from taxation (or is subject to a reduced rate of tax) pursuant to a treaty obligation of the United States.
In the case of any debt instrument having original issue discount which is held by a related foreign person which is a controlled foreign corporation (as defined in section 957) or a passive foreign investment company (as defined in section 1297), a deduction shall be allowable to the issuer with respect to such original issue discount for any taxable year before the taxable year in which paid only to the extent such original issue discount is includible (determined without regard to properly allocable deductions and qualified deficits under section 952(c)(1)(B)) during such prior taxable year in the gross income of a United States person who owns (within the meaning of section 958(a)) stock in such corporation.
The Secretary may by regulation exempt transactions from the application of clause (i), including any transaction which is entered into by a payor in the ordinary course of a trade or business in which the payor is predominantly engaged.
For purposes of subparagraph (A), the term "related foreign person" means any person-
This subsection shall not apply to any debt instrument described in section 1272(a)(2)(D) (relating to loans between natural persons).
In the case of an applicable high yield discount obligation issued by a corporation-
For purposes of this paragraph, rules similar to the rules of subsection (i)(3)(B) shall apply in determining the amount of the original issue discount and when the original issue discount is paid.
Solely for purposes of sections 243, 245, 246, and 246A, the dividend equivalent portion of any amount includible in gross income of a corporation under section 1272(a) in respect of an applicable high yield discount obligation shall be treated as a dividend received by such corporation from the corporation issuing such obligation.
For purposes of clause (i), the dividend equivalent portion of any amount includible in gross income under section 1272(a) in respect of an applicable high yield discount obligation is the portion of the amount so includible-
For purposes of this paragraph, the disqualified portion of the original issue discount on any applicable high yield discount obligation is the lesser of-
For purposes of clause (i), the term "disqualified yield" means the excess of the yield to maturity on the obligation over the sum referred to in subsection (i)(1)(B) plus 1 percentage point, and the term "total return" is the amount which would have been the original issue discount on the obligation if interest described in the parenthetical in section 1273(a)(2) were included in the stated redemption price at maturity.
This paragraph shall not apply to any obligation issued by any corporation for any period for which such corporation is an S corporation.
This paragraph shall not apply for purposes of determining earnings and profits; except that, for purposes of determining the dividend equivalent portion of any amount includible in gross income under section 1272(a) in respect of an applicable high yield discount obligation, no reduction shall be made for any amount attributable to the disqualified portion of any original issue discount on such obligation.
This paragraph shall not apply to any applicable high yield discount obligation issued during the period beginning on September 1, 2008, and ending on December 31, 2009, in exchange (including an exchange resulting from a modification of the debt instrument) for an obligation which is not an applicable high yield discount obligation and the issuer (or obligor) of which is the same as the issuer (or obligor) of such applicable high yield discount obligation. The preceding sentence shall not apply to any obligation the interest on which is interest described in section 871(h)(4) (without regard to subparagraph (D) thereof) or to any obligation issued to a related person (within the meaning of section 108(e)(4)).
Any obligation to which clause (i) applies shall not be treated as an applicable high yield discount obligation for purposes of applying this subparagraph to any other obligation issued in exchange for such obligation.
The Secretary may apply this paragraph with respect to debt instruments issued in periods following the period described in clause (i) if the Secretary determines that such application is appropriate in light of distressed conditions in the debt capital markets.
For definition of applicable high yield discount obligation, see subsection (i).
For provision relating to deduction of original issue discount on tax-exempt obligation, see section 1288.
For special rules in the case of the borrower under certain loans for personal use, see section 1275(b).
Nothing in subsection (a) or in any other provision of law shall be construed to provide a deduction for interest on any registration-required obligation unless such obligation is in registered form.
For purposes of this section-
The term "registration-required obligation" means any obligation (including any obligation issued by a governmental entity) other than an obligation which-
Clauses (ii) and (iii) of subparagraph (A) shall not apply to any obligation if-
For purposes of this subsection, rules similar to the rules of section 149(a)(3) shall apply, except that a dematerialized book entry system or other book entry system specified by the Secretary shall be treated as a book entry system described in such section.
The amount of the deduction under this section for interest paid or accrued during any taxable year on indebtedness with respect to which a mortgage credit certificate has been issued under section 25 shall be reduced by the amount of the credit allowable with respect to such interest under section 25 (determined without regard to section 26).
In the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year.
For purposes of this subsection, the term "personal interest" means any interest allowable as a deduction under this chapter other than-
For purposes of this subsection-
The term "qualified residence interest" means any interest which is paid or accrued during the taxable year on-
For purposes of the preceding sentence, the determination of whether any property is a qualified residence of the taxpayer shall be made as of the time the interest is accrued.
The term "acquisition indebtedness" means any indebtedness which-
Such term also includes any indebtedness secured by such residence resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence (or this sentence); but only to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness.
The aggregate amount treated as acquisition indebtedness for any period shall not exceed $1,000,000 ($500,000 in the case of a married individual filing a separate return).
The term "home equity indebtedness" means any indebtedness (other than acquisition indebtedness) secured by a qualified residence to the extent the aggregate amount of such indebtedness does not exceed-
The aggregate amount treated as home equity indebtedness for any period shall not exceed $100,000 ($50,000 in the case of a separate return by a married individual).
In the case of any pre-October 13, 1987, indebtedness-
The limitation of subparagraph (B)(ii) shall be reduced (but not below zero) by the aggregate amount of outstanding pre-October 13, 1987, indebtedness.
The term "pre-October 13, 1987, indebtedness" means-
Subclause (II) of clause (iii) shall not apply to any indebtedness after-
Premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer shall be treated for purposes of this section as interest which is qualified residence interest.
The amount otherwise treated as interest under clause (i) shall be reduced (but not below zero) by 10 percent of such amount for each $1,000 ($500 in the case of a married individual filing a separate return) (or fraction thereof) that the taxpayer's adjusted gross income for the taxable year exceeds $100,000 ($50,000 in the case of a married individual filing a separate return).
Clause (i) shall not apply with respect to any mortgage insurance contracts issued before January 1, 2007.
Clause (i) shall not apply to amounts-
In the case of taxable years beginning after December 31, 2017, and before January 1, 2026-
Subparagraph (A)(ii) shall not apply.
Subparagraph (B)(ii) shall be applied by substituting "$750,000 ($375,000" for "$1,000,000 ($500,000".
Subclause (II) shall not apply to any indebtedness incurred on or before December 15, 2017, and, in applying such subclause to any indebtedness incurred after such date, the limitation under such subclause shall be reduced (but not below zero) by the amount of any indebtedness incurred on or before December 15, 2017, which is treated as acquisition indebtedness for purposes of this subsection for the taxable year.
In the case of a taxpayer who enters into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, subclause (III) shall be applied by substituting "April 1, 2018" for "December 15, 2017".
In the case of taxable years beginning after December 31, 2025, the limitation under subparagraph (B)(ii) shall be applied to the aggregate amount of indebtedness of the taxpayer described in subparagraph (B)(i) without regard to the taxable year in which the indebtedness was incurred.
In the case of any indebtedness which is incurred to refinance indebtedness, such refinanced indebtedness shall be treated for purposes of clause (i)(III) as incurred on the date that the original indebtedness was incurred to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness.
Subclause (I) shall not apply to any indebtedness after the expiration of the term of the original indebtedness or, if the principal of such original indebtedness is not amortized over its term, the expiration of the term of the 1st refinancing of such indebtedness (or if earlier, the date which is 30 years after the date of such 1st refinancing).
Section 108(h)(2) shall be applied without regard to this subparagraph.
For purposes of this subsection-
The term "qualified residence" means-
If a married couple does not file a joint return for the taxable year-
For purposes of clause (i)(II), notwithstanding section 280A(d)(1), if the taxpayer does not rent a dwelling unit at any time during a taxable year, such unit may be treated as a residence for such taxable year.
Any indebtedness secured by stock held by the taxpayer as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) shall be treated as secured by the house or apartment which the taxpayer is entitled to occupy as such a tenant-stockholder. If stock described in the preceding sentence may not be used to secure indebtedness, indebtedness shall be treated as so secured if the taxpayer establishes to the satisfaction of the Secretary that such indebtedness was incurred to acquire such stock.
Indebtedness shall not fail to be treated as secured by any property solely because, under any applicable State or local homestead or other debtor protection law in effect on August 16, 1986, the security interest is ineffective or the enforceability of the security interest is restricted.
For purposes of determining whether any interest paid or accrued by an estate or trust is qualified residence interest, any residence held by such estate or trust shall be treated as a qualified residence of such estate or trust if such estate or trust establishes that such residence is a qualified residence of a beneficiary who has a present interest in such estate or trust or an interest in the residuary of such estate or trust.
The term "qualified mortgage insurance" means-
Any amount paid by the taxpayer for qualified mortgage insurance that is properly allocable to any mortgage the payment of which extends to periods that are after the close of the taxable year in which such amount is paid shall be chargeable to capital account and shall be treated as paid in such periods to which so allocated. No deduction shall be allowed for the unamortized balance of such account if such mortgage is satisfied before the end of its term. The preceding sentences shall not apply to amounts paid for qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service.
For purposes of this section, the term "applicable high yield discount obligation" means any debt instrument if-
For purposes of subparagraph (B)(i), the Secretary may by regulation (i) permit a rate to be used with respect to any debt instrument which is higher than the applicable Federal rate if the taxpayer establishes to the satisfaction of the Secretary that such higher rate is based on the same principles as the applicable Federal rate and is appropriate for the term of the instrument, or (ii) permit, on a temporary basis, a rate to be used with respect to any debt instrument which is higher than the applicable Federal rate if the Secretary determines that such rate is appropriate in light of distressed conditions in the debt capital markets.
For purposes of paragraph (1)(C), a debt instrument shall be treated as having significant original issue discount if-
For purposes of determining whether a debt instrument is an applicable high yield discount obligation-
Except for purposes of paragraph (1)(B), any reference to an obligation in subparagraph (B) of this paragraph shall be treated as including a reference to stock.
For purposes of this subsection, the term "debt instrument" means any instrument which is a debt instrument as defined in section 1275(a).
The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this subsection and subsection (e)(5), including-
The amount allowed as a deduction under this chapter for any taxable year for business interest shall not exceed the sum of-
The amount determined under subparagraph (B) shall not be less than zero.
The amount of any business interest not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as business interest paid or accrued in the succeeding taxable year.
In the case of any taxpayer (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) which meets the gross receipts test of section 448(c) for any taxable year, paragraph (1) shall not apply to such taxpayer for such taxable year. In the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if such taxpayer were a corporation or partnership.
In the case of any partnership-
For purposes of clause (ii)(II), a partner's distributive share of partnership excess taxable income shall be determined in the same manner as the partner's distributive share of nonseparately stated taxable income or loss of the partnership.
The amount of any business interest not allowed as a deduction to a partnership for any taxable year by reason of paragraph (1) for any taxable year-
If a partner is allocated any excess business interest from a partnership under clause (i) for any taxable year-
For purposes of applying this paragraph, excess taxable income allocated to a partner from a partnership for any taxable year shall not be taken into account under paragraph (1)(A) with respect to any business interest other than excess business interest from the partnership until all such excess business interest for such taxable year and all preceding taxable years has been treated as paid or accrued under clause (ii).
The adjusted basis of a partner in a partnership interest shall be reduced (but not below zero) by the amount of excess business interest allocated to the partner under clause (i)(II).
If a partner disposes of a partnership interest, the adjusted basis of the partner in the partnership interest shall be increased immediately before the disposition by the amount of the excess (if any) of the amount of the basis reduction under subclause (I) over the portion of any excess business interest allocated to the partner under clause (i)(II) which has previously been treated under clause (ii) as business interest paid or accrued by the partner. The preceding sentence shall also apply to transfers of the partnership interest (including by reason of death) in a transaction in which gain is not recognized in whole or in part. No deduction shall be allowed to the transferor or transferee under this chapter for any excess business interest resulting in a basis increase under this subclause.
The term "excess taxable income" means, with respect to any partnership, the amount which bears the same ratio to the partnership's adjusted taxable income as-
Rules similar to the rules of subparagraphs (A) and (C) shall apply with respect to any S corporation and its shareholders.
For purposes of this subsection, the term "business interest" means any interest paid or accrued on indebtedness properly allocable to a trade or business. Such term shall not include investment interest (within the meaning of subsection (d)).
For purposes of this subsection, the term "business interest income" means the amount of interest includible in the gross income of the taxpayer for the taxable year which is properly allocable to a trade or business. Such term shall not include investment income (within the meaning of subsection (d)).
For purposes of this subsection-
The term "trade or business" shall not include-
if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof, by any agency or instrumentality of the United States, by a public service or public utility commission or other similar body of any State or political subdivision thereof, or by the governing or ratemaking body of an electric cooperative.
For purposes of this paragraph, the term "electing real property trade or business" means any trade or business which is described in section 469(c)(7)(C) and which makes an election under this subparagraph. Any such election shall be made at such time and in such manner as the Secretary shall prescribe, and, once made, shall be irrevocable.
For purposes of this paragraph, the term "electing farming business" means-
Any such election shall be made at such time and in such manner as the Secretary shall prescribe, and, once made, shall be irrevocable.
For purposes of this subsection, the term "adjusted taxable income" means the taxable income of the taxpayer-
For purposes of this subsection-
The term "floor plan financing interest" means interest paid or accrued on floor plan financing indebtedness.
The term "floor plan financing indebtedness" means indebtedness-
The term "motor vehicle" means a motor vehicle that is any of the following:
Except as provided in clause (ii) or (iii), in the case of any taxable year beginning in 2019 or 2020, paragraph (1)(B) shall be applied by substituting "50 percent" for "30 percent".
In the case of a partnership-
A taxpayer may elect, at such time and in such manner as the Secretary may prescribe, not to have clause (i) apply to any taxable year. Such an election, once made, may be revoked only with the consent of the Secretary. In the case of a partnership, any such election shall be made by the partnership and may be made only for taxable years beginning in 2020.
Subject to clause (ii), in the case of any taxable year beginning in 2020, the taxpayer may elect to apply this subsection by substituting the adjusted taxable income of the taxpayer for the last taxable year beginning in 2019 for the adjusted taxable income for such taxable year. In the case of a partnership, any such election shall be made by the partnership.
If an election is made under clause (i) for a taxable year which is a short taxable year, the adjusted taxable income for the taxpayer's last taxable year beginning in 2019 which is substituted under clause (i) shall be equal to the amount which bears the same ratio to such adjusted taxable income determined without regard to this clause as the number of months in the short taxable year bears to 12 2
No deduction shall be allowed under this section for any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166.
No deduction shall be allowed under this chapter for any interest paid or accrued on a disqualified debt instrument.
For purposes of this subsection, the term "disqualified debt instrument" means any indebtedness of a corporation which is payable in equity of the issuer or a related party or equity held by the issuer (or any related party) in any other person.
For purposes of paragraph (2), indebtedness shall be treated as payable in equity of the issuer or any other person only if-
For purposes of this paragraph, principal or interest shall be treated as required to be so paid, converted, or determined if it may be required at the option of the holder or a related party and there is a substantial certainty the option will be exercised.
If the disqualified debt instrument of a corporation is payable in equity held by the issuer (or any related party) in any other person (other than a related party), the basis of such equity shall be increased by the amount not allowed as a deduction by reason of paragraph (1) with respect to the instrument.
For purposes of this subsection, the term "disqualified debt instrument" does not include indebtedness issued by a dealer in securities (or a related party) which is payable in, or by reference to, equity (other than equity of the issuer or a related party) held by such dealer in its capacity as a dealer in securities. For purposes of this paragraph, the term "dealer in securities" has the meaning given such term by section 475.
For purposes of this subsection, a person is a related party with respect to another person if such person bears a relationship to such other person described in section 267(b) or 707(b).
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations preventing avoidance of this subsection through the use of an issuer other than a corporation.
No deduction shall be allowed under this chapter for any interest paid or accrued under section 6601 on any underpayment of tax which is attributable to the portion of any reportable transaction understatement (as defined in section 6662A(b)) with respect to which the requirement of section 6664(d)(2)(A) 1 is not met.
1 See References in Text note below.
2 So in original. Probably should be followed by a period.
26 U.S.C. § 163
EDITORIAL NOTES
REFERENCES IN TEXTThe date of the enactment of this subparagraph, referred to in subsec. (h)(4)(E)(ii), is the date of enactment of Pub. L. 109-432, which was approved Dec. 20, 2006.Section 199A(g)(2), referred to in subsec. (j)(7)(C)(ii), probably should be a reference to section 199A(g)(4), which defines "specified agricultural or horticultural cooperative" after the general amendment of section 199A(g) by Pub. L. 115-141, div. T, §101(a)(1), Mar. 23, 2018, 132 Stat. 1151.Section 6664(d)(2)(A), referred to in subsec. (m), was redesignated as section 6664(d)(3)(A) by Pub. L. 111-152, §1409(c)(2)(A), Mar. 30, 2010, 124 Stat. 1069.
AMENDMENTS2020-Subsec. (h)(3)(E)(iv)(I). Pub. L. 116-260 substituted "December 31, 2021" for "December 31, 2020". Subsec. (j)(10), (11). Pub. L. 116-136 added par. (10) and redesignated former par. (10) as (11). 2019-Subsec. (h)(3)(E)(iv)(I). Pub. L. 116-94 substituted "December 31, 2020" for "December 31, 2017". 2018-Subsec. (d)(4)(E). Pub. L. 115-141, §401(b) (12), struck out subpar. (E). Text read as follows: "Investment income of the taxpayer for any taxable year shall be reduced by the amount of the passive activity loss to which section 469(a) does not apply for such taxable year by reason of section 469(m). The preceding sentence shall not apply to any portion of such passive activity loss which is attributable to a rental real estate activity with respect to which the taxpayer actively participates (within the meaning of section 469(i)(6)) during such taxable year."Subsec. (e)(1). Pub. L. 115-141, §401(c)(1)(C), substituted "The portion of the original issue discount with respect to any debt instrument which is" for "In the case of any debt instrument issued after July 1, 1982, the portion of the original issue discount with respect to such debt instrument which is".Subsec. (e)(4). Pub. L. 115-141, §401(c)(3)(B), amended par. (4) generally. Prior to amendment, text read as follows: "This subsection shall not apply to any debt instrument described in-"(A) subparagraph (D) of section 1272(a)(2) (relating to obligations issued by natural persons before March 2, 1984), and "(B) subparagraph (E) of section 1272(a)(2) (relating to loans between natural persons)."Subsec. (e)(5)(C)(ii). Pub. L. 115-141, §401(a) (48), inserted "in" before "subsection (i)(1)(B)". Subsec. (h)(3)(E)(iv)(I). Pub. L. 115-123 substituted "December 31, 2017" for "December 31, 2016".2017-Subsec. (h)(3)(F). Pub. L. 115-97, §11043(a), added subpar. (F). Subsec. (j). Pub. L. 115-97, §13301(a), amended subsec. (j) generally. Prior to amendment, subsec. (j) related to a limitation on deduction for interest on certain indebtedness of a corporation. 2015-Subsec. (h)(3)(E)(iv)(I). Pub. L. 114-113 substituted "December 31, 2016" for "December 31, 2014". 2014-Subsec. (d)(6). Pub. L. 113-295, §221(a) (25)(A)(i), struck out par. (6) which related to phase-in of disallowance.Subsec. (h)(3)(E)(iv)(I). Pub. L. 113-295, §104(a), substituted "December 31, 2014" for "December 31, 2013".Subsec. (h)(4)(F). Pub. L. 113-295, §220(h), substituted "Department of Veterans Affairs or the Rural Housing Service" for "Veterans Administration or the Rural Housing Administration". Subsec. (h)(5). Pub. L. 113-295, §221(a) (25)(A)(ii), struck out par. (5). Text read as follows: "In the case of any taxable year beginning in calendar years 1987 through 1990, the amount of interest with respect to which a deduction is disallowed under this subsection shall be equal to the applicable percentage (within the meaning of subsection (d)(6)(B)) of the amount which (but for this paragraph) would have been so disallowed." 2013-Subsec. (h)(3)(E)(iv)(I). Pub. L. 112-240, §204(a), substituted "December 31, 2013" for "December 31, 2011".Subsec. (h)(4)(E)(i). Pub. L. 112-240, §204(b), substituted "Department of Veterans Affairs" for "Veterans Administration" and "Rural Housing Service" for "Rural Housing Administration". 2010-Subsec. (f)(2)(A)(ii) to (iv). Pub. L. 111-147, §502(a)(2)(B), inserted "or" at end of cl. (ii), substituted period for ", or" in cl. (iii), and struck out cl. (iv), which read as follows: "is described in subparagraph (B)."Subsec. (f)(2)(B). Pub. L. 111-147, §502(a)(1), (2)(C)(i), redesignated subpar. (C) as (B), struck out ", and subparagraph (B)," after "subparagraph (A)" in introductory provisions, and struck out former subpar. (B) which related to certain obligations not included as registration-required obligations. Subsec. (f)(2)(B)(i). Pub. L. 111-147, §502(a)(2)(C) (ii), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: "in the case of-"(I) subparagraph (A), such obligation is of a type which the Secretary has determined by regulations to be used frequently in avoiding Federal taxes, or"(II) subparagraph (B), such obligation is of a type specified by the Secretary in regulations, and". Subsec. (f)(2)(C). Pub. L. 111-147, §502(a)(1), redesignated subpar. (C) as (B).Subsec. (f)(3). Pub. L. 111-147, §502(c), inserted before period at end ", except that a dematerialized book entry system or other book entry system specified by the Secretary shall be treated as a book entry system described in such section".Subsec. (h)(3)(E)(iv)(I). Pub. L. 111-312 substituted "December 31, 2011" for "December 31, 2010". 2009-Subsec. (e)(5)(F), (G). Pub. L. 111-5, §1232(a), added subpar. (F) and redesignated former subpar. (F) as (G).Subsec. (i)(1). Pub. L. 111-5, §1232(b), in concluding provisions, inserted "(i)" before "permit a rate" and ", or (ii) permit, on a temporary basis, a rate to be used with respect to any debt instrument which is higher than the applicable Federal rate if the Secretary determines that such rate is appropriate in light of distressed conditions in the debt capital markets" before period at end. 2007-Subsec. (h)(3)(E)(iv)(I). Pub. L. 110-142 substituted "December 31, 2010" for "December 31, 2007". 2006-Subsec. (h)(3)(E). Pub. L. 109-432, §419(a), added subpar. (E).Subsec. (h)(4)(E), (F). Pub. L. 109-432, §419(b), added subpars. (E) and (F).Subsec. (j)(8). Pub. L. 109-222, §501(a), added par. (8). Former par. (8) redesignated (9).Subsec. (j)(9). Pub. L. 109-222 redesignated par. (8) as (9) and added subpar. (D).2005-Subsec. (j)(6)(A)(i)(III), (IV). Pub. L. 109-135 added subcl. (III) and redesignated former subcl. (III) as (IV).2004-Subsec. (e)(3)(B), (C). Pub. L. 108-357, §841(a), added subpar. (B) and redesignated former subpar. (B) as (C).Subsec. (l)(2). Pub. L. 108-357, §845(a), inserted "or equity held by the issuer (or any related party) in any other person" after "or a related party". Subsec. (l)(3). Pub. L. 108-357, §845(d), substituted "or any other person" for "or a related party" in introductory provisions. Subsec. (l)(4) to (7). Pub. L. 108-357, §845(b), (c), added pars. (4) and (5) and redesignated former pars. (4) and (5) as (6) and (7), respectively.Subsecs. (m), (n). Pub. L. 108-357, §838(a), added subsec. (m) and redesignated former subsec. (m) as (n).2003-Subsec. (d)(4)(B). Pub. L. 108-27 inserted at end "Such term shall include qualified dividend income (as defined in section 1(h)(11)(B)) only to the extent the taxpayer elects to treat such income as investment income for purposes of this subsection." 1999-Subsec. (j)(3)(C). Pub. L. 106-170 added subpar. (C).1998-Subsec. (h)(2)(F). Pub. L. 105-277 added subpar. (F).1997-Subsec. (h)(2)(E). Pub. L. 105-34, §503(b)(2)(B), struck out "or 6166 or under section 6166A (as in effect before its repeal by the Economic Recovery Tax Act of 1981)" after "section 6163".Subsec. (h)(4)(A)(i)(I). Pub. L. 105-34, §312(d)(1), substituted "section 121" for "section 1034". Subsec. (j)(2)(B)(iii). Pub. L. 105-34, §1604(g)(1), substituted "clause (ii)" for "clause (i)" in introductory provisions. Subsec. (k). Pub. L. 105-34, §503(b)(2)(A), added subsec. (k). Former subsec. (k) redesignated (l).Subsec. (l). Pub. L. 105-34, §1005(a), added subsec. (l). Former subsec. (l) redesignated (m). Pub. L. 105-34, §503(b)(2)(A), redesignated subsec. (k) as (l).Subsec. (m). Pub. L. 105-34, §1005(a), redesignated subsec. (l) as (m).1996-Subsec. (j)(1)(B). Pub. L. 104-188, §1704(f)(2)(A), inserted before period at end "(and clause (ii) of paragraph (2)(A) shall not apply for purposes of applying this subsection to the amount so treated)".Subsec. (j)(6)(E)(ii). Pub. L. 104-188, §1703(n)(4), which directed that cl. (ii) be amended by substituting "which is" for "which is a", could not be executed, because "which is a" does not appear.Subsec. (j)(7), (8). Pub. L. 104-188, §1704(f)(2)(B), added par. (7) and redesignated former par. (7) as (8).1993-Subsec. (d)(4)(B). Pub. L. 103-66, §13206(d)(1), amended heading and text of subpar. (B) generally. Prior to amendment, text read as follows: "The term 'investment income' means the sum of-"(i) gross income (other than gain taken into account under clause (ii)) from property held for investment, and "(ii) any net gain attributable to the disposition of property held for investment."Subsec. (j). Pub. L. 103-66, §13228(c)(2), substituted "for interest on certain indebtedness" for "for certain interest paid by corporation to related person" in heading. Subsec. (j)(3). Pub. L. 103-66, §13228(a), amended heading and text of par. (3) generally. Prior to amendment, text read as follows: "For purposes of this subsection-"(A) IN GENERAL.-Except as provided in subparagraph (B), the term 'disqualified interest' means any interest paid or accrued by the taxpayer (directly or indirectly) to a related person if no tax is imposed by this subtitle with respect to such interest."(B) EXCEPTION FOR CERTAIN EXISTING INDEBTEDNESS.-The term 'disqualified interest' does not include any interest paid or accrued under indebtedness with a fixed term-"(i) which was issued on or before July 10, 1989, or"(ii) which was issued after such date pursuant to a written binding contract in effect on such date and all times thereafter before such indebtedness was issued."Subsec. (j)(5)(B). Pub. L. 103-66, §13228(c)(1), struck out "to a related person" after "by the taxpayer" in introductory provisions.Subsec. (j)(6)(D), (E). Pub. L. 103-66, §13228(b), added subpars. (D) and (E). 1990-Subsec. (e)(5)(A). Pub. L. 101-508, §11701(b)(1), amended last sentence generally. Prior to amendment, last sentence read as follows: "For purposes of clause (ii), rules similar to the rules of subsection (i)(3)(B) shall apply in determining the time when the original issue discount is paid."Subsec. (i)(3). Pub. L. 101-508, §11701(b)(2)(B), inserted sentence at end. Subsec. (i)(3)(B). Pub. L. 101-508, §11701(b)(2)(A), struck out "(or stock)" after "obligation" wherever appearing.Subsec. (j)(2)(A)(ii). Pub. L. 101-508, §11701(c)(2), substituted "or on any other day" for "and on such other days".Subsec. (j)(2)(C). Pub. L. 101-508, §11701(c)(1), substituted "reduced (but not below zero) by such" for "less such" in introductory provisions. 1989-Subsec. (e)(5), (6). Pub. L. 101-239, §7202(a), added par. (5) and redesignated former par. (5) as (6). Subsec. (i). Pub. L. 101-239, §7202(b), added subsec. (i). Former subsec. (i) redesignated (j).Subsec. (j). Pub. L. 101-239, §7210(a), added subsec. (j). Former subsec. (j) redesignated (k). Pub. L. 101-239, §7202(b), redesignated subsec. (i) as (j).Subsec. (k). Pub. L. 101-239, §7210(a), redesignated subsec. (j) as (k).1988-Subsec. (d)(3)(A). Pub. L. 100-647, §1005(c)(1), substituted "properly allocable to" for "incurred or continued to purchase or carry".Subsec. (d)(4)(B). Pub. L. 100-647, §1005(c)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "The term 'investment income' means the sum of-"(i) gross income (other than gain described in clause (ii)) from property held for investment, and "(ii) any net gain attributable to the disposition of property held for investment,but only to the extent such amounts are not derived from the conduct of a trade or business."Subsec. (d)(6)(A). Pub. L. 100-647, §1005(c)(3), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "The amount of interest disallowed under this subsection for any such taxable year shall be equal to the sum of-"(i) the applicable percentage of the amount which (without regard to this paragraph) is not allowed as a deduction under this subsection for the taxable year to the extent such amount does not exceed the ceiling amount,"(ii) the amount which (without regard to this paragraph) is not allowed as a deduction under this subsection in excess of the ceiling amount, plus"(iii) the amount of any carryforward to such taxable year under paragraph (2) with respect to which a deduction was disallowed under this subsection for a preceding taxable year.For purposes of this subparagraph, the amount under clause (i) or (ii) shall be computed without regard to the amount described in clause (iii)."Subsec. (e)(2)(B). Pub. L. 100-647, §1006(u)(1), substituted "paragraph (7)" for "paragraph (6)". Subsec. (h)(2)(A). Pub. L. 100-647, §1005(c)(4), substituted "properly allocable to" for "incurred or continued in connection with the conduct of".Subsec. (h)(2)(E). Pub. L. 100-647, §1005(c)(12), inserted "or under section 6166A (as in effect before its repeal by the Economic Recovery Tax Act of 1981)" before period at end.Subsec. (h)(3)(C). Pub. L. 100-647, §1005(c)(5), effective as if enacted immediately before enactment of Pub. L. 100-203 (see 1987 Amendment note below), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: "The amount under subparagraph (B)(ii)(I) at any time after August 16, 1986, shall not be less than the outstanding aggregate principal amount (as of such time) of indebtedness which was incurred on or before August 16, 1986, and which was secured by the qualified residence on August 16, 1986."Subsec. (h)(4). Pub. L. 100-647, §1005(c)(6)(A), effective as if enacted immediately before enactment of Pub. L. 100-203 (redesignating par. (5) as (4), see 1987 Amendment note below), amended heading by substituting "Other definitions and special rules-For purposes of this subsection-" for "Other definitions and special rules".Subsec. (h)(4)(A). Pub. L. 100-647, §1005(c)(6)(B)(i), (7), effective as if enacted immediately before enactment of Pub. L. 100-203 (redesignating par. (5) as (4), see 1987 Amendment note below), amended subpar. (A) by striking out "For purposes of this subsection-" after "Qualified residence" in introductory provisions, "used or" after "Residence not" in cl. (iii) heading, and "or use" after "does not rent" in cl. (iii) text.Subsec. (h)(4)(B). Pub. L. 100-647, §1005(c)(6)(B)(ii), effective as if enacted immediately before enactment of Pub. L. 100-203 (redesignating par. (5) as (4), see 1987 Amendment note below), amended subpar. (B) by substituting "Any" for "For purposes of this paragraph, any".Subsec. (h)(4)(C), (D). Pub. L. 100-647, §1005(c)(8), effective as if enacted immediately before enactment of Pub. L. 100-203 (redesignating par. (5) as (4), see 1987 Amendment note below), par. (4) added subpars. (C) and (D).Subsec. (h)(5). Pub. L. 100-647, §2004(b)(1), redesignated par. (6) as (5). Subsec. (h)(6). Pub. L. 100-647, §2004(b)(1), redesignated par. (6) as (5).Pub. L. 100-647, §1005(c)(9), substituted "but for this paragraph" for "but for this subsection". Subsec. (i)(2). Pub. L. 100-647, §1009(b)(6), made technical correction to directory language of Pub. L. 99-514, §902(e)(1), see 1986 Amendment note below.1987-Subsec. (d)(4)(E). Pub. L. 100-203, §10212(b), substituted "section 469(m)" for "section 469(l)".Subsec. (h)(3). Pub. L. 100-203, §10102(a), amended par. (3) generally. Prior to amendment (see 1988 Amendment note above), par. (3) read as follows: "For purposes of this subsection- "(A) IN GENERAL.-The term 'qualified residence interest' means interest which is paid or accrued during the taxable year on indebtedness which is secured by any property which (at the time such interest is paid or accrued) is a qualified residence of the taxpayer."(B) LIMITATION ON AMOUNT OF INTEREST.-The term 'qualified residence interest' shall not include any interest paid or accrued on indebtedness secured by any qualified residence which is allocable to that portion of the principal amount of such indebtedness which, when added to the outstanding aggregate principal amount of all other indebtedness previously incurred and secured by such qualified residence, exceeds the lesser of-"(i) the fair market value of such qualified residence, or"(ii) the sum of- "(I) the taxpayer's basis in such qualified residence (adjusted only by the cost of any improvements to such residence), plus "(II) the aggregate amount of qualified indebtedness of the taxpayer with respect to such qualified residence."(C) COST NOT LESS THAN BALANCE OF INDEBTEDNESS INCURRED ON OR BEFORE AUGUST 16, 1986.- "(i) IN GENERAL.-The amount under subparagraph (B)(ii)(I) at any time after August 16, 1986, shall not be less than the outstanding principal amount (as of such time) of indebtedness-"(I) which was incurred on or before August 16, 1986, and which was secured by the qualified residence on August 16, 1986, or"(II) which is secured by the qualified residence and was incurred after August 16, 1986, to refinance indebtedness described in subclause (I) (or refinanced indebtedness meeting the requirements of this subclause) to the extent (immediately after the refinancing) the principal amount of the indebtedness resulting from the refinancing does not exceed the principal amount of the refinanced indebtedness (immediately before the refinancing)."(ii) LIMITATION ON PERIOD OF REFINANCING.-Subclause (II) of clause (i) shall not apply to any indebtedness after-"(I) the expiration of the term of the indebtedness described in clause (i)(I), or"(II) if the principal of the indebtedness described in clause (i)(I) is not amortized over its term, the expiration of the term of the 1st refinancing of such indebtedness (or if earlier, the date which is 30 years after the date of such refinancing)."(D) TIME FOR DETERMINATION.-Except as provided in regulations, any determination under subparagraph (B) shall be made as of the time the indebtedness is incurred."Subsec. (h)(4), (5). Pub. L. 100-203, §10102(b), redesignated par. (5) as (4) and struck out former par. (4) which defined "qualified indebtedness" for purposes of this subsection.1986-Subsec. (d). Pub. L. 99-514, §511(a), substituted "Limitation on investment interest" for "Limitation on interest on investment indebtedness" in heading, and amended text generally, revising and restating as pars. (1) to (6) provisions of former pars. (1) to (7).Subsec. (e)(2)(C). Pub. L. 99-514, §1803(a)(4), added subpar. (C).Subsec. (e)(3)(A). Pub. L. 99-514, §1810(e)(1)(A), inserted "The preceding sentence shall not apply to the extent that the original issue discount is effectively connected with the conduct by such foreign related person of a trade or business within the United States unless such original issue discount is exempt from taxation (or is subject to a reduced rate of tax) pursuant to a treaty obligation of the United States."Subsec. (e)(5). Pub. L. 99-514, §1810(e)(1)(B), redesignated par. (4), relating to cross references, as (5). Subsec. (f)(3). Pub. L. 99-514, §1301(j)(3), substituted "section 149(a)(3)" for "section 103(j)(3)".Subsec. (h). Pub. L. 99-514, §511(b), added subsec. (h). Former subsec. (h) redesignated (i).Subsec. (i)(2). Pub. L. 99-514, §902(e)(1), as amended by Pub. L. 100-647, §1009(b)(6), substituted "section 265(a)(2)" for "section 265(2)".Pub. L. 99-514, §511(b), redesignated former subsec. (h) as (i). 1984-Subsec. (d)(3)(D). Pub. L. 98-369, §56(b), designated existing provisions as cl. (i) and added cl. (ii). Subsec. (e)(1). Pub. L. 98-369, §42(a)(3), substituted "debt instrument" for "bond" in two places and struck out "by an issuer (other than a natural person)" before ", the portion of the original issue". Subsec. (e)(2). Pub. L. 98-369, §42(a)(3), substituted provisions relating to debt instruments for provisions relating to bonds. Subsec. (e)(3). Pub. L. 98-369, §128(c), added par. (3) relating to special rule for original issue discount on obligation held by related foreign person. Former par. (3), relating to exceptions, redesignated (4).Pub. L. 98-369, §42(a)(3), added par. (3) relating to exceptions.Subsec. (e)(4). Pub. L. 98-369, §128(c), redesignated par. (3), relating to exceptions, as (4).Pub. L. 98-369, §42(a)(3), added par. (4) relating to cross references.Subsec. (f)(2)(C)(i). Pub. L. 98-369, §127(f), redesignated existing provision as subcl. (I), and in subcl. (I) as so redesignated, inserted reference to subpar. (A) and substituted "or" for "and", and added subcl. (II).Subsecs. (g), (h). Pub. L. 98-369, §612(c), added subsec. (g) and redesignated former subsec. (g) as (h).1982-Subsec. (d)(4). Pub. L. 97-354 redesignated subpar. (D) as (B). Former subpars. (B) and (C), relating to partnerships and shareholders of electing small business corporations, respectively, were struck out.Subsec. (e). Pub. L. 97-248, §231(b), added subsec. (e) relating to original issue discount. Former subsec. (e), setting forth cross references, redesignated (f). Pub. L. 97-248, §231(b), redesignated former subsec. (e), setting forth cross references, as (f).Subsec. (f). Pub. L. 97-248, §310(b)(2), added subsec. (f) relating to the requirement that obligations be in registered form to be tax-exempt. Former subsec. (f), setting forth cross references, redesignated (g).Subsec. (g). Pub. L. 97-248, §310(b)(2), redesignated former subsec. (f), setting forth cross references, as (g).1976-Subsec. (b)(1). Pub. L. 94-455, §1901(b)(8)(C), substituted "organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization" for "institution (as defined in section 151(e)(4)) and which is provided for a student of such institution".Subsec. (d)(1). Pub. L. 94-455, §209(a)(1), among other changes, substituted in subpar. (A) "$10,000" for "$25,000" and "$5,000" for "$12,500", struck out subpar. (C) relating to the excess of net long-term capital gain over short-term capital loss and subpar. (D) relating to the excess of investment interest over amounts in subpar. (A), and in provisions following lettered paragraphs substituted "$10,000" for "$25,000" and struck out provisions relating to the determination of the amount referred to in subpar. (C).Subsec. (d)(2). Pub. L. 94-455, §209(a)(1), among other changes, struck out provisions relating to the limitation on the amount of interest allowable by this par. and to reduction of disallowed investment interest for capital gain deduction purposes. Subsec. (d)(3)(A). Pub. L. 94-455, §209(a)(2), inserted provision relating to determination of the amount of net investment income where taxpayer has investment interest for taxable year to which this subsection applies.Subsec. (d)(3)(B)(iii). Pub. L. 94-455, §§205(c)(3), 1901(b)(3)(K), substituted "1250, and 1254" for "and 1250", and "ordinary income" for "gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231". Section 205(c)(3) of Pub. L. 94-455, which directed the amendment of subsec. (d)(3)(A)(iii), was executed by amending subsec. (d)(3)(B)(iii) to reflect the probable intent of Congress.Subsec. (d)(3)(E). Pub. L. 94-455, §209(a)(3), substituted "limitation in paragraph (1)" for "limitations in paragraphs (1) and (2)(A)".Subsec. (d)(4)(B), (C). Pub. L. 94-455, §1906(b)(13)(A), struck out "or his delegate" after "Secretary".Subsec. (d)(5). Pub. L. 94-455, §209(a)(4), (5), redesignated par. (6) as (5) and inserted provision relating to the application of this paragraph after Dec. 31, 1975, on an allocation basis rather than a specific item basis. Former par. (5), relating to capital gains treatment of investment interest, was struck out. Pub. L. 94-455, §1901(b)(3)(K), directed the amendment of par. (5) by substituting "ordinary income" for "gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231", such par. (5) having been struck out by Pub. L. 94-455, §209(a)(4).Subsec. (d)(6). Pub. L. 94-455, §§209(a)(4), 1906(b)(13)(A), redesignated par. (7) as (6) and struck out in provision following subpar. (B) "or his delegate" after "Secretary". Former par. (6) redesignated (5).Subsec. (d)(7). Pub. L. 94-455, §209(a)(6), added par. (7). Former par. (7) redesignated (6).1971-Subsec. (d)(1)(B). Pub. L. 92-178, §304(b)(2), inserted "the amount (if any) by which the deductions allowable under this section (determined without regard to this subsection) and sections 162, 164(a)(1) or (2), or 212 attributable to property of the taxpayer subject to a net lease exceeds the rental income produced by such property for the property year, plus" after "plus".Subsec. (d)(3)(C). Pub. L. 92-178, §304(d), inserted reference to section 162. Subsec. (d)(4)(A)(i). Pub. L. 92-178, §304(a)(2)(A), inserted "of the lessor" after "deductions" and "(other than rents and reimbursed amounts with respect to such property)" after "section 162".Subsec. (d)(7). Pub. L. 92-178, §304(a)(2)(B), added par. (7). 1969-Subsecs. (d), (e). Pub. L. 91-172 added subsec. (d). Former subsec. (d) redesignated (e). 1964-Subsec. (b)(1). Pub. L. 88-272 included the purchase of educational services, and defined "educational services". 1963-Subsecs. (c), (d). Pub. L. 88-9, §1(a), (c), added subsec. (c), redesignated former subsec. (c) as (d) and added par. (5).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116-260, div. EE, title I, §133(b), Dec. 27, 2020, 134 Stat. 3053, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2020." Pub. L. 116-136, div. A, title II, §2306(b), Mar. 27, 2020, 134 Stat. 359, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2018."
EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116-94, div. Q, title I, §102(b), Dec. 20, 2019, 133 Stat. 3228, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2017."
EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115-141, div. U, title IV, §401(c)(1)(H), Mar. 23, 2018, 132 Stat. 1205, provided that: "The amendments made by this paragraph [amending this section and sections 1271, 1272, and 1278 of this title] shall apply to debt instruments issued on or after July 2, 1982." Pub. L. 115-141, div. U, title IV, §401(c)(3)(C), Mar. 23, 2018, 132 Stat. 1206, provided that: "The amendments made by this paragraph [amending this section and section 1272 of this title] shall apply to obligations issued on or after March 2, 1984." Pub. L. 115-123, div. D, title I, §40202(b), Feb. 9, 2018, 132 Stat. 145, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2016."
EFFECTIVE DATE OF 2017 AMENDMENT Pub. L. 115-97, §11043(b), Dec. 22, 2017, 131 Stat. 2087, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017." Pub. L. 115-97, §13301(c), Dec. 22, 2017, 131 Stat. 2121, provided that: "The amendments made by this section [amending this section and sections 381 and 382 of this title] shall apply to taxable years beginning after December 31, 2017."
EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114-113, div. Q, title I, §152(b), Dec. 18, 2015, 129 Stat. 3066, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2014."
EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113-295, div. A, title I, §104(b), Dec. 19, 2014, 128 Stat. 4013, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2013."Amendment by section 221(a)(25)(A) 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 2013 AMENDMENT Pub. L. 112-240, §204(c), Jan. 2, 2013, 126 Stat. 2323, provided that: "The amendments made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2011."
EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111-312, §759(b), Dec. 17, 2010, 124 Stat. 3323, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2010."Amendment by Pub. L. 111-147 applicable to obligations issued after the date which is 2 years after Mar. 18, 2010, see section 502(f) of Pub. L. 111-147, set out as a note under section 149 of this title.
EFFECTIVE DATE OF 2009 AMENDMENT Pub. L. 111-5, div. B, title I, §1232(c), Feb. 17, 2009, 123 Stat. 341, provided that:"(1) SUSPENSION.-The amendments made by subsection (a) [amending this section] shall apply to obligations issued after August 31, 2008, in taxable years ending after such date."(2) INTEREST RATE AUTHORITY.-The amendments made by subsection (b) [amending this section] shall apply to obligations issued after December 31, 2009, in taxable years ending after such date."
EFFECTIVE DATE OF 2007 AMENDMENT Pub. L. 110-142, §3(b), Dec. 20, 2007, 121 Stat. 1804, provided that: "The amendment made by this section [amending this section] shall apply to amounts paid or accrued after December 31, 2007."
EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109-432, div. A, title IV, §419(d), Dec. 20, 2006, 120 Stat. 2968, provided that: "The amendments made by this section [amending this section and section 6050H of this title] shall apply to amounts paid or accrued after December 31, 2006." Pub. L. 109-222, §501(c), May 17, 2006, 120 Stat. 354, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning on or after the date of the enactment of this Act [May 17, 2006]."
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 OF 2004 AMENDMENT Pub. L. 108-357, §838(b), Oct. 22, 2004, 118 Stat. 1597, provided that: "The amendments made by this section [amending this section] shall apply to transactions in taxable years beginning after the date of the enactment of this Act [Oct. 22, 2004]." Pub. L. 108-357, §841(c), Oct. 22, 2004, 118 Stat. 1598, provided that: "The amendments made by this section [amending this section and section 267 of this title] shall apply to payments accrued on or after the date of the enactment of this Act [Oct. 22, 2004]." Pub. L. 108-357, §845(e), Oct. 22, 2004, 118 Stat. 1601, provided that: "The amendments made by this section [amending this section] shall apply to debt instruments issued after October 3, 2004."
EFFECTIVE DATE OF 2003 AMENDMENT Amendment by Pub. L. 108-27 applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) 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 1999 AMENDMENT Amendment by Pub. L. 106-170 applicable to taxable years beginning after Dec. 31, 2000, see section 546(a) of Pub. L. 106-170, set out as a note under section 856 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105-277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which such amendment relates, see section 4003(l) of Pub. L. 105-277, set out as a note under section 86 of this title.
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, §503(d), Aug. 5, 1997, 111 Stat. 853, provided that:"(1) IN GENERAL.-The amendments made by this section [amending this section and sections 2053, 6166, and 6601 of this title] shall apply to estates of decedents dying after December 31, 1997. "(2) ELECTION.-In the case of the estate of any decedent dying before January 1, 1998, with respect to which there is an election under section 6166 of the Internal Revenue Code of 1986, the executor of the estate may elect to have the amendments made by this section apply with respect to installments due after the effective date of the election; except that the 2-percent portion of such installments shall be equal to the amount which would be the 4-percent portion of such installments without regard to such election. Such an election shall be made before January 1, 1999 in the manner prescribed by the Secretary of the Treasury and, once made, is irrevocable." Pub. L. 105-34, §1005(b), Aug. 5, 1997, 111 Stat. 912, provided that:"(1) IN GENERAL.-The amendment made by this section [amending this section] shall apply to disqualified debt instruments issued after June 8, 1997."(2) TRANSITION RULE.-The amendment made by this section shall not apply to any instrument issued after June 8, 1997, if such instrument is-"(A) issued pursuant to a written agreement which was binding on such date and at all times thereafter, "(B) described in a ruling request submitted to the Internal Revenue Service on or before such date, or"(C) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission required solely by reason of the issuance."
EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 1703(n)(4) 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. Pub. L. 104-188, §1704(f)(2)(C), Aug. 20, 1996, 110 Stat. 1879, provided that: "The amendments made by this paragraph [amending this section] shall apply as if included in the amendments made by section 7210(a) of the Revenue Reconciliation Act of 1989 [Pub. L. 101-239]."
EFFECTIVE DATE OF 1993 AMENDMENT Amendment by section 13206(d)(1) of Pub. L. 103-66 applicable to taxable years beginning after Dec. 31, 1992, see section 13206(d)(3) of Pub. L. 103-66 set out as a note under section 1 of this title. Pub. L. 103-66, §13228(d), Aug. 10, 1993, 107 Stat. 495, provided that: "The amendments made by this section [amending this section] shall apply to interest paid or accrued in taxable years beginning after December 31, 1993."
EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101-508 effective, except as otherwise provided, as if included in the provision of the Revenue Reconciliation Act of 1989, Pub. L. 101-239, title VII, to which such amendment relates, see section 11701(n) 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, §7202(c), Dec. 19, 1989, 103 Stat. 2332, provided that:"(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to instruments issued after July 10, 1989."(2) EXCEPTIONS.-"(A) The amendments made by this section shall not apply to any instrument if-"(i) such instrument is issued in connection with an acquisition-"(I) which is made on or before July 10, 1989,"(II) for which there was a written binding contract in effect on July 10, 1989, and at all times thereafter before such acquisition, or"(III) for which a tender offer was filed with the Securities and Exchange Commission on or before July 10, 1989,"(ii) the term of such instrument is not greater than-"(I) the term specified in the written documents described in clause (iii), or"(II) if no term is determined under subclause (I), 10 years, and"(iii) the use of such instrument in connection with such acquisition (and the maximum amount of proceeds from such instrument) was determined on or before July 10, 1989, and such determination is evidenced by written documents- "(I) which were transmitted on or before July 10, 1989, between the issuer and any governmental regulatory bodies or prospective parties to the issuance or acquisition, and"(II) which are customarily used for the type of acquisition or financing involved."(B) The amendments made by this section shall not apply to any instrument issued pursuant to the terms of a debt instrument issued on or before July 10, 1989, or described in subparagraph (A) or (D)."(C) The amendments made by this section shall not apply to any instrument issued to refinance an original issue discount debt instrument to which the amendments made by this section do not apply if-"(i) the maturity date of the refinancing instrument is not later than the maturity date of the refinanced instrument,"(ii) the issue price of the refinancing instrument does not exceed the adjusted issue price of the refinanced instrument,"(iii) the stated redemption price at maturity of the refinancing instrument is not greater than the stated redemption price at maturity of the refinanced instrument, and"(iv) the interest payments required under the refinancing instrument before maturity are not less than (and are paid not later than) the interest payments required under the refinanced instrument."(D) The amendments made by this section shall not apply to instruments issued after July 10, 1989, pursuant to a reorganization plan in a title 11 or similar case (as defined in section 368(a)(3) of the Internal Revenue Code of 1986) if the amount of proceeds of such instruments, and the maturities of such instruments, do not exceed the amount or maturities specified in the last reorganization plan filed in such case on or before July 10, 1989." Pub. L. 101-239, §7210(b), Dec. 19, 1989, 103 Stat. 2342, provided that: "(1) IN GENERAL.-The amendment made by this section [amending this section] shall apply to interest paid or accrued in taxable years beginning after July 10, 1989."(2) SPECIAL RULE FOR DEMAND LOANS, ETC.-In the case of any demand loan (or other loan without a fixed term) which was outstanding on July 10, 1989, interest on such loan to the extent attributable to periods before September 1, 1989, shall not be treated as disqualified interest for purposes of section 163(j) of the Internal Revenue Code of 1986 (as added by subsection (a))."
EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100-647, title I, §1005(c)(13), Nov. 10, 1988, 102 Stat. 3392, provided that: "For purposes of applying the amendments made by this subsection [amending this section and sections 467, 1255, and 7872 of this title] and the amendments made by section 10102 of the Revenue Act of 1987 [section 10102 of Pub. L. 100-203, amending this section], the provisions of this subsection shall be treated as having been enacted immediately before the enactment of the Revenue Act of 1987."Amendment by sections 1006(u)(1) and 1009(b)(6) 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. Amendment by section 2004(b)(1) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100-203, title X, to which such amendment relates, see section 2004(u) of Pub. L. 100-647, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT Pub. L. 100-203, title X, §10102(c), Dec. 22, 1987, 101 Stat. 1330-386, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1987."Amendment by section 10212(b) of Pub. L. 100-203 effective as if included in the amendments made by section 501 of the Tax Reform Act of 1986, Pub. L. 99-514, see section 10212(c) of Pub. L. 100-203, set out as a note under section 58 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99-514, title V, §511(e), Oct. 22, 1986, 100 Stat. 2249, provided that: "The amendments made by this section [amending this section and sections 467, 703, 1255, 1363, and 7872 of this title] shall apply to taxable years beginning after December 31, 1986."Amendment by section 902(e)(1) of Pub. L. 99-514 applicable to taxable years ending after Dec. 31, 1986, with certain exceptions and qualifications, see section 902(f) of Pub. L. 99-514, set out as a note under section 265 of this title. Amendment by section 1301(j)(3) of Pub. L. 99-514 applicable to bonds issued after Aug. 15, 1986, except as otherwise provided, see sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective Date; Transitional Rules note under section 141 of this title.Amendment by sections 1803(a)(4) and 1810(e)(1) 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 42(a)(3) of Pub. L. 98-369 applicable to taxable years ending after July 18, 1984, see section 44 of Pub. L. 98-369, set out as an Effective Date note under section 1271 of this title.Pub. L. 98-369, div. A, title I, §56(d), July 18, 1984, 98 Stat. 574, provided that: "The amendments made by this section [amending this section and sections 263 and 265 of this title] shall apply to short sales after the date of enactment of this Act [July 18, 1984] in taxable years ending after such date."Amendment by section 127(f) of Pub. L. 98-369 applicable to interest received after July 18, 1984, with respect to obligations issued after such date, in taxable years ending after such date, see section 127(g)(1) of Pub. L. 98-369, set out as a note under section 871 of this title.Amendment by section 128(c) of Pub. L. 98-369 applicable to obligations issued after June 9, 1984, see section 128(d)(2) of Pub. L. 98-369, set out as a note under section 871 of this title. Amendment by section 612(c) of Pub. L. 98-369 applicable to interest paid or accrued after Dec. 31, 1984, on indebtedness incurred after Dec. 31, 1984, see section 612(g) of Pub. L. 98-369, set out as an Effective Date note under section 25 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97-354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an Effective Date note under section 1361 of this title. Amendment by Pub. L. 97-248 applicable to obligations issued after Dec. 31, 1982, with exceptions for certain warrants, see section 310(d) of Pub. L. 97-248, set out as a note under section 103 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 205(c)(3) of Pub. L. 94-455 applicable with respect to taxable years ending after Dec. 31, 1975, see section 205(e) of Pub. L. 94-455, set out as an Effective Date note under section 1254 of this title.Pub. L. 94-455, title II, §209(b), Oct. 4, 1976, 90 Stat. 1543, as amended by Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:"(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1975. "(2) INDEBTEDNESS INCURRED BEFORE SEPTEMBER 11, 1975.-In the case of indebtedness attributable to a specific item of property which- "(A) is for a specified term, and"(B) was incurred before September 11, 1975, or is incurred after September 10, 1975, pursuant to a written contract or commitment which on September 11, 1975, and at all times thereafter before the incurring of such indebtedness, is binding on the taxpayer,the amendments made by this section shall not apply, but section 163(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as in effect before the enactment of this Act [Oct. 4, 1976]) shall apply. For purposes of the preceding sentence, so much of the net investment income (as defined in section 163(d)(3)(A) of such Code) for any taxable year as is not taken into account under section 163(d) of such Code, as amended by this Act, by reason of the last sentence of section 163(d)(3)(A) of such Code, shall be taken into account for purposes of applying such section as in effect before the date of enactment of this Act [Oct. 4, 1976] with respect to interest on indebtedness referred to in the preceding sentence." Amendment by section 1901(b)(8)(C), (3)(K) of Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT Pub. L. 92-178, title III, §304(e), Dec. 10, 1971, 85 Stat. 524, provided that: "The amendments made by this section to section 57 of the Internal Revenue Code of 1954 shall apply to taxable years beginning after December 31, 1969. The amendments made by this section to section 163 of such Code shall apply to taxable years beginning after December 31, 1971."
EFFECTIVE DATE OF 1969 AMENDMENT Pub. L. 91-172, title II, §221(b), Dec. 30, 1969, 83 Stat. 576, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1971."
EFFECTIVE DATE OF 1964 AMENDMENT Pub. L. 88-272, title II, §224(d), Feb. 26, 1964, 78 Stat. 79, provided that: "The amendments made by subsections (a) [enacting section 483 of this title] and (b) [amending the analysis preceding section 481 of this title] shall apply to payments made after December 31, 1963, on account of sales or exchanges of property occurring after June 30, 1963, other than any sale or exchange made pursuant to a binding written contract (including an irrevocable written option) entered into before July 1, 1963. The amendments made by subsection (c) [amending this section] shall apply to payments made during taxable years beginning after December 31, 1963."
EFFECTIVE DATE OF 1963 AMENDMENT Subsec. (c) effective as of Jan. 1, 1962, and applicable with respect to taxable years ending on or after such date, see section 2 of Pub. L. 88-9, set out as an Effective Date note under section 1055 of this title.
SAVINGS PROVISIONFor provisions that nothing in amendment by section 401(b)(12) of 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.
APPLICATION OF SUBSECTION (H) TO TAXABLE YEARS BEGINNING IN 1987Pub. L. 100-647, title I, §1005(c)(14), Nov. 10, 1988, 102 Stat. 3392, provided that:"(A) For purposes of applying section 163(h) of the 1986 Code to any taxable year beginning during 1987, if, incident to a divorce or legal separation- "(i) an individual acquires the interest of a spouse or former spouse in a qualified residence in a transfer to which section 1041 of the 1986 Code applies, and"(ii) such individual incurs indebtedness which is secured by such qualified residence,the amount determined under paragraph (3)(B)(ii)(I) of section 163(h) of the 1986 Code (as in effect before the amendments made by the Revenue Act of 1987 [Pub. L. 100-203, title X]) with respect to such qualified residence shall be increased by the amount determined under subparagraph (B)."(B) The amount determined under this subparagraph shall be equal to the excess (if any) of- "(i) the lesser of the amount of the indebtedness described in subparagraph (A)(ii), or the fair market value of the spouse's or former spouse's interest in the qualified residence as of the time of the transfer, over"(ii) the basis of the spouse or former spouse in such interest in such residence (adjusted only by the cost of any improvements to such residence)."
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.
TRANSITIONAL RULE FOR TREATMENT OF CERTAIN INCOME FROM S CORPORATIONSPub. L. 98-369, div. A, title X, §1066, July 18, 1984, 98 Stat. 1048, as amended by Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:"(a) IN GENERAL.-If-"(1) a corporation had an election in effect under subchapter S of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] for the taxable years of such corporation beginning in 1982, 1983, and 1984, and"(2) a shareholder of such corporation makes an election to have this section apply,then any qualified income which such shareholder takes into account by reason of holding stock in such corporation for any taxable year of such corporation beginning in 1983 or 1984 shall be treated for purposes of section 163(d) of the Internal Revenue Code of 1986 as such income would have been treated but for the enactment of the Subchapter S Revision Act of 1982 [Pub. L. 97-354, see Tables for classification]."(b) QUALIFIED INCOME.-For purposes of subsection (a), the term 'qualified income' means any income other than income which is attributable to personal services performed by the shareholder for the corporation."(c) ELECTION.-The election under subsection (a)(2) shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may by regulations prescribe."
TRANSITIONAL RULEFor provision that, for purposes of amendments by section 231(b) of Pub. L. 97-248, any evidence of indebtedness issued pursuant to a written commitment which was binding on July 1, 1982, and at all times thereafter be treated as issued on July 1, 1982, see section 231(e) of Pub. L. 97-248, set out as a note under section 1232A 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 of the Treasury
- The term "Secretary of the Treasury" means the Secretary of the Treasury, personally, and shall not include any delegate of his.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- United States person
- The term "United States person" means-(A) a citizen or resident of the United States,(B) a domestic partnership,(C) a domestic corporation,(D) any estate (other than a foreign estate, within the meaning of paragraph (31)), and(E) any trust if-(i) a court within the United States is able to exercise primary supervision over the administration of the trust, and(ii) one or more United States persons have the authority to control all substantial decisions of the trust.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- joint return
- The term "joint return" means a single return made jointly under section 6013 by a husband and wife.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- shareholder
- The term "shareholder" includes a member in an association, joint-stock company, or insurance company.
- stock
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- student
- The term "student" means any individual-(i) who is temporarily present in the United States-(I) under subparagraph (F) or (M) of section 101(15) of the Immigration and Nationality Act, or(II) as a student under subparagraph (J) or (Q) of such section 101(15), and(ii) who substantially complies with the requirements for being so present.
- 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.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.
- transaction
- The term "transaction" includes a series of transactions.