26 U.S.C. § 864
For purposes of this part, the term "produced" includes created, fabricated, manufactured, extracted, processed, cured, or aged.
For purposes of this part, part II, and chapter 3, the term "trade or business within the United States" includes the performance of personal services within the United States at any time within the taxable year, but does not include-
The performance of personal services-
by a nonresident alien individual temporarily present in the United States for a period or periods not exceeding a total of 90 days during the taxable year and whose compensation for such services does not exceed in the aggregate $3,000.
Trading in stocks or securities through a resident broker, commission agent, custodian, or other independent agent.
Trading in stocks or securities for the taxpayer's own account, whether by the taxpayer or his employees or through a resident broker, commission agent, custodian, or other agent, and whether or not any such employee or agent has discretionary authority to make decisions in effecting the transactions. This clause shall not apply in the case of a dealer in stocks or securities.
Trading in commodities through a resident broker, commission agent, custodian, or other independent agent.
Trading in commodities for the taxpayer's own account, whether by the taxpayer or his employees or through a resident broker, commission agent, custodian, or other agent, and whether or not any such employee or agent has discretionary authority to make decisions in effecting the transactions. This clause shall not apply in the case of a dealer in commodities.
Clauses (i) and (ii) shall apply only if the commodities are of a kind customarily dealt in on an organized commodity exchange and if the transaction is of a kind customarily consummated at such place.
Subparagraphs (A)(i) and (B)(i) shall apply only if, at no time during the taxable year, the taxpayer has an office or other fixed place of business in the United States through which or by the direction of which the transactions in stocks or securities, or in commodities, as the case may be, are effected.
For purposes of this title-
In determining whether income from sources within the United States of the types described in section 871(a)(1), section 871(h), section 881(a), or section 881(c), or whether gain or loss from sources within the United States from the sale or exchange of capital assets, is effectively connected with the conduct of a trade or business within the United States, the factors taken into account shall include whether-
In determining whether an asset is used in or held for use in the conduct of such trade or business or whether the activities of such trade or business were a material factor in realizing an item of income, gain, or loss, due regard shall be given to whether or not such asset or such income, gain, or loss was accounted for through such trade or business.
All income, gain, or loss from sources within the United States (other than income, gain, or loss to which paragraph (2) applies) shall be treated as effectively connected with the conduct of a trade or business within the United States.
Any income or gain which is equivalent to any item of income or gain described in clause (i), (ii), or (iii) shall be treated in the same manner as such item for purposes of this subparagraph.
For purposes of subparagraph (B) of paragraph (4)-
For purposes of this title, in the case of any income or gain of a nonresident alien individual or a foreign corporation which-
the determination of whether such income or gain is taxable under section 871(b) or 882 (as the case may be) shall be made as if such income or gain were taken into account in such other taxable year and without regard to the requirement that the taxpayer be engaged in a trade or business within the United States during the taxable year referred to in subparagraph (A).
For purposes of this title, if-
the determination of whether any income or gain attributable to such disposition is taxable under section 871(b) or 882 (as the case may be) shall be made as if such sale or exchange occurred immediately before such cessation and without regard to the requirement that the taxpayer be engaged in a trade or business within the United States during the taxable year for which such income or gain is taken into account.
Notwithstanding any other provision of this subtitle, if a nonresident alien individual or foreign corporation owns, directly or indirectly, an interest in a partnership which is engaged in any trade or business within the United States, gain or loss on the sale or exchange of all (or any portion of) such interest shall be treated as effectively connected with the conduct of such trade or business to the extent such gain or loss does not exceed the amount determined under subparagraph (B).
The amount determined under this subparagraph with respect to any partnership interest sold or exchanged-
For purposes of this subparagraph, a partner's distributive share of gain or loss on the deemed sale shall be determined in the same manner as such partner's distributive share of the non-separately stated taxable income or loss of such partnership.
If a partnership described in subparagraph (A) holds any United States real property interest (as defined in section 897(c)) at the time of the sale or exchange of the partnership interest, then the gain or loss treated as effectively connected income under subparagraph (A) shall be reduced by the amount so treated with respect to such United States real property interest under section 897.
For purposes of this paragraph, the term "sale or exchange" means any sale, exchange, or other disposition.
The Secretary shall prescribe such regulations or other guidance as the Secretary determines appropriate for the application of this paragraph, including with respect to exchanges described in section 332, 351, 354, 355, 356, or 361.
For purposes of the provisions set forth in paragraph (2), if any person acquires (directly or indirectly) a trade or service receivable from a related person, any income of such person from the trade or service receivable so acquired shall be treated as if it were interest on a loan to the obligor under the receivable.
The provisions set forth in this paragraph are as follows:
For purposes of this subsection, the term "trade or service receivable" means any account receivable or evidence of indebtedness arising out of-
For purposes of this subsection, the term "related person" means-
The following provisions shall not apply to any amount treated as interest under paragraph (1) or (6):
Any income of a controlled foreign corporation (within the meaning of section 957(a)) from a loan to a person for the purpose of financing-
shall be treated as interest described in paragraph (1).
Paragraph (1) shall not apply to any trade or service receivable acquired by any person from a related person if-
The Secretary shall prescribe such regulations as may be necessary to prevent the avoidance of the provisions of this subsection or section 956(c)(3).
For purposes of this subchapter-
The taxable income of each member of an affiliated group shall be determined by allocating and apportioning interest expense of each member as if all members of such group were a single corporation.
All allocations and apportionments of interest expense shall be determined using the adjusted bases of assets rather than on the basis of the fair market value of the assets or gross income.
For purposes of allocating and apportioning any deductible expense, any tax-exempt asset (and any income from such an asset) shall not be taken into account. A similar rule shall apply in the case of the portion of any dividend (other than a qualifying dividend as defined in section 243(b)) equal to the deduction allowable under section 243 or 245(a) with respect to such dividend and in the case of a like portion of any stock the dividends on which would be so deductible and would not be qualifying dividends (as so defined).
For purposes of allocating and apportioning expenses on the basis of assets, the adjusted basis of any stock in a nonaffiliated 10-percent owned corporation shall be-
For purposes of this paragraph, the term "nonaffiliated 10-percent owned corporation" means any corporation if-
If, by reason of holding stock in a nonaffiliated 10-percent owned corporation, the taxpayer is treated under clause (iii) as owning stock in another corporation with respect to which the stock ownership requirements of clause (ii) are met, the adjustment under subparagraph (A) shall include an adjustment for the amount of the earnings and profits (or deficit therein) of such other corporation which are attributable to the stock the taxpayer is so treated as owning and to the period during which the taxpayer is treated as owning such stock.
The stock ownership requirements of this clause are met with respect to any corporation if members of the taxpayer's affiliated group own (directly or through the application of clause (iii)) 10 percent or more of the total combined voting power of all classes of stock of such corporation entitled to vote.
For purposes of this subparagraph, stock owned (directly or indirectly) by a corporation, partnership, or trust shall be treated as being owned proportionately by its shareholders, partners, or beneficiaries. Stock considered to be owned by a person by reason of the application of the preceding sentence, shall, for purposes of applying such sentence, be treated as actually owned by such person.
For purposes of this paragraph, proper adjustment shall be made to the earnings and profits of any corporation to take into account any earnings and profits included in gross income under section 951 or under any other provision of this title and reflected in the adjusted basis of the stock.
For purposes of this subsection-
Except as provided in subparagraph (B), the term "affiliated group" has the meaning given such term by section 1504. Notwithstanding the preceding sentence, a foreign corporation shall be treated as a member of the affiliated group if-
For purposes of subparagraph (A), any corporation described in subparagraph (C) shall be treated as an includible corporation for purposes of section 1504 only for purposes of applying such section separately to corporations so described. This subparagraph shall not apply for purposes of paragraph (6).
A corporation is described in this subparagraph if-
To the extent provided in regulations-
shall be treated as a corporation described in subparagraph (C).
Expenses other than interest which are not directly allocable or apportioned to any specific income producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations providing-
For purposes of sections 861(b), 862(b), and 863(b), qualified research and experimental expenditures shall be allocated and apportioned as follows:
For purposes of this section, the term "qualified research and experimental expenditures" means amounts which are research and experimental expenditures within the meaning of section 174. For purposes of this paragraph, rules similar to the rules of subsection (c) 2 of section 174 shall apply. Any qualified research and experimental expenditures treated as deferred expenses under subsection (b) 2 of section 174 shall be taken into account under this subsection for the taxable year for which such expenditures are allowed as a deduction under such subsection.
Any qualified research and experimental expenditures described in subparagraph (B)-
For purposes of subparagraph (A), qualified research and experimental expenditures are described in this subparagraph if such expenditures are attributable to activities conducted-
shall not be taken into account, except that this subparagraph shall not apply to sales of (and gross income and dividends attributable to sales of) products with respect to which an election under section 936(h)(5)(F) 2 is not in effect.
The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this subsection, including regulations relating to the determination of whether any expenses are attributable to activities conducted in the United States or outside the United States and regulations providing such adjustments to the provisions of this subsection as may be appropriate in the case of cost-sharing arrangements and contract research.
This subsection shall apply to the taxpayer's first taxable year (beginning on or before August 1, 1994) following the taxpayer's last taxable year to which Revenue Procedure 92-56 applies or would apply if the taxpayer elected the benefits of such Revenue Procedure.
1 So in original. Probably should be followed by a comma.
2 See References in Text note below.
26 U.S.C. § 864
EDITORIAL NOTES
REFERENCES IN TEXTSection 2(a) of the Bank Holding Company Act of 1956, referred to in subsec. (e)(5)(D)(i), is classified to section 1841(a) of Title 12, Banks and Banking. Section 174, referred to in subsec. (g)(2), was amended generally by Pub. L. 115-97, §13206(a), Dec. 22, 2017, 131 Stat. 2111. Provisions similar to those contained in former subsec. (c) of section 174 are now contained in subsec. (c)(1) of section 174. For provisions similar to those contained in former subsec. (b) of section 174 relating to amortization of certain research and experimental expenditures, see subsecs. (a) and (b) of section 174.Section 936, referred to in subsec. (g)(4)(B), (C), was repealed by Pub. L. 115-141, div. U, title IV, §401(d)(1)(C), Mar. 23, 2018, 132 Stat. 1206.
AMENDMENTS2021-Subsec. (f). Pub. L. 117-2 struck out subsec. (f) which related to election to allocate interest and other expenses on worldwide basis.2018-Subsec. (d)(5). Pub. L. 115-141, §401(d)(1)(D)(x), amended par. (5) generally. Prior to amendment, par. (5) related to certain provisions that did not apply to any amount treated as interest under par. (1) or (6).Subsec. (d)(8). Pub. L. 115-141, §401(a) (152), substituted "section 956(c)(3)" for "section 956(b)(3)".Subsec. (e)(5)(A). Pub. L. 115-141, §401(d)(1)(D) (xvii)(IV), struck out "(determined without regard to paragraph (4) of section 1504(b))" after "section 1504" in introductory provisions.Subsec. (f)(1)(C)(i). Pub. L. 115-141, §401(d)(1)(D) (xvii)(V), substituted "paragraph (2)" for "paragraphs (2) and (4)".Subsec. (f)(2). Pub. L. 115-141, §401(d)(1)(D) (xvii)(V), which directed amendment of par. (2) by substituting "paragraph (2)" for "paragraphs (2) and (4)", was executed by making the substitution for "paragraph (4)", to reflect the probable intent of Congress.2017-Subsec. (c)(1)(A). Pub. L. 115-97, §13501(a)(2)(A), substituted "(7), and (8)" for "and (7)".Subsec. (c)(1)(B). Pub. L. 115-97, §13501(a)(2)(B), substituted "(7), or (8)" for "or (7)". Subsec. (c)(8). Pub. L. 115-97, §13501(a)(1), added par. (8).Subsec. (e)(2). Pub. L. 115-97, §14502(a), amended par. (2) generally. Prior to amendment, text read as follows: "All allocations and apportionments of interest expense shall be made on the basis of assets rather than gross income."2010-Subsec. (c)(4)(B)(ii). Pub. L. 111-240 substituted "dividends, interest, or amounts received for the provision of guarantees of indebtedness" for "dividends or interest".Subsec. (e)(5)(A). Pub. L. 111-226 inserted at end "Notwithstanding the preceding sentence, a foreign corporation shall be treated as a member of the affiliated group if-" and added cls. (i) and (ii). Subsec. (f)(5)(D), (6). Pub. L. 111-147 substituted "December 31, 2020" for "December 31, 2017".2009-Subsec. (f)(5)(D), (6). Pub. L. 111-92, §15(a), substituted "December 31, 2017" for "December 31, 2010".Subsec. (f)(7). Pub. L. 111-92, §15(b), struck out par. (7). Text read as follows: "In the case of the first taxable year to which this subsection applies, the increase (if any) in the amount of the interest expense allocable to sources within the United States by reason of the application of this subsection shall be 30 percent of the amount of such increase determined without regard to this paragraph."2008-Subsec. (f)(5)(D), (6). Pub. L. 110-289, §3093(a), substituted "December 31, 2010" for "December 31, 2008".Subsec. (f)(7). Pub. L. 110-289, §3093(b), added par. (7).2004-Subsec. (c)(4)(B). Pub. L. 108-357, §894(a), added concluding provisions.Subsec. (d)(2). Pub. L. 108-357, §413(c) (12), redesignated subpars. (B) and (C) as (A) and (B), respectively, and struck out former subpar. (A) which read as follows: "Part III of subchapter G of this chapter (relating to foreign personal holding companies)."Subsec. (d)(5)(A)(i). Pub. L. 108-357, §403(b)(6), substituted "(C)(iii)(II)" for "(C)(iii)(III)".Subsec. (e)(3). Pub. L. 108-357, §101(b)(6), struck out "(A) In general" before "For purposes" and struck out heading and text of subpar. (B). Text read as follows: "For purposes of allocating and apportioning any interest expense, there shall not be taken into account any qualifying foreign trade property (as defined in section 943(a)) which is held by the taxpayer for lease or rental in the ordinary course of trade or business for use by the lessee outside the United States (as defined in section 943(b)(2))."Subsec. (e)(7)(B). Pub. L. 108-357, §401(b)(1), inserted "and in other circumstances where such allocation would be appropriate to carry out the purposes of this subsection" before comma at end.Subsec. (e)(7)(F), (G). Pub. L. 108-357, §401(b)(2), added subpar. (F) and redesignated former subpar. (F) as (G).Subsecs. (f), (g). Pub. L. 108-357, §401(a), added subsec. (f) and redesignated former subsec. (f) as (g). 2000-Subsec. (e)(3). Pub. L. 106-519 designated existing provisions as subpar. (A), inserted heading, and added subpar. (B). 1999-Subsecs. (c)(4)(B)(iii), (d)(3)(A), (6)(A). Pub. L. 106-170 substituted "section 1221(a)(1)" for "section 1221(1)". 1997-Subsec. (b)(2)(A)(ii). Pub. L. 105-34 struck out ", or in the case of a corporation (other than a corporation which is, or but for section 542(c)(7), 542(c)(10), or 543(b)(1)(C) would be, a personal holding company) the principal business of which is trading in stocks or securities for its own account, if its principal office is in the United States" after "dealer in stocks or securities". 1993-Subsec. (f)(1)(B). Pub. L. 103-66, §13234(a), substituted "50 percent" for "64 percent" in cls. (i) and (ii). Subsec. (f)(4)(D). Pub. L. 103-66, §13234(b)(2), substituted "subparagraph (B) or (C)" for "subparagraph (C)".Subsec. (f)(5), (6). Pub. L. 103-66, §13234(b)(1), added pars. (5) and (6) and struck out heading and text of former par. (5). Text read as follows: "(A) IN GENERAL.-This subsection shall apply to the taxpayer's first 3 taxable years beginning after August 1, 1989, and on or before August 1, 1992."(B) REDUCTION.-Notwithstanding subparagraph (A), in the case of the taxpayer's first taxable year beginning after August 1, 1991, this subsection shall only apply to qualified research and experimental expenditures incurred during the first 6 months of such taxable year." 1991-Subsec. (f)(5). Pub. L. 102-227 amended par. (5) generally. Prior to amendment, par. (5) read as follows: "This subsection shall apply to the taxpayer's first 2 taxable years beginning after August 1, 1989, and on or before August 1, 1991." 1990-Subsec. (f)(5). Pub. L. 101-508 substituted "Years" for "Year" in heading and amended text generally. Prior to amendment, text read as follows: "(A) IN GENERAL.-Except as provided in this paragraph, this subsection shall apply to the taxpayer's first taxable year beginning after August 1, 1989, and before August 2, 1990. "(B) REDUCTION.-Notwithstanding subparagraph (A), this subsection shall only apply to that portion of the qualified research and experimental expenditures for the taxable year referred to in subparagraph (A) which bears the same ratio to the total amount of such expenditures as- "(i) the lesser of 9 months or the number of months in the taxable year, bears to "(ii) the number of months in the taxable year." 1989-Subsec. (f). Pub. L. 101-239 added subsec. (f).1988-Subsec. (b)(2)(A)(ii). Pub. L. 100-647, §1012(p)(30), substituted "section 542(c)(7), 542(c)(10)," for "section 542(c)(7)".Subsec. (c)(2). Pub. L. 100-647, §1012(g)(5), struck out at end "In applying this paragraph and paragraph (4), interest referred to in section 861(a)(1)(A) shall be considered income from sources within the United States."Subsec. (c)(4)(B)(i), (ii). Pub. L. 100-647, §1012(d)(10), struck out "(including any gain or loss realized on the sale or exchange of such property)" after "section 862(a)(4)" in cl. (i) and ", or gain or loss from the sale or exchange of stock or notes, bonds, or other evidences of indebtedness" after "dividends or interest" in cl. (ii).Subsec. (c)(4)(B)(iii). Pub. L. 100-647, §1012(d)(7), added cl. (iii).Subsec. (c)(6). Pub. L. 100-647, §1012(r)(2), amended par. (6) generally. Prior to amendment, par. (6) read as follows: "For purposes of this title, any income or gain of a nonresident alien individual or a foreign corporation for any taxable year which is attributable to a sale or exchange of property or the performance of services (or any other transaction) in any other taxable year shall be treated as effectively connected with the conduct of a trade or business within the United States if it would have been so treated if such income or gain were taken into account in such other taxable year."Subsec. (c)(7). Pub. L. 100-647, §1012(r)(1), amended par. (7) generally. Prior to amendment, par. (7) read as follows: "For purposes of this title, if any property ceases to be used or held for use in connection with the conduct of a trade or business within the United States, the determination of whether any income or gain attributable to a sale or exchange of such property occurring within 10 years after such cessation is effectively connected with the conduct of a trade or business within the United States shall be made as if such sale or exchange occurred immediately before such cessation." Subsec. (d)(5)(A)(i). Pub. L. 100-647, §1012(a)(1)(B), substituted "(C)(iii)(III)" for "(C)(iii)".Subsec. (e). Pub. L. 100-647, §1012(h)(6)(B), struck out "(except as provided in regulations)" after "subchapter".Subsec. (e)(1). Pub. L. 100-647, §1012(h)(2)(A), struck out "from sources outside the United States" after "affiliated group".Subsec. (e)(3). Pub. L. 100-647, §1012(h)(3), inserted sentence at end and struck out former last sentence which read as follows: "A similar rule shall apply in the case of any dividend (other than a qualifying dividend as defined in section 243(b)) for which a deduction is allowable under section 243 or 245(a) and any stock the dividends on which would be so deductible and would not be qualifying dividends (as so defined)."Subsec. (e)(4). Pub. L. 100-647, §1012(h)(1), substituted "nonaffiliated 10-percent owned corporations" for "certain corporations" in heading and amended text generally. Prior to amendment, text read as follows: "For purposes of allocating and apportioning expenses on the basis of assets, the adjusted basis of any asset which is stock in a corporation which is not included in the affiliated group and in which members of the affiliated group own 10 percent or more of the total combined voting power of all classes of stock entitled to vote in such corporation shall be-"(A) increased by the amount of the earnings and profits of such corporation attributable to such stock and accumulated during the period the taxpayer held such stock, or"(B) reduced (but not below zero) by any deficit in earnings and profits of such corporation attributable to such stock for such period."Subsec. (e)(5)(B). Pub. L. 100-647, §1012(h)(4)(B), inserted at end "This subparagraph shall not apply for purposes of paragraph (6)." Subsec. (e)(5)(D). Pub. L. 100-647, §1012(h)(4)(A), added subpar. (D).Subsec. (e)(6). Pub. L. 100-647, §1012(h)(5), substituted "directly allocable or apportioned" for "directly allocable and apportioned".Subsec. (e)(7)(D) to (F). Pub. L. 100-647, §1012(h)(6)(A), added subpars. (D) to (F). 1987-Subsec. (c)(4)(C). Pub. L. 100-203 inserted "or part II" after "part I".1986-Pub. L. 99-514, §1215(b)(1), inserted "and special rules" in section catchline. Subsec. (c)(1)(A). Pub. L. 99-514, §1242(b)(1), inserted reference to pars. (6) and (7).Subsec. (c)(1)(B). Pub. L. 99-514, §1242(b)(2), inserted "paragraph (6) or (7) or in". Subsec. (c)(2). Pub. L. 99-514, §1899A(21), inserted a comma between "section 871(h)" and "section 881(a)".Subsec. (c)(4)(B)(iii). Pub. L. 99-514, §1211(b)(2), struck out cl. (iii), which read as follows: "is derived from the sale or exchange (without the United States) through such office or other fixed place of business of personal property described in section 1221(1), except that this clause shall not apply if the property is sold or exchanged for use, consumption, or disposition outside the United States and an office or other fixed place of business of the taxpayer outside the United States participated materially in such sale or exchange."Subsec. (c)(6), (7). Pub. L. 99-514, §1242(a), added pars. (6) and (7).Subsec. (d)(5)(A)(i). Pub. L. 99-514, §1201(d)(4), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: "Subparagraphs (A), (B), (C), and (D) of section 904(d)(2) (relating to interest income to which separate limitation applies) and subparagraph (J) of section 904(d)(3) (relating to interest from members of same affiliated group)."Pub. L. 99-514, §1810(c)(3), inserted "and subparagraph (J) of section 904(d)(3) (relating to interest from members of same affiliated group)".Subsec. (d)(5)(A)(ii). Pub. L. 99-514, §1223(b)(1), substituted "less than 5 percent or $1,000,000" for "less than 10 percent".Subsec. (d)(5)(A)(iii). Pub. L. 99-514, §1221(a)(2), amended cl. (iii) generally, substituting "section 954(c)(2) (relating to certain export financing)" for "section 954(c)(3) (relating to certain income derived in active conduct of trade or business)".Subsec. (d)(5)(A)(iv). Pub. L. 99-514, §1221(a)(2), amended cl. (iv) generally, substituting "Clause (i) of section 954(c)(3)(A) (relating to" for "Subparagraphs (A) and (B) of section 954(c)(4) (relating to exception for".Subsec. (d)(5)(B). Pub. L. 99-514, §1275(c)(7), amended subpar. (B) generally, striking out cl. (i) heading, substituting "An amount" for "Any amount", and striking out cl. (ii), Virgin Islands corporations, which read as follows: "Subsection (b) of section 934 shall not apply to any amount treated as interest under paragraph (1) unless such amount is from sources within the Virgin Islands (determined after the application of paragraph (1))."Subsec. (d)(7), (8). Pub. L. 99-514, §1810(c)(2), added par. (7) and redesignated former par. (7) as (8).Subsec. (e). Pub. L. 99-514, §1215(a), added subsec. (e).1984-Subsec. (c)(2). Pub. L. 98-369, §127(c), substituted "section 871(a)(1), section 871(h) section 881(a), or section 881(c)" for "section 871(a)(1) or section 881(a)".Subsec. (d). Pub. L. 98-369, §123(a), added subsec. (d).1976-Subsec. (a). Pub. L. 94-455, §1901(a)(113)(A), substituted in heading "Produced" for "Sale, etc." and struck out in text provisions relating to the definition of sale and sold.Subsec. (c)(4)(B)(i). Pub. L. 94-455, §1901(a)(113)(B), substituted "sale or exchange" for "sale". Subsec. (c)(4)(B)(iii). Pub. L. 94-455, §1901(a)(113)(B), (C), substituted "sold or exchanged" for "sold" and "sale or exchange" for "sale" wherever appearing.Subsec. (c)(5)(C). Pub. L. 94-455, §1901(a)(113)(B), substituted "sale or exchange" for "sale" wherever appearing.1966-Pub. L. 89-809 designated existing provisions as subsec. (a) and added subsecs. (b) and (c).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2021 AMENDMENT Pub. L. 117-2, §9671(b), Mar. 11, 2021, 135 Stat. 184, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2020."
EFFECTIVE DATE OF 2017 AMENDMENT Pub. L. 115-97, §13501(c)(1), Dec. 22, 2017, 131 Stat. 2141, provided that: "The amendments made by subsection (a) [amending this section] shall apply to sales, exchanges, and dispositions on or after November 27, 2017." Pub. L. 115-97, §14502(b), Dec. 22, 2017, 131 Stat. 2235, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017."
EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111-240 applicable to guarantees issued after Sept. 27, 2010, see section 2122(d) of Pub. L. 111-240, set out as a note under section 861 of this title. Pub. L. 111-226, §216(b), Aug. 10, 2010, 124 Stat. 2400, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 10, 2010]." Pub. L. 111-147, §551(b), Mar. 18, 2010, 124 Stat. 117, provided that: "The amendments made by this section [amending this section] shall take effect on the date of the enactment of this Act [Mar. 18, 2010]."
EFFECTIVE DATE OF 2009 AMENDMENT Pub. L. 111-92, §15(c), Nov. 6, 2009, 123 Stat. 2996, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2010."
EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110-289, div. C, title III, §3093(c), July 30, 2008, 122 Stat. 2912, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2008."
EFFECTIVE DATE OF 2004 AMENDMENT Amendment by section 101(b)(6) of Pub. L. 108-357 applicable to transactions after Dec. 31, 2004, see section 101(c) of Pub. L. 108-357, set out as a note under section 56 of this title. Pub. L. 108-357, §401(c), Oct. 22, 2004, 118 Stat. 1491, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2008." Pub. L. 108-357, §403(c), Oct. 22, 2004, 118 Stat. 1494, provided that: "The amendments made by this section [amending this section and section 904 of this title] shall apply to taxable years beginning after December 31, 2002." Pub. L. 108-357, §403(d), as added by Pub. L. 109-135, §403(l), Dec. 21, 2005, 119 Stat. 2625, provided that: "If the taxpayer elects (at such time and in such form and manner as the Secretary of the Treasury may prescribe) to have the rules of this subsection apply-"(1) the amendments made by this section [amending this section and section 904 of this title] shall not apply to taxable years beginning after December 31, 2002, and before January 1, 2005, and"(2) in the case of taxable years beginning after December 31, 2004, clause (iv) of section 904(d)(4)(C) of the Internal Revenue Code of 1986 (as amended by this section) shall be applied by substituting 'January 1, 2005' for 'January 1, 2003' both places it appears." [Amendment by Pub. L. 109-135 adding section 403(d) of Pub. L. 108-357, set out above, 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 an Effective Date of 2005 Amendment note under section 26 of this title.] Amendment by section 413(c)(12) of Pub. L. 108-357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108-357, set out as an Effective and Termination Dates of 2004 Amendments note under section 1 of this title. Pub. L. 108-357, §894(b), Oct. 22, 2004, 118 Stat. 1647, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Oct. 22, 2004]."
EFFECTIVE DATE OF 2000 AMENDMENT Amendment by Pub. L. 106-519 applicable to transactions after Sept. 30, 2000, with special rules relating to existing foreign sales corporations, see section 5 of Pub. L. 106-519, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106-170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. L. 106-170, set out as a note under section 170 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105-34, §1162(b), Aug. 5, 1997, 111 Stat. 987, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1997."
EFFECTIVE DATE OF 1991 AMENDMENT Pub. L. 102-227, §101(b), Dec. 11, 1991, 105 Stat. 1686, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after August 1, 1989."
EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101-508, §11401(b), Nov. 5, 1990, 104 Stat. 1388-472, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after August 1, 1989."
EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100-203 applicable to taxable years beginning after Dec. 31, 1987, see section 10242(d) of Pub. L. 100-203, set out as a note under section 816 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 1201(d)(4) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, except as otherwise provided, see section 1201(e) of Pub. L. 99-514, set out as a note under section 904 of this title.Amendment by section 1211(b)(2) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, except as otherwise provided, see section 1211(c) of Pub. L. 99-514, set out as an Effective Date note under section 865 of this title.Pub. L. 99-514, title XII, §1215(c), Oct. 22, 1986, 100 Stat. 2545, as amended by Pub. L. 100-647, title I, §1012(h)(7), Nov. 10, 1988, 102 Stat. 3504; Pub. L. 104-191, §521(a), Aug. 21, 1996, 110 Stat. 2103, provided that:"(1) IN GENERAL.-Except as otherwise provided in this subsection, the amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1986. "(2) TRANSITIONAL RULES.-"(A) GENERAL PHASE-IN.-"(i) IN GENERAL.-In the case of the 1st 3 taxable years of the taxpayer beginning after December 31, 1986, the amendments made by this section shall not apply to interest expenses paid or accrued by the taxpayer during the taxable year with respect to an aggregate amount of indebtedness which does not exceed the general phase-in amount. "(ii) GENERAL PHASE-IN AMOUNT.-Except as provided in clause (iii), the general phase-in amount for purposes of clause (i) is the applicable percentage (determined under the following table) of the aggregate amount of indebtedness of the taxpayer outstanding on November 16, 1985:
| "In the case of the: | The applicable percentage is: |
| 1st taxable year | 75 |
| 2nd taxable year | 50 |
| 3rd taxable year | 25. |
| "In the case of the: | The applicable percentage for purposes of subclause (I) is: | The applicable percentage for purposes of subclause (II) is: |
| 1st taxable year | 81/3 | 10 |
| 2nd taxable year | 162/3 | 25 |
| 3rd taxable year | 25 | 50 |
| 4th taxable year | 331/3 | 100 |
| 5th taxable year | 162/3 | 100. |
| "In the case of the: | The applicable percentage for purposes of subclause (I) is: | The applicable percentage for purposes of subclause (II) is: |
| 1st taxable year | 5 | 6¼ |
| 2nd taxable year | 10 | 162/3 |
| 3rd taxable year | 15 | 37½ |
| 4th taxable year | 20 | 100 |
| 5th taxable year | 0 | 0. |
| "In the case of the: | The applicable percentage is: |
| 1st taxable year | 90 |
| 2nd taxable year | 80 |
| 3rd taxable year | 70 |
| 4th taxable year | 60 |
| 5th taxable year | 50 |
| 6th taxable year | 40 |
| 7th taxable year | 30 |
| 8th taxable year | 20 |
| 9th taxable year | 10. |
| "In the case of taxable years beginning in: | The phase-in percentage is: |
| 1987 | 75 |
| 1988 | 50 |
| 1989 | 25." |
EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 98-369, div. A, title I, §123(c), July 18, 1984, 98 Stat. 646, 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 this section [amending this section and section 956 of this title] shall apply to accounts receivable and evidences of indebtedness transferred after March 1, 1984, in taxable years ending after such date."(2) TRANSITIONAL RULE.-The amendments made by this section shall not apply to accounts receivable and evidences of indebtedness acquired after March 1, 1984, and before March 1, 1994, by a Belgian corporation in existence on March 1, 1984, in any taxable year ending after such date, but only to the extent that the amount includible in gross income by reason of section 956 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to such corporation for all such taxable years is not reduced by reason of this paragraph by more than the lesser of- "(A) $15,000,000 or"(B) the amount of the Belgian corporation's adjusted basis on March 1, 1984, in stock of a foreign corporation formed to issue bonds outside the United States to the public."Amendment by section 127(c) 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.
EFFECTIVE DATE OF 1976 AMENDMENT Amendment by Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89-809 applicable with respect to taxable years beginning after Dec. 31, 1966, except that in applying section 864(c)(4)(B)(iii) of this title with respect to a binding contract entered into on or before Feb. 24, 1966, activities in the United States on or before such date in negotiating or carrying out such contract shall not be taken into account, see section 102(e)(1) of Pub. L. 89-809, set out as a note under section 861 of this title.
SAVINGS PROVISIONFor provisions that nothing in amendment by section 401(d)(1)(D)(x), (xvii)(IV), (V) 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.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION TO TREATY OBLIGATIONS OF UNITED STATESFor applicability of amendment by section 1201(d)(4) of Pub. L. 99-514 notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, and for nonapplication of amendments by sections 1211(b)(2) and 1242(a) of Pub. L. 99-514 to the extent application of such amendments would be contrary to 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) to (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 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.
- 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.
- 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.