26 CFR Part 1 — Income Taxes

Contents

8,125 provisions, too many to show on one page. Open a part or section to read it with its history and connections, or search inside the text.

1. 1.0-1 · -1 Internal Revenue Code of 1954 and regulations.
   1. (a) Enactment of law. The Internal Revenue Code of 1954 which became law upon enactment of Public Law 591, 83d Congress, approved August 16, 1954, provides in p
   2. (b) Scope of regulations. The regulations in this part deal with (1) the income taxes imposed under subtitle A of the Internal Revenue Code of 1954, and (2) cer
2. 1.1(h)-1 · (h)-1 Capital gains look-through rule for sales or exchanges of interests in a partnership, S corporation, or trust.
   1. (a) In general. When an interest in a partnership held for more than one year is sold or exchanged, the transferor may recognize ordinary income (e.g., under se
   2. (b) Look-through capital gain—(1) In general. Look-through capital gain is the share of collectibles gain allocable to an interest in a partnership, S corporati
   3. (e) Notification requirements. Reporting rules similar to those that apply to the partners and the partnership under section 751(a) shall apply in the case of s
   4. (f) Examples. The following examples illustrate the requirements of this section: Example 1. Collectibles gain.(i) A and B are equal partners in a personal serv
   5. (g) Effective date. This section applies to transfers of interests in partnerships, S corporations, and trusts that occur on or after September 21, 2000.
   6. (ii) Share of section 1250 capital gain allocable to interest in partnership. When an interest in a partnership held for more than one year is sold or exchanged
3. 1.1(i)-1T · (i)-1T Questions and answers relating to the tax on unearned income certain minor children (Temporary).
4. 1.1-1 · -1 Income tax on individuals.
   1. (a) General rule. (1) Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to th
   2. (b) Citizens or residents of the United States liable to tax. In general, all citizens of the United States, wherever resident, and all resident alien individua
   3. (c) Who is a citizen. Every person born or naturalized in the United States and subject to its jurisdiction is a citizen. For other rules governing the acquisit
   4. (d) Effective/applicability date. The second sentence of paragraph (b) of this section applies to taxable years ending after April 9, 2008.
   5. (ii) For taxable years beginning after December 31, 1970, the tax imposed by section 1(d), as amended by the Tax Reform Act of 1969, shall apply to the income e
5. 1.1-2 · -2 Limitation on tax.
   1. (a) Taxable years ending before January 1, 1971. For taxable years ending before January 1, 1971, the tax imposed by section 1 (whether by subsection (a) or sub
   2. (b) Taxable years beginning after December 31, 1970. If, for any taxable year beginning after December 31, 1970, an individual has earned taxable income which e
6. 1.1-3 · -3 Change in rates applicable to taxable year.
7. 1.1001-1 · -1 Computation of gain or loss.
   1. (a) General rule. Except as otherwise provided in subtitle A of the Code, the gain or loss realized from the conversion of property into cash, or from the excha
   2. (b) Real estate taxes as amounts received. (1) Section 1001(b) and section 1012 state rules applicable in making an adjustment upon a sale of real property with
   3. (c) Other rules. (1) Even though property is not sold or otherwise disposed of, gain is realized if the sum of all the amounts received which are required by se
   4. (d) Installment sales. In the case of property sold on the installment plan, special rules for the taxation of the gain are prescribed in section 453.
   5. (e) Transfers in part a sale and in part a gift. (1) Where a transfer of property is in part a sale and in part a gift, the transferor has a gain to the extent
   6. (f) Sale or other disposition of a term interest in property—(1) General rule. Except as otherwise provided in paragraph (f)(3) of this section, for purposes of
   7. (g) Debt instruments issued in exchange for property—(1) In general. If a debt instrument is issued in exchange for property, the amount realized attributable t
   8. (h) Severances of trusts—(1) In general. The severance of a trust (including without limitation a severance that meets the requirements of § 26.2642-6 or of § 2
   9. (i) An applicable state statute or the governing instrument authorizes or directs the trustee to sever the trust; and
   10. (ii) Any non-pro rata funding of the separate trusts resulting from the severance (including non-pro rata funding as described in § 26.2642-6(d)(4) or § 26.2654
8. 1.1001-2 · -2 Discharge of liabilities.
   1. (a) Inclusion in amount realized—(1) In general. Except as provided in paragraph (a) (2) and (3) of this section, the amount realized from a sale or other dispo
   2. (b) Effect of fair market value of security. The fair market value of the security at the time of sale or disposition is not relevant for purposes of determinin
   3. (c) Examples. The provisions of this section may be illustrated by the following examples. In each example assume the taxpayer uses the cash receipts and disbur
9. 1.1001-3 · -3 Modifications of debt instruments.
   1. (a) Scope—(1) In general. This section provides rules for determining whether a modification of the terms of a debt instrument results in an exchange for purpos
   2. (b) General rule. For purposes of § 1.1001-1(a), a significant modification of a debt instrument, within the meaning of this section, results in an exchange of
   3. (c) Modification defined—(1) In general—(i) Alteration of terms. A modification means any alteration, including any deletion or addition, in whole or in part, o
   4. (e) Significant modifications. Whether the modification of a debt instrument is a significant modification is determined under the rules of this paragraph (e).
   5. (f) Rules of application—(1) Testing for significance—(i) In general. Whether a modification of any term is a significant modification is determined under each
   6. (g) Examples. The following examples illustrate the provisions of paragraphs (e) and (f) of this section: Example 1. Modification of call right.(i) Under the te
   7. (h) Effective/applicability date—(1) In general. Except as otherwise provided in paragraph (h)(2) of this section, this section applies to alterations of the te
   8. (ii) Contingent modifications. If a modification described in paragraphs (e) (2) through (5) of this section is effective only upon the occurrence of a substant
   9. (iv) Variable rate debt instruments. For purposes of this paragraph (e)(2), the annual yield of a variable rate debt instrument is the annual yield of the equiv
10. 1.1001-4 · -4 Modifications of certain derivative contracts.
    1. (a) Certain assignments. For purposes of § 1.1001-1(a), the transfer or assignment of a derivative contract is not treated by the nonassigning counterparty as a
    2. (b) Definitions—(1) Dealer. For purposes of this section, a dealer is a taxpayer who meets the definition of a dealer in securities in section 475(c)(1) or is a
    3. (c) Consideration for the assignment. Any payment between a party transferring or assigning its rights and obligations under the contract and the party to which
    4. (d) Effective/applicability date. This section applies to transfers or assignments of derivative contracts on or after July 22, 2011.
11. 1.1001-5 · -5 European Monetary Union (conversion to the euro).
    1. (a) Conversion of currencies. For purposes of § 1.1001-1(a), the conversion to the euro of legacy currencies (as defined in § 1.985-8(a)(1)) is not the exchange
    2. (b) Effect of currency conversion on other rights and obligations. For purposes of § 1.1001-1(a), if, solely as the result of the conversion of legacy currencie
    3. (c) Effective date. This section applies to tax years ending after July 29, 1998.
12. 1.1001-6 · -6 Transition from certain interbank offered rates.
    1. (a) In general. This section provides rules relating to the modification of the terms of a contract as part of the transition away from the London Interbank Off
    2. (b) Treatment under section 1001—(1) Covered modifications. A covered modification of a contract is not treated as the exchange of property for other property d
    3. (c) Effect of a covered modification on integrated transactions and hedging transactions—(1) In general. Except as otherwise provided in paragraph (c)(2) of thi
    4. (e) Coordination with fast-pay stock rules. A covered modification of stock is not a significant modification in the terms of the stock or the related agreement
    5. (f) Coordination with rules for investment trusts. A covered modification of a contract held by an investment trust does not manifest a power to vary the invest
    6. (g) [Reserved]
    7. (h) Definitions—(1) Covered modification. A covered modification is a modification or portion of a modification of the terms of a contract that is described in
    8. (i) The terms of the contract are modified to replace an operative rate that references a discontinued IBOR with a qualified rate, to add an obligation for one
    9. (ii) The terms of the contract are modified to include a qualified rate as a fallback to an operative rate that references a discontinued IBOR and to make assoc
    10. (j) Modifications excluded from the definition of covered modification. A modification or portion of a modification described in any of paragraphs (j)(1) throug
    11. (k) Applicability date. This section applies to a modification of the terms of a contract that occurs on or after March 7, 2022. A taxpayer may choose to apply
13. 1.1001-7 · -7 Computation of gain or loss for digital assets.
    1. (a) In general. This section provides rules to determine the amount realized for purposes of computing the gain or loss upon the sale, exchange, or other dispos
    2. (b) Amount realized in a sale, exchange, or other disposition of digital assets for cash, other property, or services—(1) Computation of amount realized—(i) In
    3. (ii) Digital assets used to pay digital asset transaction costs. If digital assets are used or withheld to pay digital asset transaction costs, as defined in pa
14. 1.1002-1 · -1 Sales or exchanges.
    1. (a) General rule. The general rule with respect to gain or loss realized upon the sale or exchange of property as determined under section 1001 is that the enti
    2. (b) Strict construction of exceptions from general rule. The exceptions from the general rule requiring the recognition of all gains and losses, like other exce
    3. (c) Certain exceptions to general rule. Exceptions to the general rule are made, for example, by sections 351(a), 354, 361(a), 371(a)(1), 371(b)(1), 721, 1031,
    4. (d) Exchange. Ordinarily, to constitute an exchange, the transaction must be a reciprocal transfer of property, as distinguished from a transfer of property for
15. 1.101-1 · -1 Exclusion from gross income of proceeds of life insurance contracts payable by reason of death.
    1. (a) Exclusion from gross income—(1) In general. Section 101(a)(1) states the general rule that the proceeds of life insurance policies, if paid by reason of the
    2. (b) Transfers and exchanges of life insurance policies—(1) Transfer of an interest in a life insurance contract for valuable consideration—(i) In general. In th
    3. (e) Interest in a life insurance contract—(1) Definition. For purposes of this section and section 6050Y, the term interest in a life insurance contract means t
    4. (f) Definitions. The following definitions apply for purposes of this section:
    5. (g) Examples. The application of this section is illustrated by the following examples. Each example assumes that the transferee did not receive any amounts und
    6. (i) The higher of the amount that would have been excludable by the transferor if the transfer had not occurred or the actual value of the consideration for the
    7. (ii) Determination of gross value of assets of publicly traded entity. For purposes of determining the gross value of assets of an entity that is publicly trade
16. 1.101-2 · -2 Employees' death benefits.
    1. (a) If such amounts are paid under an annuity contract purchased by an employer which is an organization referred to in section 170(b)(1)(A) (ii) or (vi) or whi
    2. (b) The present value of an annuity (immediately before the death of the employee), to the employee, or (immediately after the death of the employee), to his es
    3. (c) If such “total payment” is paid in full within one taxable year of the payee beginning after December 31, 1957. However, the amount that is excludable under
    4. (d) Nonforfeitable rights. (1) Except as provided in subparagraphs (3) and (4) of this paragraph, the exclusion provided by section 101(b) does not apply to amo
    5. (e) Annuity payments. (1) Where death benefits are paid in the form of annuity payments, the following rules shall govern for purposes of the exclusion provided
    6. (f) Distributions on behalf of a self- employed individual. (1) Under sections 401(c)(1) and 403(a)(3), certain self-employed individuals may be covered by a pe
    7. (i) The exclusion from gross income provided by section 101(b) does not apply to amounts, paid as an annuity, with respect to which the employee possessed, imme
    8. (ii) Under section 101(b)(2)(C), no exclusion is allowable for amounts received by a surviving annuitant under a joint and survivor's annuity contract if the an
    9. (iv) Any amount subject to section 101(b)(2)(D) which is excludable under section 101(b) (see subdivision (iii) of this subparagraph) shall, for purposes of sec
    10. (v) Where more than one beneficiary, or more than one death benefit, is involved, the exclusion provided by section 101(b) shall be apportioned to the various b
17. 1.101-3 · -3 Interest payments.
    1. (a) Applicability of section 101(c). Section 101(c) provides that if any amount excluded from gross income by section 101(a) (relating to life insurance proceed
    2. (b) Determination of “present value”. For the purpose of determining whether section 101(c) or section 101(d) applies, the present value (at the time of the ins
18. 1.101-4 · -4 Payment of life insurance proceeds at a date later than death.
    1. (a) In general. (1)(i) Section 101(d) states the provisions governing the exclusion from gross income of amounts (other than those to which section 101(c) appli
    2. (b) Amount held by an insurer. (1) For the purpose of the proration referred to in section 101(d)(1), an “amount held by an insurer with respect to any benefici
    3. (c) Treatment of payments for life to a sole beneficiary. If the contract provides for the payment of a specified lump sum, but, pursuant to an agreement betwee
    4. (d) Treatment of payments to two or more beneficiaries—(1) Unrelated payments. If payments are to be made to two or more beneficiaries, but the payments to be m
    5. (e) Treatment of present value of guaranteed payments. In the case of payments which are to be made for a life or lives under a contract providing that further
    6. (f) Treatment of payments not paid periodically. Payments made to beneficiaries other than periodically shall be included in the gross income of the recipients,
    7. (g) Examples. The principles of this section may be illustrated by the following examples: Example 1.A life insurance policy provides for the payment of $20,000
    8. (h) Applicability of both section 101(c) and 101(d) to payments under a single life insurance contract—(1) In general. Section 101(d) shall not apply to interes
    9. (ii) Section 101(d)(1)(B) provides an additional exclusion where life insurance proceeds are paid to the surviving spouse of an insured. For purposes of this ex
19. 1.101-5 · -5 [Reserved]
20. 1.101-6 · -6 Applicability date.
    1. (a) Except as otherwise provided in paragraph (h)(4) of § 1.101-4, the provisions of section 101 of the Internal Revenue Code of 1954 and §§ 1.101-1, 1.101-2, 1
    2. (b) Notwithstanding paragraph (a) of this section, for purposes of determining whether a transfer of an interest in a life insurance contract is a reportable po
    3. (c) Notwithstanding paragraphs (a) and (b) of this section, § 1.101-1(b)(2)(iv) and (c)(3) apply to any interest in a life insurance contract issued in a sectio
21. 1.101-7 · -7 Mortality table used to determine exclusion for deferred payments of life insurance proceeds.
    1. (a) Mortality table. Notwithstanding any provision of § 1.101-4 that otherwise would permit the use of a mortality table not described in this section, the mort
    2. (b) Examples. The principles of this section may be illustrated by the following examples: Example 1.A life insurance policy provides only for the payment of $5
    3. (c) Effective date. This section applies to amounts received with respect to deaths occurring after October 22, 1986, in taxable years ending after October 22,
22. 1.1011-1 · -1 Adjusted basis.
23. 1.1011-2 · -2 Bargain sale to a charitable organization.
    1. (a) The transferor dies before the entire amount of gain has been reported and there is no surviving annuitant, or
    2. (b) Apportionment of adjusted basis. For purposes of determining gain on a sale or exchange to which this paragraph applies, the adjusted basis of the property
    3. (c) Illustrations. The application of this section may be illustrated by the following examples, which are supplemented by other examples in paragraph (d) of §
    4. (d) Effective date. This section applies only to sales and exchanges made after December 19, 1969.
    5. (e) Cross reference. For rules relating to the treatment of liabilities on the sale or other disposition or encumbered property, see § 1.1001-2.
    6. (ii) If in such case the annuity received in exchange for the property is nonassignable, or is assignable but only to the charitable organization to which the p
24. 1.1012-1 · -1 Basis of property.
    1. (a) Substantially all of the assets of which consist (1) of securities issued by a single management company (as defined in such Act) and securities acquired pu
    2. (b) Which has no power to invest in any other securities except securities issued by a single other management company, when permitted by such Act or the rules
    3. (c) The term serially-numbered advice of transaction means the confirmation (prescribed in 31 CFR 306.116) issued by the Reserve Bank which is identifiable by a
    4. (d) Obligations issued as part of an investment unit. For purposes of determining the basis of the individual elements of an investment unit (as defined in para
    5. (e) Election to use average basis method—(1) In general. Notwithstanding paragraph (c) of this section, and except as provided in paragraph (e)(8) of this secti
    6. (f) Special rules. For special rules for determining the basis for gain or loss in the case of certain vessels acquired through the Maritime Commission (or its
    7. (g) Debt instruments issued in exchange for property—(1) In general. For purposes of paragraph (a) of this section, if a debt instrument is issued in exchange f
    8. (h) Determination of basis of digital assets—(1) Overview and general rule. This paragraph (h) provides rules to determine the basis of digital assets, as defin
    9. (i) Basis of digital assets purchased for cash. The basis of digital assets purchased for cash is the amount of cash used to purchase the digital assets plus an
    10. (ii) Basis of digital assets received in connection with the performance of services. For rules regarding digital assets received in connection with the perform
    11. (j) Sale, disposition, or transfer of digital assets. Paragraphs (j)(1) and (2) of this section apply to digital assets not held in the custody of a broker, suc
25. 1.1012-2 · -2 Transfers in part a sale and in part a gift.
26. 1.1013-1 · -1 Property included in inventory.
27. 1.1014-0 · -0 Table of contents.
28. 1.1014-1 · -1 Basis of property acquired from a decedent.
    1. (a) General rule. The purpose of section 1014 is, in general, to provide a basis for property acquired from a decedent that is equal to the value placed upon su
    2. (b) Scope and application. With certain limitations, the general rule described in paragraph (a) of this section is applicable to the classes of property descri
    3. (c) Property to which section 1014 does not apply. Section 1014 has no application to property that constitutes a right to receive an item of income in respect
    4. (d) Applicability date. This section applies after September 17, 2024. For rules on and before September 17, 2024, see § 1.1014-1 as contained in 26 CFR part 1
29. 1.1014-10 · -10 Basis of property acquired from a decedent must be consistent with property's Federal estate tax value.
    1. (a) Consistent basis requirement—(1) General rule. The consistent basis requirement is the requirement that the initial basis in certain property be equal to or
    2. (b) Final value and reported value—(1) Final value. The final value of consistent basis property is its fair market value as finally determined for Federal esta
    3. (e) Examples. The following examples illustrate the application of this section. In each case, the decedent D was a citizen of the United States, the estate doe
    4. (f) Applicability date. This section applies to property described in paragraph (c)(1) of this section that is acquired from a decedent or by reason of the deat
    5. (i) The value reported on an estate tax return filed with the IRS, once the period of limitations on assessment (see section 6501) of estate tax has expired wit
    6. (ii) Wholly deductible property not subject to the consistent basis requirement. The facts are the same as in paragraph (e)(7)(i) of this section (Example 7), e
30. 1.1014-2 · -2 Property acquired from a decedent.
    1. (a) In general. The following property, except where otherwise indicated, is considered to have been acquired from a decedent and the basis thereof is determine
    2. (b) Property acquired from a decedent dying after December 31, 1953—(1) In general. In addition to the property described in paragraph (a) of this section, and
    3. (c) Special basis rules with respect to certain property acquired from a decedent—(1) Stock or securities of a foreign personal holding company. The basis of ce
31. 1.1014-3 · -3 Other basis rules.
    1. (a) Fair market value. For purposes of this section and § 1.1014-1, the value of property as of the date of the decedent's death as appraised for the purpose of
    2. (b) Property acquired from a decedent dying before March 1, 1913. If the decedent died before March 1, 1913, the fair market value on that date is taken in lieu
    3. (c) Reinvestments by a fiduciary. The basis of property acquired after the death of the decedent by a fiduciary as an investment is the cost or other basis of s
    4. (d) Reinvestments of property transferred during life. Where property is transferred by a decedent during life and the property is sold, exchanged, or otherwise
    5. (e) Alternate valuation dates. Section 1014(a) provides a special rule applicable in determining the basis of property described in § 1.1014-2 where—
32. 1.1014-4 · -4 Uniformity of basis; adjustment to basis.
    1. (a) In general. (1) The basis of property acquired from a decedent, as determined under section 1014(a) or section 1022, is uniform in the hands of every person
    2. (b) Multiple interests. Where more than one person has an interest in property acquired from a decedent, the basis of such property shall be determined and adju
    3. (c) Records. The executor or other legal representative of the decedent, the fiduciary of a trust under a will, the life tenant and every other person to whom a
    4. (d) Effective/applicability date. This section applies on and after January 19, 2017. For rules before January 19, 2017, see § 1.1014-4 as contained in 26 CFR p
33. 1.1014-5 · -5 Gain or loss.
    1. (a) Sale or other disposition of a life interest, remainder interest, or other interest in property acquired from a decedent. (1) Except as provided in paragrap
    2. (b) Sale or other disposition of certain term interests—(1) In general. In determining gain or loss from the sale or other disposition after October 9, 1969, of
    3. (c) Sale or other disposition of a term interest in a tax-exempt trust—(1) In general. In the case of any sale or other disposition by a taxable beneficiary of
    4. (d) Illustrations. The application of this section may be illustrated by the following examples, in which references are made to the actuarial tables contained
    5. (i) That part of the adjusted uniform basis assignable to the term interest of the taxable beneficiary under the rules of paragraph (a) of this section reduced,
    6. (ii) An amount determined by applying the same actuarial share applied in paragraph (c)(1)(i) of this section to the sum of—
34. 1.1014-6 · -6 Special rule for adjustments to basis where property is acquired from a decedent prior to his death.
    1. (a) In cases where the value of the life interest is not included in the decedent's gross estate, the amount of such allowance to the life tenant under section
    2. (b) Any remaining allowance (that is, the increase in the amount of depreciation, amortization, or depletion allowable resulting from any increase in the unifor
    3. (c) Adjustments for deductions allowed prior to the decedent's death. (1) As stated in paragraph (a) of this section, section 1014(b)(9) requires a reduction in
    4. (ii) In cases of the type described in subdivision (i) of this subparagraph, the basis of any interest which is included in the decedent's gross estate may be a
35. 1.1014-7 · -7 Example applying rules of §§ 1.1014-4 through 1.1014-6 to case involving multiple interests.
    1. (a) On January 1, 1950, the decedent creates a trust to pay the income to A for life, remainder to B or his estate. The trust instrument provides that if the de
    2. (b) Assume the same facts as in paragraph (a) of this section. Assume further, that following the decedent's death depreciation is allowed in the amount of $1,0
36. 1.1014-8 · -8 Bequest, devise, or inheritance of a remainder interest.
    1. (a) (1) Where property is transferred for life, with remainder in fee, and the remainderman dies before the life tenant, no adjustment is made to the uniform ba
    2. (b) The provisions of paragraph (a) of this section are illustrated by the following examples: Example 1.Assume that, under the will of a decedent, property con
    3. (c) The rules stated in paragraph (a) of this section do not apply where the basis of the remainder interest in the hands of the remainderman's transferee is de
    4. (i) The value of the remainder interest included in the remainderman's estate, and
    5. (ii) The basis of the remainder interest immediately prior to the remainderman's death.
37. 1.1014-9 · -9 Special rule with respect to DISC stock.
    1. (a) In general. If property consisting of stock of a DISC or former DISC (as defined in section 992(a) (1) or (3) as the case may be) is considered to have been
    2. (b) Portion of property acquired from decedent before his death included in decedent's gross estate—(1) In general. In cases where, due to the operation of the
    3. (c) Estate tax valuation date. For purposes of section 1014(d) and this section, the estate tax valuation date is the date of the decedent's death or, in the ca
    4. (d) Examples. The provisions of this section may be illustrated by the following examples: Example 1.At the date of A's death, his DISC stock has a fair market
38. 1.1015-1 · -1 Basis of property acquired by gift after December 31, 1920.
    1. (a) General rule. (1) In the case of property acquired by gift after December 31, 1920 (whether by a transfer in trust or otherwise), the basis of the property
    2. (b) Uniform basis; proportionate parts of. Property acquired by gift has a single or uniform basis although more than one person may acquire an interest in such
    3. (c) Time of acquisition. The date that the donee acquires an interest in property by gift is when the donor relinquishes dominion over the property and not nece
    4. (d) Property acquired by gift from a decedent dying after December 31, 1953. If an interest in property was acquired by the taxpayer by gift from a donor dying
    5. (e) Fair market value. For the purposes of this section, the value of property as appraised for the purpose of the Federal gift tax, or, if the gift is not subj
    6. (f) Reinvestments by fiduciary. If the property is an investment by the fiduciary under the terms of the gift (as, for example, in the case of a sale by the fid
    7. (g) Records. To insure a fair and adequate determination of the proper basis under section 1015, persons making or receiving gifts of property should preserve a
39. 1.1015-2 · -2 Transfer of property in trust after December 31, 1920.
    1. (a) General rule. (1) In the case of property acquired after December 31, 1920, by transfer in trust (other than by a transfer in trust by a gift, bequest, or d
    2. (b) Reinvestment by fiduciary. If the property is an investment made by the fiduciary (as, for example, in the case of a sale by the fiduciary of property trans
40. 1.1015-3 · -3 Gift or transfer in trust before January 1, 1921.
    1. (a) In the case of property acquired by gift or transfer in trust before January 1, 1921, the basis of such property is the fair market value thereof at the tim
    2. (b) The principles stated in paragraph (b) of § 1.1015-1 concerning the uniform basis are applicable in determining the basis of property where more than one pe
41. 1.1015-4 · -4 Transfers in part a gift and in part a sale.
    1. (a) General rule. Where a transfer of property is in part a sale and in part a gift, the unadjusted basis of the property in the hands of the transferee is the
    2. (b) Examples. The rule of paragraph (a) of this section is illustrated by the following examples: Example 1.If A transfers property to his son for $30,000, and
42. 1.1015-5 · -5 Increased basis for gift tax paid.
    1. (a) General rule in the case of gifts made on or before December 31, 1976. (1)(i) Subject to the conditions and limitations provided in section 1015(d), as adde
    2. (b) Amount of gift tax paid with respect to gifts made on or before December 31, 1976. (1)(i) If only one gift was made during a certain calendar period (as def
    3. (ii) If more than one gift was made during a certain calendar period, the amount of the gift tax paid under chapter 12 or the corresponding provisions of prior
43. 1.1016-1 · -1 Adjustments to basis; scope of section.
44. 1.1016-10 · -10 Substituted basis.
    1. (a) Whenever it appears that the basis of property in the hands of the taxpayer is a substituted basis, as defined in section 1016(b), the adjustments indicated
    2. (b) cation of this section may be illustrated by the following example: Example:A, who makes his returns upon the calendar year basis, in 1935 purchased the X B
45. 1.1016-2 · -2 Items properly chargeable to capital account.
    1. (a) The cost or other basis shall be properly adjusted for any expenditure, receipt, loss, or other item, properly chargeable to capital account, including the
    2. (b) The application of the foregoing provisions may be illustrated by the following example: Example:A, who makes his returns on the calendar year basis, purcha
    3. (c) Adjustments to basis shall be made for carrying charges such as taxes and interest, with respect to property (whether real or personal, improved or unimprov
    4. (d) Expenditures described in section 173 to establish, maintain, or increase the circulation of a newspaper, magazine, or other periodical are chargeable to ca
46. 1.1016-3 · -3 Exhaustion, wear and tear, obsolescence, amortization, and depletion for periods since February 28, 1913.
    1. (a) The amount allowed as deductions in computing taxable income, to the extent resulting in a reduction of the taxpayer's income taxes, or
    2. (b) Adjustment for periods beginning on or after January 1, 1952. The decrease required by paragraph (a) of this section for deductions in respect of any period
    3. (c) Adjustment for periods since February 28, 1913, and before January 1, 1952, where no election made. If no election has been properly made under section 1020
    4. (d) Adjustment for periods since February 28, 1913, and before January 1, 1952, where election made. If an election has been properly made under section 1020, o
    5. (e) Determination of amount allowed which reduced taxpayer's taxes. (1) As indicated in paragraphs (b) and (d) of this section, there are situations in which it
    6. (f) Determination of amount allowable in prior taxable years. (1) One of the factors in determining the adjustment to basis as of any date is the amount of depr
    7. (g) Property with transferred basis. The following rules apply in the determination of the adjustments to basis of property in the hands of a transferee, donee,
    8. (h) Application to a change in method of accounting. For purposes of determining whether a change in depreciation or amortization for property subject to sectio
    9. (i) Examples. The application of section 1016(a) (1) and (2) may be illustrated by the following examples: Example 1.The case of Corporation A discloses the fol
    10. (ii) Early application of § 1.1016-3(a)(1)(ii). A taxpayer may choose to apply paragraph (a)(1)(ii) of this section to taxable years beginning on or after Janua
    11. (j) Effective/applicability dates—(1) In general. Except as provided in paragraphs (j)(2) and (j)(3) of this section, this section applies on or after December
47. 1.1016-4 · -4 Exhaustion, wear and tear, obsolescence, amortization, and depletion; periods during which income was not subject to tax.
    1. (a) Adjustments to basis must be made for exhaustion, wear and tear, obsolescence, amortization, and depletion to the extent actually sustained in respect of:
    2. (b) The amount of the adjustments described in paragraph (a) of this section actually sustained is that amount charged off on the books of the taxpayer where su
48. 1.1016-5 · -5 Miscellaneous adjustments to basis.
    1. (a) Certain stock distributions. (1) In the case of stock, the cost or other basis must be diminished by the amount of distributions previously made which, unde
    2. (b) Amortizable bond premium—(1) In general. A holder's basis in a bond is reduced by the amount of bond premium used to offset qualified stated interest income
    3. (c) Municipal bonds. In the case of a municipal bond (as defined in section 75(b)), basis shall be adjusted to the extent provided in section 75 or as provided
    4. (d) Sale or exchange of residence. Where the acquisition of a new residence results in the nonrecognition of any part of the gain on the sale, or exchange, or i
    5. (e) Loans from Commodity Credit Corporation. In the case of property pledged to the Commodity Credit Corporation, the basis of such property shall be increased
    6. (f) Deferred development and exploration expenses. Expenditures for development and exploration of mines or mineral deposits treated as deferred expenses under
    7. (g) Sale of land with unharvested crop. In the case of an unharvested crop which is sold, exchanged, or involuntarily converted with the land and which is consi
    8. (h) Consent dividends. (1) In the case of amounts specified in a shareholder's consent to which section 28 of the Internal Revenue Code of 1939 applies, the bas
    9. (i) Stock in foreign personal holding company. In the case of the stock of a United States shareholder in a foreign personal holding company, basis shall be adj
    10. (j) Research and experimental expenditures. Research and experimental expenditures treated as deferred expenses under section 174(b) are chargeable to capital a
    11. (k) Deductions disallowed in connection with disposal of coal or domestic iron ore. Basis shall be adjusted by the amount of the deductions disallowed under sec
    12. (l) Expenditures attributable to grants or loans covered by section 621. In the case of expenditures attributable to a grant or loan made to a taxpayer by the U
    13. (m) Trademark and trade name expenditures. Trademark and trade name expenditures treated as deferred expenses under section 177 are chargeable to capital accoun
    14. (n) Life insurance companies. In the case of any evidence of indebtedness referred to in section 818(b), the basis shall be adjusted to the extent of the adjust
    15. (o) Stock and indebtedness of electing small business corporation. In the case of a shareholder of an electing small business corporation, as defined in section
    16. (p) Gift tax paid on certain property acquired by gift. Basis shall be adjusted by that amount of the gift tax paid in respect of property acquired by gift whic
    17. (q) Section 38 property. In the case of property which is or has been section 38 property (as defined in section 48(a)), the basis shall be adjusted to the exte
    18. (r) Stock in controlled foreign corporations and other property. In the case of stock in controlled foreign corporations (or foreign corporations which were con
    19. (s) Original issue discount. In the case of certain corporate obligations issued at a discount after May 27, 1969, the basis shall be increased under section 12
    20. (t) Section 23 credit. In the case of property with respect to which a credit has been allowed under section 23 or former section 44C (relating to residential e
    21. (u) Gas guzzler tax. In the case of an automobile upon which the gas guzzler tax was imposed, the basis shall be reduced as provided in section 1016 (d). Editor
49. 1.1016-6 · -6 Other applicable rules.
    1. (a) Adjustments must always be made to eliminate double deductions or their equivalent. Thus, in the case of the stock of a subsidiary company, the basis thereo
    2. (b) In determining basis, and adjustments to basis, the principles of estoppel apply, as elsewhere under the Code, and prior internal revenue laws.
50. 1.1017-1 · -1 Basis reductions following a discharge of indebtedness.
    1. (a) General rule for section 108(b)(2)(E). This paragraph (a) applies to basis reductions under section 108(b)(2)(E) that are required by section 108(a)(1) (A)
    2. (b) Operating rules—(1) Prior tax-attribute reduction. The amount of excluded COD income applied to reduce basis does not include any COD income applied to redu
    3. (c) Modification of ordering rules for basis reductions under sections 108(b)(5) and 108(c)—(1) In general. The ordering rules prescribed in paragraph (a) of th
    4. (d) Changes in security. If any property is added or eliminated as security for an indebtedness during the one-year period preceding the discharge of that indeb
    5. (e) Depreciable property. For purposes of this section, the term depreciable property means any property of a character subject to the allowance for depreciatio
    6. (f) Election to treat section 1221(1) real property as depreciable—(1) In general. For basis reductions under section 108(b)(5) and basis reductions relating to
    7. (g) Partnerships—(1) Partnership COD income. For purposes of paragraph (a) of this section, a taxpayer must treat a distributive share of a partnership's COD in
    8. (h) Special allocation rule for cases to which section 1398 applies. If a bankruptcy estate and a taxpayer to whom section 1398 applies (concerning only individ
    9. (i) Effective date. This section applies to discharges of indebtedness occurring on or after October 22, 1998.
    10. (ii) Request by partner and consent of partnership—(A) In general. Except as otherwise provided in this paragraph (g)(2)(ii), a taxpayer may choose whether or n
    11. (iv) Partner's share of partnership basis—(A) In general. For purposes of this paragraph (g), a partner's proportionate share of the partnership's basis in depr
    12. (v) Treatment of basis reduction—(A) Basis adjustment. The amount of the reduction to the basis of depreciable partnership property constitutes an adjustment to
51. 1.1019-1 · -1 Property on which lessee has made improvements.
52. 1.102-1 · -1 Gifts and inheritances.
    1. (a) General rule. Property received as a gift, or received under a will or under statutes of descent and distribution, is not includible in gross income, althou
    2. (b) Income from gifts and inheritances. The income from any property received as a gift, or under a will or statute of descent and distribution shall not be exc
    3. (c) Gifts and inheritances of income. If the gift, bequest, devise, or inheritance is of income from property, it shall not be excluded from gross income under
    4. (d) Effect of Subchapter J. Any amount required to be included in the gross income of a beneficiary under sections 652, 662, or 668 shall be treated for purpose
    5. (e) Income taxed to grantor or assignor. Section 102 is not intended to tax a donee upon the same income which is taxed to the grantor of a trust or assignor of
53. 1.1020-1 · -1 Election as to amounts allowed in respect of depreciation, etc., before 1952.
    1. (a) In general. (1) Any person may elect to have the adjustments to the cost or other basis of property under section 1016(a)(2) determined in accordance with s
    2. (b) Rules applicable to making of election. The following rules are applicable to the making of an election under section 1020:
    3. (c) Election made on or before December 31, 1952. An election made on or before December 31, 1952, in accordance with the provisions of section 113(d) of the In
    4. (d) Validity of elections or revocation of elections. An election or revocation of an election which conforms in substance to the provisions of this section wil
    5. (e) Effect of election. For rules relating to the effect of an election under this section, see section 1016(a)(2) and the regulations thereunder.
54. 1.1021-1 · -1 Sale of annuities.
55. 1.103-1 · -1 Interest upon obligations of a State, territory, etc.
    1. (a) Interest upon obligations of a State, territory, a possession of the United States, the District of Columbia, or any political subdivision thereof (hereinaf
    2. (b) Obligations issued by or on behalf of any State or local governmental unit by constituted authorities empowered to issue such obligations are the obligation
56. 1.103-10 · -10 Exemption for certain small issues of industrial development bonds.
    1. (a) A capital expenditure is an excluded expenditure if either it is made by a public utility company which is not the principal user of the facility financed b
    2. (b) However, if an exchange referred to in (a) of this subdivision occurs during the 6-year period beginning 3 years before the date of issuance of an issue of
    3. (c) Refunding or refinancing issue exemption—(1) $1 million or less refunding issue. Section 103(b)(6)(A) also provides that section 103(b)(1) shall not apply t
    4. (d) However, if such a transfer referred to in (c) of this subdivision occurs during the 6-year period beginning 3 years before the date of issuance of an issue
    5. (e) Related persons. For purposes of section 103(b) and §§ 1.103-7 through 1.103-11, the term “related person” means a person who is related to another person i
    6. (f) Disqualification of certain small issues. (1) Section 103(b)(6) shall not apply to any obligation issued after April 24, 1979, which is part of an issue, a
    7. (g) Examples. The application of the rules contained in section 103(b)(6) and this section are illustrated by the following examples: Example 1.County A and cor
    8. (i) To redeem part of all of a prior issue substantially all of the proceeds of which were used to acquire, construct, reconstruct, or improve land or property
    9. (ii) To redeem part or all of a prior exempt small refunding issue.
    10. (v) (a) If the assets of a corporation are acquired by another corporation in a transaction to which section 381(a) (relating to carryovers in certain corporate
    11. (vi) The issuer may make the election provided by section 103(b)(6)(D) and this paragraph (b)(2) (assuming that the bonds otherwise qualify under section 103(b)
57. 1.103-11 · -11 Bonds held by substantial users.
    1. (a) In general. Section 103(c) (4), (5), or (6) (relating respectively to interest on bonds to finance certain exempt facilities, interest on bonds to finance i
    2. (b) Substantial user. In general, a substantial user of a facility includes any nonexempt person who regularly uses a part of such facility in his trade or busi
    3. (c) Examples. The application of section 103(c)(7) and this section are illustrated by the following examples: Example 1.Pursuant to an arrangement with corpora
58. 1.103-16 · -16 Obligations of certain volunteer fire departments.
    1. (a) General rule. An obligation of a volunteer fire department issued after December 31, 1980, shall be treated as an obligation of a political subdivision of a
    2. (b) Definition of qualified volunteer fire department. For purposes of this section, the term “qualified volunteer fire department” means an organization—
    3. (c) “Substantially all” test. Substantially all of the proceeds of an issue are used for the purposes specified in paragraph (a)(2) of this section if 90 percen
    4. (d) Refunding issues. An obligation which is part of an issue issued by a qualified volunteer fire department after December 31, 1980, part or all of the procee
    5. (e) Examples. The provisions of this section may be illustrated by the following examples: Example 1.The County M Volunteer Fire and Rescue Association provides
59. 1.103-2 - 1.103-6 · -2-1.103-6 [Reserved]
60. 1.103-7 · -7 Industrial development bonds.
    1. (a) Where a contract described in subdivision (i) of this subparagraph may be extended by the issuer of obligations described therein, the term of the contract
    2. (b) The subparagraph (5) output of a facility shall be determined by multiplying the number of units produced or to be produced by the facility in 1 year by the
    3. (c) Examples. The application of the rules contained in section 103(c) (2) and (3) and paragraph (b) of this section are illustrated by the following examples:
    4. (d) Certain refunding issues—(1) General rule. In the case of an issue of obligations issued to refund the outstanding face amount of an issue of obligations, t
    5. (i) Which is issued as part of an issue all or a major portion of the proceeds of which are to be used directly or indirectly in any trade or business carried o
    6. (ii) For purposes of this subparagraph—
61. 1.103-8 · -8 Interest on bonds to finance certain exempt facilities.
    1. (a) It is property which is described in subdivision (ii) of this subparagraph and is either of a character subject to the allowance for depreciation provided i
    2. (b) Either (1) a Federal, State, or local agency exercising jurisdiction has certified that the facility, as designed, is in furtherance of the purpose of abati
    3. (c) Is used in the trade or business of furnishing electric energy or gas, and
    4. (d) Is a part of a system providing service to the general populace of one or more communities or municipalities, but in no event more than 2 contiguous countie
    5. (e) Certain transportation facilities—(1) General rule. Section 103(b)(4)(D) provides that section 103(b)(1) shall not apply to obligations issued by a State or
    6. (f) Certain public utility facilities—(1) General rule. (i) Section 103(b)(4)(E) provides that section 103(b)(1) shall not apply to obligations issued by a Stat
    7. (g) Air or water pollution control facilities—(1) General rule. Section 103(b)(4)(F) provides that section 103(b)(1) shall not apply to obligations issued by a
    8. (h) Water facilities—(1) General rule. Section 103(b)(4)(G) provides that section 103(b)(1) shall not apply to obligations issued by a State or local government
    9. (i) Examples. The application of section 103(b)(4) and this section are illustrated by the following examples: Example 1.City B plans to issue $10 million of bo
    10. (ii) Property is described in this subdivision if it is property to be used, in whole or in part, to abate or control water or atmospheric pollution or contamin
62. 1.103-9 · -9 Interest on bonds to finance industrial parks.
    1. (a) General rule. (1) Under section 103(c)(5), interest paid on an issue of obligations issued by a State or local governmental unit (as defined in § 1.103-1) i
    2. (b) Definition of an industrial park. For purposes of section 103(c)(5) and this section, the term “industrial park” means a tract of land, other than a tract o
    3. (c) Development of land defined. For purposes of section 103(c)(5) and this section, the term “development of land” includes the provision of certain improvemen
    4. (d) Examples. The application of the rules contained in section 103(c)(5) and this section are illustrated by the following examples: Example 1.City A and corpo
63. 1.1031(a)-1 · (a)-1 Property held for productive use in trade or business or for investment.
    1. (a) In general—(1) Exchanges of property solely for property of a like kind. Section 1031(a)(1) provides an exception from the general rule requiring the recogn
    2. (b) Definition of “like kind.” As used in section 1031(a), the words like kind have reference to the nature or character of the property and not to its grade or
    3. (c) Examples of exchanges of property of a “like kind.” No gain or loss is recognized if (1) a taxpayer exchanges property held for productive use in his trade
    4. (d) Examples of exchanges not solely in kind. Gain or loss is recognized if, for instance, a taxpayer exchanges (1) Treasury bonds maturing March 15, 1958, for
    5. (e) Applicability dates—(1) Exchanges of partnership interests. The provisions of paragraph (a)(1) of this section relating to exchanges of partnership interest
    6. (i) Stock in trade or other property held primarily for sale;
    7. (ii) Stocks, bonds, or notes;
64. 1.1031(a)-2 · (a)-2 Additional rules for exchanges of personal property.
    1. (a) Introduction. Section 1.1031(a)-1(b) provides that the nonrecognition rules of section 1031 do not apply to an exchange of one kind or class of property for
    2. (b) Depreciable tangible personal property—(1) General rule. Depreciable tangible personal property is exchanged for property of a “like kind” under section 103
    3. (c) Intangible personal property and nondepreciable personal property—(1) General rule. An exchange of intangible personal property of nondepreciable personal p
    4. (d) Effective date. Except as otherwise provided in this paragraph (d), this section applies to exchanges occurring on or after April 11, 1991. Paragraphs (b)(3
65. 1.1031(a)-3 · (a)-3 Definition of real property.
    1. (a) Real property—(1) In general. The term real property under section 1031 and §§ 1.1031(a)-1 through 1.1031(k)-1 means land and improvements to land, unsevere
    2. (b) Examples. The following examples illustrate the provisions of this section. In each example, unless otherwise provided, the State or local law of the applic
    3. (ii) The sculpture is not an inherently permanent structure listed in paragraph (a)(2)(ii)(C) of this section, and, therefore, C must use the factors provided i
66. 1.1031(b)-1 · (b)-1 Receipt of other property or money in tax-free exchange.
    1. (a) If the taxpayer receives other property (in addition to property permitted to be received without recognition of gain) or money—
    2. (b) The application of this section may be illustrated by the following examples: Example 1.A, who is not a dealer in real estate, in 1954 exchanges real estate
    3. (c) Consideration received in the form of an assumption of liabilities (or a transfer subject to a liability) is to be treated as other property or money for th
67. 1.1031(b)-2 · (b)-2 Safe harbor for qualified intermediaries.
    1. (a) In the case of simultaneous transfers of like-kind properties involving a qualified intermediary (as defined in § 1.1031(k)-1(g)(4)(iii)), the qualified int
    2. (b) In the case of simultaneous exchanges of like-kind properties involving a qualified intermediary (as defined in § 1.1031(k)-1(g)(4)(iii)), the receipt by th
    3. (c) Paragraph (a) of this section applies to transfers of property made by taxpayers on or after June 10, 1991.
    4. (d) Paragraph (b) of this section applies to transfers of property made by taxpayers on or after April 20, 1994. A taxpayer may choose to apply paragraph (b) of
68. 1.1031(c)-1 · (c)-1 Nonrecognition of loss.
69. 1.1031(d)-1 · (d)-1 Property acquired upon a tax-free exchange.
    1. (a) If, in an exchange of property solely of the type described in section 1031, section 1035(a), section 1036(a), or section 1037(a), no part of the gain or lo
    2. (b) If, in an exchange of properties of the type indicated in section 1031, section 1035(a), section 1036(a), or section 1037(a), gain to the taxpayer was recog
    3. (c) If, upon an exchange of properties of the type described in section 1031, section 1035(a), section 1036(a), or section 1037(a), the taxpayer received other
    4. (d) Section 1031(c) and, with respect to section 1031 and section 1036(a), similar provisions of prior revenue laws provide that no loss may be recognized on an
    5. (e) If, upon an exchange of properties of the type described in section 1031, section 1035(a), section 1036(a), or section 1037(a), the taxpayer also exchanged
70. 1.1031(d)-1T · (d)-1T Coordination of section 1060 with section 1031 (temporary).
71. 1.1031(d)-2 · (d)-2 Treatment of assumption of liabilities.
72. 1.1031(e)-1 · (e)-1 Exchange of livestock of different sexes.
73. 1.1031(j)-1 · (j)-1 Exchanges of multiple properties.
    1. (a) Introduction—(1) Overview. As a general rule, the application of section 1031 requires a property-by-property comparison for computing the gain recognized a
    2. (b) Computation of gain recognized—(1) In general. In computing the amount of gain recognized in an exchange of multiple properties, the fair market value must
    3. (c) Computation of basis of properties received. In an exchange of multiple properties qualifying for nonrecognition of gain or loss under section 1031 and this
    4. (d) Examples. The application of this section may be illustrated by the following examples: Example 1.(i) K exchanges computer A (asset class 00.12) and automob
    5. (e) Effective date. Section 1.1031 (j)-1 is effective for exchanges occurring on or after April 11, 1991.
    6. (ii) The amount of gain or loss realized and recognized with respect to properties transferred by the taxpayer that are not within any exchange group or the res
74. 1.1031(k)-1 · (k)-1 Treatment of deferred exchanges.
    1. (a) Overview. This section provides rules for the application of section 1031 and the regulations thereunder in the case of a “deferred exchange.” For purposes
    2. (b) Identification and receipt requirements—(1) In general. In the case of a deferred exchange, any replacement property received by the taxpayer will be treate
    3. (e) Special rules for identification and receipt of replacement property to be produced—(1) In general. A transfer of relinquished property in a deferred exchan
    4. (f) Receipt of money or other property—(1) In general. A transfer of relinquished property in a deferred exchange is not within the provisions of section 1031(a
    5. (g) Safe harbors—(1) In general. Paragraphs (g)(2) through (g)(5) of this section set forth four safe harbors the use of which will result in a determination th
    6. (h) Interest and growth factors—(1) In general. For purposes of this section, the taxpayer is treated as being entitled to receive interest or a growth factor w
    7. (i) [Reserved]
    8. (ii) In the case of a transfer of relinquished property made by a taxpayer on or after January 17, 2001, paragraph (k)(4)(i) of this section does not apply to a
    9. (iv) Example 4. (A) On May 1, 1991, B enters into an agreement to sell real property X to D for $100,000 on May 17, 1991. However, D is unwilling to participate
    10. (j) Determination of gain or loss recognized and the basis of property received in a deferred exchange—(1) In general. Except as otherwise provided, the amount
    11. (k) Definition of disqualified person. (1) For purposes of this section, a disqualified person is a person described in paragraph (k)(2), (k)(3), or (k)(4) of t
    12. (l) [Reserved]
    13. (m) Definition of fair market value. For purposes of this section, the fair market value of property means the fair market value of the property without regard
    14. (n) No inference with respect to actual or constructive receipt rules outside of section 1031. The rules provided in this section relating to actual or construc
    15. (o) Effective date. This section applies to transfers of property made by a taxpayer on or after June 10, 1991. However, a transfer of property made by a taxpay
    16. (v) Example 5. (A) On May 1, 1991, B enters into an agreement to sell real property X to D for $100,000. However, D is unwilling to participate in a like-kind e
    17. (vi) Example 6. (A) In 2020, B transfers to C real property with a fair market value of $1,100,000 and an adjusted basis of $400,000. B's replacement property i
75. 1.1031-0 · -0 Table of contents.
76. 1.1032-1 · -1 Disposition by a corporation of its own capital stock.
    1. (a) The disposition by a corporation of shares of its own stock (including treasury stock) for money or other property does not give rise to taxable gain or ded
    2. (b) Section 1032(a) does not apply to the acquisition by a corporation of shares of its own stock except where the corporation acquires such shares in exchange
    3. (c) Where a corporation acquires shares of its own stock in exchange for shares of its own stock (including treasury stock) the transaction may qualify not only
    4. (d) For basis of property acquired by a corporation in connection with a transaction to which section 351 applies or in connection with a reorganization, see se
77. 1.1032-2 · -2 Disposition by a corporation of stock of a controlling corporation in certain triangular reorganizations.
    1. (a) Scope. This section provides rules for certain triangular reorganizations described in § 1.358-6(b) when the acquiring corporation (S) acquires property or
    2. (b) General nonrecognition of gain or loss. For purposes of § 1.1032-1(a), in the case of a forward triangular merger, a triangular C reorganization, or a trian
    3. (c) Treatment of S. S must recognize gain or loss on its exchange of P stock as consideration in a forward triangular merger, a triangular C reorganization, or
    4. (d) Examples. The rules of this section are illustrated by the following examples. For purposes of these examples, P, S, and T are domestic corporations, P and
    5. (e) Stock options. The rules of this section shall apply to an option to buy or sell P stock issued by P in the same manner as the rules of this section apply t
    6. (f) Effective dates. This section applies to triangular reorganizations occurring on or after December 23, 1994, except for paragraph (e) of this section, which
78. 1.1032-3 · -3 Disposition of stock or stock options in certain transactions not qualifying under any other nonrecognition provision.
    1. (a) Scope. This section provides rules for certain transactions in which a corporation or a partnership (the acquiring entity) acquires money or other property
    2. (b) Nonrecognition of gain or loss—(1) General rule. In a transaction to which this section applies, no gain or loss is recognized on the disposition of the iss
    3. (c) Applicability. The rules of this section apply only if, pursuant to a plan to acquire money or other property—
    4. (d) Stock options. The rules of this section shall apply to an option issued by a corporation to buy or sell its own stock in the same manner as the rules of th
    5. (e) Examples. The following examples illustrate the application of this section: Example 1.(i) X, a corporation, owns all of the stock of Y corporation. Y reach
    6. (f) Effective date. This section applies to transfers of stock or stock options of the issuing corporation occurring on or after May 16, 2000.
79. 1.1033(a)-1 · (a)-1 Involuntary conversions; nonrecognition of gain.
    1. (a) In general. Section 1033 applies to cases where property is compulsorily or involuntarily converted. An involuntary conversion may be the result of the dest
    2. (b) Special rules. For rules relating to the application of section 1033 to involuntary conversions of a principal residence with respect to which an election h
80. 1.1033(a)-2 · (a)-2 Involuntary conversion into similar property, into money or into dissimilar property.
    1. (a) In general. The term disposition of the converted property means the destruction, theft, seizure, requisition, or condemnation of the converted property, or
    2. (b) Conversion into similar property. If property (as a result of its destruction in whole or in part, theft, seizure, or requisition or condemnation or threat
    3. (c) Conversion into money or into dissimilar property. (1) If property (as a result of its destruction in whole or in part, theft, seizure, or requisition or co
81. 1.1033(a)-3 · (a)-3 Involuntary conversion of principal residence.
82. 1.1033(b)-1 · (b)-1 Basis of property acquired as a result of an involuntary conversion.
    1. (a) The provisions of the first sentence of section 1033(b) may be illustrated by the following example: Example:A's vessel which has an adjusted basis of $100,
    2. (b) The provisions of the last sentence of section 1033(b) may be illustrated by the following example: Example:A taxpayer realizes $22,000 from the involuntary
83. 1.1033(c)-1 · (c)-1 Disposition of excess property within irrigation project deemed to be involuntary conversion.
    1. (a) The sale, exchange, or other disposition occurring in a taxable year to which the Internal Revenue Code of 1954 applies, of excess lands lying within an irr
    2. (b) If a disposition in order to conform to the acreage limitation provisions of Federal reclamation laws includes property other than excess lands (as, for exa
    3. (c) The provisions of § 1.1033(a)-2 shall be applicable in the case of dispositions treated as involuntary conversions under this section. The details in connec
    4. (d) The term involuntary conversion, where it appears in subtitle A of the Code or the regulations thereunder, includes dispositions of excess property within i
84. 1.1033(d)-1 · (d)-1 Destruction or disposition of livestock because of disease.
    1. (a) The destruction occurring in a taxable year to which the Internal Revenue Code of 1954 applies, of livestock by, or on account of, disease, or the sale or e
    2. (b) The provisions of § 1.1033(a)-2 shall be applicable in the case of a disposition treated as an involuntary conversion under this section. The details in con
    3. (c) The term involuntary conversion, where it appears in subtitle A of the Code or the regulations thereunder, includes disposition of livestock described in th
85. 1.1033(e)-1 · (e)-1 Sale or exchange of livestock solely on account of drought.
    1. (a) The sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes in excess of the number the taxpayer would sell or exchan
    2. (b) To qualify under section 1033(e) and this section, the sale or exchange of the livestock need not take place in a drought area. While it is not necessary th
    3. (c) The total sales or exchanges of livestock held for draft, breeding, or dairy purposes occurring in any taxable year which may qualify as an involuntary conv
    4. (d) The replacement requirements of section 1033 will be satisfied only if the livestock sold or exchanged is replaced within the prescribed period with livesto
    5. (e) The provisions of § 1.1033(a)-2 shall be applicable in the case of a sale or exchange treated as an involuntary conversion under this section. The details i
    6. (f) The term involuntary conversion, where it appears in subtitle A of the Code or the regulations thereunder, includes the sale or exchange of livestock descri
    7. (g) The provisions of section 1033(e) and this section apply to taxable years ending after December 31, 1955, but only in the case of sales or exchange of lives
86. 1.1033(g)-1 · (g)-1 Condemnation of real property held for productive use in trade or business or for investment.
    1. (a) Special rule in general. This section provides special rules for applying section 1033 with respect to certain dispositions, occurring after December 31, 19
    2. (b) Election to treat outdoor advertising displays as real property—(1) In general. Under section 1033(g)(3) of the Code, a taxpayer may elect to treat property
    3. (ii) Revocation of election by Commissioner's consent. Except as otherwise provided in paragraph (b)(2)(iii) of this section, an election under section 1033(g)(
87. 1.1033(h)-1 · (h)-1 Effective date.
88. 1.1035-1 · -1 Certain exchanges of insurance policies.
    1. (a) A contract of life insurance for another contract of life insurance or for an endowment or annuity contract (section 1035(a)(1));
    2. (b) A contract of endowment insurance for another contract of endowment insurance providing for regular payments beginning at a date not later than the date pay
    3. (c) An annuity contract for another annuity contract (section 1035(a)(3)), but section 1035 does not apply to such exchanges if the policies exchanged to not re
89. 1.1036-1 · -1 Stock for stock of the same corporation.
    1. (a) Section 1036 permits the exchange, without the recognition of gain or loss, of common stock for common stock, or of preferred stock for preferred stock, in
    2. (b) For rules relating to recognition of gain or loss where an exchange is not wholly in kind, see subsections (b) and (c) of section 1031. For rules relating t
    3. (c) A transfer is not within the provisions of section 1036(a) if as part of the consideration the other party to the exchange assumes a liability of the taxpay
    4. (d) Nonqualified preferred stock. See § 1.356-7(a) for the applicability of the definition of nonqualified preferred stock in section 351(g)(2) for stock issued
90. 1.1037-1 · -1 Certain exchanges of United States obligations.
    1. (a) Nonrecognition of gain or loss—(1) In general. Section 1037(a) provides for the nonrecognition of gain or loss on the surrender to the United States of obli
    2. (b) Application of section 1232 upon disposition or redemption of new obligation—(1) Exchanges involving nonrecognition of gain on obligations issued at a disco
    3. (c) Holding period of obligation received in the exchange. The holding period of an obligation received from the United States in an exchange to which the provi
    4. (d) Basis. The basis of an obligation received from the United States in an exchange to which the provisions of section 1037(a) (or so much of section 1031 (b)
    5. (e) Effective date. Section 1.1037 and this section shall apply only for taxable years ending after September 22, 1959.
    6. (ii) Illustrations. The application of this subparagraph may be illustrated by the following examples, in which it is assumed that the taxpayer uses the cash re
91. 1.1038-1 · -1 Reacquisitions of real property in satisfaction of indebtedness.
    1. (a) Scope of section 1038—(1) General rule on gain or loss. If a sale of real property gives rise to indebtedness to the seller which is secured by the real pro
    2. (b) Amount of gain resulting from a reacquisition—(1) Determination of amount—(i) In general. As a result of a reacquisition to which paragraph (a) of this sect
    3. (e) Recognition of gain. The entire amount of the gain determined under paragraphs (b) and (c) of this section with respect to a reacquisition to which paragrap
    4. (f) Special rules applicable to worthless indebtedness—(1) Worthlessness resulting from reacquisition. No debt of the purchaser to the seller which was secured
    5. (g) Rules for determining gain or loss on disposition of reacquired property—(1) Basis of reacquired real property. The basis of any real property acquired in a
    6. (h) Illustrations. The application of this section may be illustrated by the following examples in which it is assumed that the reacquisition is in satisfaction
    7. (i) The amount of the adjusted basis, determined under sections 453 and 1011, and the regulations thereunder, of all indebtedness of the purchaser to the seller
    8. (ii) The amount of gain determined under paragraphs (b) and (c) of this section with respect to such reacquisition, and
92. 1.1038-2 · -2 Reacquisition and resale of property used as a principal residence.
    1. (a) Application of special rules—(1) In general. If paragraph (a) of § 1.1038-1 applies to the reacquisition of real property which was used by the seller as hi
    2. (b) Transactions not included. (1) If with respect to the original sale of the property there was no nonrecognition of gain under section 1034 and an election u
    3. (c) Redetermination of gain required—(1) Sale of old residence. The amount of gain excluded under section 121 on the sale of the property and the amount of gain
    4. (d) Redetermination of adjusted sales price. For purposes of applying sections 121 and 1034 pursuant to this section, the adjusted sales price of the reacquired
    5. (e) Determination of adjusted basis at time of resale. For purposes of applying sections 121 and 1034 pursuant to this section, the adjusted basis of the reacqu
    6. (f) Treatment of indebtedness secured by the property—(1) Year of reacquisition. No debt of the purchaser to the seller which was secured by the reacquired real
    7. (g) Date of sale. Since the resale of the property, by being treated as part of the transaction constituting the original sale of the property, is treated as ha
    8. (h) Illustrations. The application of this section may be illustrated by the following examples: Example 1.(a) On June 30, 1964, S, a single individual over 65
93. 1.1038-3 · -3 Election to have section 1038 apply for taxable years beginning after December 31, 1957.
    1. (a) In general. If an election is made in the manner provided by paragraph (b) of this section, the applicable provisions of §§ 1.1038-1 and 1.1038-2 shall appl
    2. (b) Time and manner of making election—(1) In general. (i) An election to have the provisions of § 1.1038-2 apply to reacquisitions of real property occurring i
    3. (ii) An election to have the provisions of § 1.1038-1 apply to reacquisitions of real property occurring in taxable years beginning after December 31, 1957, and
94. 1.1039-1 · -1 Certain sales of low-income housing projects.
    1. (a) The expenses paid or incurred by the taxpayer which are directly connected with the approved disposition, and
    2. (b) The amount of taxes (other than income taxes) paid or incurred by the taxpayer which are attributable to the approved disposition.
    3. (c) Definitions—(1) General. The definitions contained in subparagraphs (2) through (5) of this paragraph shall apply for purposes of this section.
    4. (d) If no replacement project has been constructed, reconstructed, or acquired prior to the time of filing of the statement, the estimated cost of such construc
    5. (e) Assessment of deficiencies—(1) Deficiency attributable to gain. If a taxpayer makes an election under section 1039(a) with respect to an approved dispositio
    6. (f) The amount realized upon the approved disposition and a description of the expenses directly connected with the disposition and the taxes (other than income
    7. (ii) Examples of expenses directly connected with an approved disposition of a qualified housing project include amounts paid for sales or other commissions, ad
95. 1.103A-2 · -2 Qualified mortgage bond.
    1. (a) -(j) [Reserved]
    2. (ii) With respect to issues of qualified mortgage bonds, the format of the report specified in this paragraph (k)(3) is the following: Qualified Mortgage Bond I
    3. (k) Information reporting requirement—(1) In general. An issue meets the requirements of this paragraph only if the issuer in good faith attempted to meet the i
96. 1.104-1 · -1 Compensation for injuries or sickness.
    1. (a) In general. Section 104(a) provides an exclusion from gross income with respect to certain amounts described in paragraphs (b), (c), (d) and (e) of this sec
    2. (b) Amounts received under workmen's compensation acts. Section 104(a)(1) excludes from gross income amounts which are received by an employee under a workmen's
    3. (c) Damages received on account of personal physical injuries or physical sickness—(1) In general. Section 104(a)(2) excludes from gross income the amount of an
    4. (d) Accident or health insurance. Section 104(a)(3) excludes from gross income amounts received through accident or health insurance for personal injuries or si
    5. (e) Amounts received as pensions, etc., for certain personal injuries or sickness. (1) Section 104(a)(4) excludes from gross income amounts which are received a
97. 1.1041-1T · -1T Treatment of transfer of property between spouses or incident to divorce (temporary).
    1. (a) Scope of section 1041 in general. Q-2: Does section 1041 apply only to transfers of property incident to divorce? A-2: No. Section 1041 is not limited to tr
    2. (b) Transfer incident to the divorce. Q-6: When is a transfer of property incident to the divorce? A-6: A transfer of property is incident to the divorce in eit
    3. (c) Transfers on behalf of a spouse. Q-9: May transfers of property to third parties on behalf of a spouse (or former spouse) qualify under section 1041? A-9: Y
    4. (d) Tax consequences of transfers subject to section 1041. Q-10: How is the transferor of property under section 1041 treated for income tax purposes? A-10: The
    5. (e) Notice and recordkeeping requirement with respect to transactions under section 1041. Q-14: Does the trasnsferor of property in a transaction described in s
    6. (f) Property settlements—effective dates, transitional periods and elections. Q-15: When does section 1041 become effective? A-15: Generally, section 1041 appli
    7. (g) Property settlements—time and manner of making the elections under section 1041. Q-18: How do spouses (or former spouses) elect to have section 1041 apply t
98. 1.1041-2 · -2 Redemptions of stock.
    1. (a) In general—(1) Redemptions of stock not resulting in constructive distributions. Notwithstanding Q&A-9 of § 1.1041-1T(c), if a corporation redeems stock own
    2. (b) Tax consequences—(1) Transfers described in paragraph (a)(1) of this section. Section 1041 will not apply to any of the transfers described in paragraph (a)
    3. (c) Special rules in case of agreements between spouses or former spouses—(1) Transferor spouse taxable. Notwithstanding applicable tax law, a transferor spouse
    4. (d) Examples. The provisions of this section may be illustrated by the following examples: Example 1.Corporation X has 100 shares outstanding. A and B each own
    5. (e) Effective date. Except as otherwise provided in this paragraph, this section is applicable to redemptions of stock on or after January 13, 2003, except for
    6. (i) Both spouses or former spouses intend for the redemption to be treated, for Federal income tax purposes, as a redemption distribution to the transferor spou
    7. (ii) Such instrument or agreement supersedes any other instrument or agreement concerning the purchase, sale, redemption, or other disposition of the stock that
99. 1.1042-1T · -1T Questions and answers relating to the sales of stock to employee stock ownership plans or certain cooperatives (temporary).
    1. (b) Any gain from the sale of qualified securities which is required to be recognized due to a failure to meet the requirements under section 1042 shall be incl
    2. (c) If the taxpayer has not purchased qualified replacement property at the time of the filing of the statement of election, a timely election under this Q&A sh
    3. (d) A sale under section 1042(a) shall not include any sale of securities by a dealer or underwriter in the ordinary course of its trade or business as a dealer
    4. (e) For purposes of section 1042(a), there is a purchase of qualified replacement property only if the basis of such property is determined by reference to its
100. 1.1044(a)-1 · (a)-1 Time and manner for making election under the Omnibus Budget Reconciliation Act of 1993.
     1. (a) Description. Section 1044(a), as added by section 13114 of the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66, 107 Stat. 430), generally allows i
     2. (b) Time and manner for making the election. The election under section 1044(a) must be made on or before the due date (including extensions) for the income tax
     3. (c) Revocability of election. The election described in this section is revocable with the consent of the Commissioner.
     4. (d) Effective date. The rules set forth in this section are effective December 12, 1996.
101. 1.1045-1 · -1 Application to partnerships.
     1. (a) Overview of section. A partnership that holds qualified small business stock (QSB stock) (as defined in paragraph (g)(1) of this section) for more than 6 mo
     2. (b) Partnership election—(1) Partnership purchase of replacement QSB stock. A partnership that holds QSB stock for more than 6 months, sells such QSB stock, and
     3. (c) Partner election—(1) In general—(i) Rule. An eligible partner of a partnership that sells QSB stock (selling partnership) may elect in accordance with parag
     4. (e) Partnership distribution of QSB stock to a partner—(1) In general. Subject to paragraphs (e)(2) and (3) of this section, in the case of a partnership distri
     5. (f) Contribution of QSB stock or replacement QSB stock to a partnership. Section 721 applies to a contribution of QSB stock to a partnership. Except as provided
     6. (g) Definitions. For purposes of section 1045 and this section, the following terms are defined as follows:
     7. (h) Reporting and election rules—(1) Time and manner of making election. A partnership making an election under section 1045 (as described under paragraph (b)(1
     8. (i) Examples. The provisions of this section are illustrated by the following examples: Example 1. Sale of a partnership interest.On January 1, 2008, A, an indi
     9. (ii) Acquisition by gift or at death. For purposes of paragraph (g)(3)(i) of this section, a taxpayer who acquires from a partner (other than a C corporation) b
     10. (iv) Partner's percentage interest in distributed QSB stock. For purposes of this paragraph (e)(3), a partner's percentage interest in a type of QSB stock immed
     11. (j) Effective date/applicability—In general. This section applies to sales of QSB stock on or after August 14, 2007.
     12. (v) QSB stock of the same type. For purposes of this paragraph (e)(3), QSB stock will be of the same type as the distributed QSB stock if it has the same issuer
102. 1.105-1 · -1 Amounts attributable to employer contributions.
     1. (a) In general. Under section 105(a), amounts received by an employee through accident or health insurance for personal injuries or sickness must be included in
     2. (b) Noncontributory plans. All amounts received by employees through an accident or health plan which is financed solely by their employer, either by payment of
     3. (c) Contributory plans. (1) In the case of amounts received by an employee through an accident or health plan which is financed partially by his employer and pa
     4. (d) Insured plans—(1) Individual policies. If an amount is received from an insurance company by an employee under an individual policy of accident or health in
     5. (e) Noninsured plans. If the accident or health benefits are a part of a noninsured plan to which the employer and the employees contribute, and such plan has b
103. 1.105-11 · -11 Self-insured medical reimbursement plan.
     1. (a) In general. Under section 105(a), amounts received by an employee through a self-insured medical reimbursement plan which are attributable to contributions
     2. (b) Self-insured medical reimbursement plan—(1) General rule—(i) Definition. A self-insured medical reimbursement plan is a separate written plan for the benefi
     3. (e) Excess reimbursement of highly compensated individual—(1) In general. For purposes of section 105(h) and this section, a reimbursement paid to a highly comp
     4. (f) Certain controlled groups. For purposes of applying the provisions of section 105(h) and this section, all employees who are treated as employed by a single
     5. (g) Exception for medical diagnostic procedures—(1) In general. For purposes of applying section 105(h) and this section, reimbursements paid under a plan for m
     6. (h) Time of inclusion. Excess reimbursments (determined under paragraph (e)) paid to a highly compensated individual for a plan year will be considered as recei
     7. (i) Self-insured contributory plan. A medical plan subject to this section may provide for employer and employee contributions. See § 1.105-1(c). The tax treatm
     8. (ii) Shifting of risk. A plan underwritten by a policy of insurance or a prepaid health care plan that does not involve the shifting of risk to an unrelated thi
     9. (j) Effective date. Section 105(h) and this section are effective for taxable years beginning after December 31, 1979 and for amounts reimbursed after December
     10. (k) Special rules—(1) Relation to cafeteria plans. If a self-insured medical reimbursement plan is included in a cafeteria plan as described in section 125, the
104. 1.105-2 · -2 Amounts expended for medical care.
105. 1.105-3 · -3 Payments unrelated to absence from work.
106. 1.105-5 · -5 Accident and health plans.
     1. (a) In general. Sections 104(a)(3) and 105 (b), (c), and (d) exclude from gross income certain amounts received through accident or health insurance. Section 10
     2. (b) Self-employed individuals. Under section 105(g), a self-employed individual is not treated as an employee for purposes of section 105. Therefore, for exampl
107. 1.1051-1 · -1 Basis of property acquired during affiliation.
     1. (a) (1) The basis of property acquired by a corporation during a period of affiliation from a corporation with which it was affiliated shall be the same as it w
     2. (b) The basis of property acquired by a corporation during any period, in the taxable year 1929 or any subsequent taxable year, in respect of which a consolidat
     3. (c) Except as otherwise provided in the regulations promulgated under section 1502 of the Internal Revenue Code of 1954 or the regulations under section 141 of
108. 1.1052-1 · -1 Basis of property established by Revenue Act of 1932.
109. 1.1052-2 · -2 Basis of property established by Revenue Act of 1934.
110. 1.1052-3 · -3 Basis of property established by the Internal Revenue Code of 1939.
111. 1.1053-1 · -1 Property acquired before March 1, 1913.
     1. (a) Basis for determining gain. In the case of property acquired before March 1, 1913, the basis as of March 1, 1913, for determining gain is the cost or other
     2. (b) Basis for determining loss. In the case of property acquired before March 1, 1913, the basis as of March 1, 1913, for determining loss is the basis determin
     3. (c) Example. The application of paragraphs (a) and (b) of this section may be illustrated by the following example: Example:(i) On March 1, 1908, a taxpayer pur
     4. (d) Fair market value. The determination of the fair market value of property on March 1, 1913, is generally a question of fact and shall be established by comp
112. 1.1054-1 · -1 Certain stock of Federal National Mortgage Association.
     1. (a) In general. The basis in the hands of the initial holder of a share of stock which is issued pursuant to section 303(c) of the Federal National Mortgage Ass
     2. (b) Example. The provisions of this section may be illustrated by the following example: Example:Pursuant to section 303(c) of the Federal National Mortgage Ass
113. 1.1055-1 · -1 General rule with respect to redeemable ground rents.
     1. (a) Character of a redeemable ground rent. For purposes of subtitle A of the Code (1) a redeemable ground rent (as defined in section 1055(c) and paragraph (b)
     2. (b) Definition of redeemable ground rent. For purposes of subtitle A of the Code, the term redeemable ground rent means only a ground rent with respect to which
     3. (c) Effective date. In general, the provisions of section 1055 and paragraph (a) of this section take effect on April 11, 1963, and apply with respect to taxabl
114. 1.1055-2 · -2 Determination of amount realized on the transfer of the right to hold real property subject to liabilities under a redeemable ground rent.
115. 1.1055-3 · -3 Basis of real property held subject to liabilities under a redeemable ground rent.
     1. (a) In general. The provisions of section 1055(a) and paragraph (a) of § 1.1055-1 are applicable in determining the basis of real property held on or after Apri
     2. (b) Illustrations. The provisions of this section may be illustrated by the following examples: Example 1.On April 11, 1963, taxpayer A held residential propert
116. 1.1055-4 · -4 Basis of redeemable ground rent reserved or created in connection with transfers of real property before April 11, 1963.
     1. (a) In general. In the case of a redeemable ground rent created or reserved in connection with a transfer, occurring before April 11, 1963, of the right to hold
     2. (b) The provisions of this section may be illustrated by the following examples: Example 1.The taxpayer, who was in the business of building houses, purchased a
117. 1.1059(e)-1 · (e)-1 Non-pro rata redemptions.
     1. (a) In general. Section 1059(d)(6) (exception where stock held during entire existence of corporation) and section 1059(e)(2) (qualifying dividends) do not appl
     2. (b) Reorganizations. For purposes of section 1059(e)(1), any exchange under section 356 is treated as a redemption and, to the extent any amount is treated as a
     3. (c) Effective date. This section applies to distributions announced (within the meaning of section 1059(d)(5)) on or after June 17, 1996.
118. 1.1059A-1 · -1 Limitation on taxpayer's basis or inventory cost in property imported from related persons.
     1. (a) General rule. In the case of property imported into the United States in a transaction (directly or indirectly) by a controlled taxpayer from another member
     2. (b) Definitions—(1) Import. For purposes of section 1059A and this section only, the term import means the filing of the entry documentation required by the U.S
     3. (c) Customs value—(1) Definition. For purposes of this section only, the term customs value means the value required to be taken into account for purposes of de
     4. (d) Finality of customs value and of other determinations of the U.S. Customs Service. For purposes of section 1059A and this section, a taxpayer is bound by th
     5. (e) Drawbacks. For purposes of this section, a drawback, that is, a refund or remission (in whole or in part) of a customs duty because of a particular use made
     6. (f) Effective date. Property imported by a taxpayer is subject to section 1059A and this section if the entry documentation required to be filed to obtain the r
119. 1.106-1 · -1 Contributions by employer to accident and health plans.
     1. (a) The gross income of an employee does not include the contributions that the employer makes to an accident or health plan for compensation (through insurance
     2. (b) Effective/applicability date. The first and last sentences of paragraph (a) of this section apply for taxable years beginning on or after January 1, 2015.
120. 1.1060-1 · -1 Special allocation rules for certain asset acquisitions.
     1. (a) Scope—(1) In general. This section prescribes rules relating to the requirements of section 1060, which, in the case of an applicable asset acquisition, req
     2. (b) Applicable asset acquisition—(1) In general. An applicable asset acquisition is any transfer, whether direct or indirect, of a group of assets if the assets
     3. (e) Reporting requirements—(1) Applicable asset acquisitions—(i) In general. Unless otherwise excluded from this requirement by the Commissioner, the seller and
     4. (ii) Time and manner of reporting—(A) In general. The seller and the purchaser each must file asset acquisition statements on Form 8594, “Asset Allocation State
121. 1.1061-0 · -0 Table of contents.
122. 1.1061-1 · -1 Section 1061 definitions.
     1. (a) Definitions. The following definitions apply solely for purposes of this section and §§ 1.1061-2 through 1.1061-6. API Gains and Losses are any long-term ca
     2. (b) Applicability date. The provisions of this section apply to taxable years of Owner Taxpayers and Passthrough Entities beginning on or after January 19, 2021
     3. (i) The API One Year Distributive Share Amount as defined in § 1.1061-4(a)(3)(i);
     4. (ii) The API Three Year Distributive Share Amount as defined in § 1.1061-4(a)(3)(ii);
123. 1.1061-2 · -2 Applicable partnership interests and applicable trades or businesses.
     1. (a) API rules and examples—(1) Rules—(i) An API remains an API. Once a partnership interest qualifies as an API, the partnership interest remains an API unless
     2. (b) Application of the ATB Activity Test—(1) In general. The ATB Activity Test is satisfied if both Raising and Returning Actions and Investing or Developing Ac
     3. (i) Rules for applying the ATB Activity Test—(A) Aggregate Specified Actions taken into account. The determination of whether the ATB Activity Test is satisfied
     4. (ii) Developing Specified Assets. Developing Specified Assets takes place if it is represented to investors, lenders, regulators, or other interested parties th
124. 1.1061-3 · -3 Exceptions to the definition of an API.
     1. (a) A partnership interest held by an employee of another entity not conducting an ATB. An API does not include any interest transferred to a person in connecti
     2. (b) Partnership interest held by a corporation—(1) In general. An API does not include any interest directly or indirectly held by a corporation.
     3. (c) Capital Interest Gains and Losses—(1) In general. Capital Interest Gains and Losses are not subject to section 1061 and, therefore, are not included in calc
     4. (e) [Reserved]
     5. (f) Applicability date—(1) General rule. Except as provided in paragraphs (f)(2) and (3) of this section, the provisions of this section apply to taxable years
     6. (i) Example 1: Capital Interest Allocations—(A) Facts. Each of A, B, and C contributes $100 to GP and is an equal partner in GP, a partnership that is the gener
     7. (ii) Example 2: Sale of a Passthrough Interest—(A) Facts. In Year 1, A, B, and C form GP, a partnership. Each of A, B, and C contributes $100 to GP and is an eq
     8. (vi) Items that are not included in Capital Interest Allocations. Capital Interest Allocations do not include—
125. 1.1061-4 · -4 Section 1061 computations.
     1. (a) Computations—(1) Recharacterization Amount. The Recharacterization Amount is the amount that an Owner Taxpayer must treat as short-term capital gain under s
     2. (b) Special rules for calculating the One Year Gain Amount and the Three Year Gain Amount—(1) One Year Gain Amount equals zero or less. If an Owner Taxpayer's O
     3. (i) The Owner Taxpayer's One Year Gain Amount; less
     4. (ii) API Three Year Distributive Share Amount. If a RIC or REIT reports or designates a dividend as a capital gain dividend and provides the Three Year Amounts
126. 1.1061-5 · -5 Section 1061(d) transfers to related persons.
     1. (a) In general. If an Owner Taxpayer transfers any API or Distributed API Property, directly or indirectly, to a Section 1061(d) Related Person (as defined in p
     2. (b) Transfer. For purposes of this section, the term transfer means a sale or exchange in which gain is recognized by the Owner Taxpayer under chapter 1 of the
     3. (c) Section 1061(d) Recharacterization Amount. To the extent an Owner Taxpayer recognizes long-term capital gain upon a transfer of an API to a Section 1061(d)
     4. (d) Special rules. For purposes of this section, the following rules are applicable.
     5. (e) Section 1061(d) Related Person. For purposes of this section, the term Section 1061(d) Related Person means—
     6. (f) Examples. The following examples illustrate the rules of this section.
     7. (g) Applicability date. The provisions of this section apply to taxable years of Owner Taxpayers and Passthrough Entities beginning on or after January 19, 2021
     8. (ii) Application of section 1061(d). Because the contribution by each of A and B of its interest in GP to PRS2 is an exchange in which no gain is recognized by
127. 1.1061-6 · -6 Reporting rules.
     1. (a) Owner Taxpayer filing requirements-(1) In general. An Owner Taxpayer must file such information with the IRS as the Commissioner of Internal Revenue or the
     2. (b) Passthrough Entity filing requirements and reporting—(1) Requirement to file information with the IRS and to furnish information to API Holder. A Passthroug
     3. (e) Applicability date. The provisions of this section apply to taxable years of Owner Taxpayers and Passthrough Entities beginning on or after January 19, 2021
     4. (i) The API One Year Distributive Share Amount and the API Three Year Distributive Share Amount (as determined under § 1.1061-4);
     5. (ii) Capital gains and losses allocated to the API Holder that are excluded from section 1061 under § 1.1061-4(b)(7);
128. 1.107-1 · -1 Rental value of parsonages.
     1. (a) In the case of a minister of the gospel, gross income does not include (1) the rental value of a home, including utilities, furnished to him as a part of hi
     2. (b) For purposes of section 107, the term “home” means a dwelling place (including furnishings) and the appurtenances thereto, such as a garage. The term “renta
     3. (c) A rental allowance must be included in the minister's gross income in the taxable year in which it is received, to the extent that such allowance is not use
129. 1.1071-1 · -1 Gain from sale or exchange to effectuate policies of Federal Communications Commission.
     1. (a) (1) At the election of the taxpayer, section 1071 postpones the recognition of the gain upon the sale or exchange of property if the Federal Communications
     2. (b) Section 1071 applies only in the case of a sale or exchange made necessary by reason of the Federal Communications Commission's policies as to ownership or
     3. (c) An election to have the benefits of section 1071 shall be made in the manner prescribed in § 1.1071-4.
     4. (d) For purposes of section 1071, the term radio broadcasting includes telecasting.
     5. (ii) In the case of a sale or exchange after December 31, 1957, the certificate from the Federal Communications Commission must clearly identify the property an
130. 1.1071-2 · -2 Nature and effect of election.
     1. (a) Alternative elections. (1) A taxpayer entitled to the benefits of section 1071 in respect of a sale or exchange of property may elect—
     2. (b) Application of section 1033. (1) If the taxpayer elects, under either paragraph (a)(1) (i) or (ii) of this section, to treat the sale or exchange as an invo
     3. (c) Example. The application of the provisions of section 1071 may be illustrated by the following example: Example:A, who makes his return on a calendar year b
     4. (i) To treat such sale or exchange as an involuntary conversion under the provisions of section 1033; or
     5. (ii) To treat such sale or exchange as an involuntary conversion under the provisions of section 1033, and in addition elect to reduce the basis of property, in
131. 1.1071-3 · -3 Reduction of basis of property pursuant to election under section 1071.
     1. (a) General rule. (1) In addition to the adjustments provided in section 1016 and other applicable provisions of chapter 1 of the Code which adjustments are req
     2. (b) Special cases. With the consent of the Commissioner, the taxpayer may, however, have the basis of the various units of property of the class specified in se
132. 1.1071-4 · -4 Manner of election.
     1. (a) An election under the provisions of section 1071 shall be in the form of a written statement and shall be executed and filed in duplicate. Such statement sh
     2. (b) If, in pursuance of an election to have the basis of its property adjusted under section 1071, the taxpayer desires to have such basis adjusted in any manne
133. 1.108(c)-1T · (c)-1T [Reserved]
134. 1.108(i)-0 · (i)-0 Definitions and effective/applicability dates.
     1. (a) Definitions. For purposes of regulations under section 108(i)—
     2. (b) Effective/Applicability dates—(1) In general. The rules of this section, § 1.108(i)-1, and § 1.108(i)-2, apply on or after July 2, 2013, to reacquisitions o
135. 1.108(i)-1 · (i)-1 Deferred discharge of indebtedness income and deferred original issue discount deductions of C corporations.
     1. (a) Overview. Section 108(i)(1) provides an election for the deferral of COD income arising in connection with the reacquisition of an applicable debt instrumen
     2. (b) Acceleration events—(1) Deferred COD income. Except as otherwise provided in paragraphs (b)(2) and (3) of this section, and § 1.108(i)-2(b)(6) (in the case
     3. (e) Effective/applicability dates. For effective/applicability dates, see § 1.108(i)-0(b).
     4. (ii) Taxable years. In the case of an intercompany transaction to which section 381(a) applies, the transaction does not cause the transferor or distributor to
136. 1.108(i)-2 · (i)-2 Application of section 108(i) to partnerships and S corporations.
     1. (a) Overview. Under section 108(i), a partnership or an S corporation may elect to defer COD income arising in connection with a reacquisition of an applicable
     2. (b) Specific rules applicable to partnerships—(1) Allocation of COD income and partner's deferred amounts. An electing partnership that defers any portion of CO
     3. (e) Election procedures and reporting requirements—(1) Partnerships—(i) In general. A partnership makes an election under section 108(i) by following procedures
     4. (f) Effective/applicability dates. For the applicability dates of this section, see § 1.108(i)-0(b).
     5. (ii) Tiered passthrough entities. A partnership that is a direct or indirect partner of an electing partnership (or its successor) or a related partnership or a
137. 1.108(i)-3 · (i)-3 Rules for the deduction of OID.
     1. (a) Deemed debt-for-debt exchanges—(1) In general. For purposes of section 108(i)(2) (relating to deferred OID deductions that arise in certain debt-for-debt ex
     2. (b) Proportional rule for accruals of OID. For purposes of section 108(i)(2), if only a portion of the proceeds from the issuance of a debt instrument are used
     3. (c) No acceleration—(1) Retirement. Retirement of a debt instrument subject to section 108(i)(2) does not accelerate deferred OID deductions.
     4. (d) Examples. The application of this section is illustrated by the following examples. Unless otherwise stated, all taxpayers in the following examples are cal
     5. (e) Effective/applicability dates. For effective/applicability dates, see § 1.108(i)-0(b).
138. 1.108-1 · -1 [Reserved]
139. 1.108-2 · -2 Acquisition of indebtedness by a person related to the debtor.
     1. (a) General rules. The acquisition of outstanding indebtedness by a person related to the debtor from a person who is not related to the debtor results in the r
     2. (b) Direct acquisition. An acquisition of outstanding indebtedness is a direct acquisition under this section if a person related to the debtor (or a person who
     3. (c) Indirect acquisition—(1) In general. An indirect acquisition is a transaction in which a holder of outstanding indebtedness becomes related to the debtor, i
     4. (e) Exceptions—(1) Indebtedness retired within one year. This section does not apply to a direct or indirect acquisition of indebtedness with a stated maturity
     5. (f) Amount of discharge of indebtedness income realized—(1) Holder acquired the indebtedness by purchase on or less than six months before the acquisition date.
     6. (g) Correlative adjustments—(1) Deemed issuance. For income tax purposes, if a debtor realizes income from discharge of its indebtedness in a direct or an indir
     7. (h) Effective date. This section applies to any transaction described in paragraph (a) and in either paragraph (b) or (c) of this section with an acquisition da
     8. (ii) Any comparable tax benefit that would otherwise be available to the holder, debtor, or any person related to either, in any other transaction that directly
140. 1.108-3 · -3 Intercompany losses and deductions.
     1. (a) General rule. This section applies to certain losses and deductions from the sale, exchange, or other transfer of property between corporations that are mem
     2. (b) Effective date. This section applies with respect to discharges of indebtedness occurring on or after September 11, 1995.
141. 1.108-4 · -4 Election to reduce basis of depreciable property under section 108(b)(5) of the Internal Revenue Code .
     1. (a) Description. An election under section 108(b)(5) is available whenever a taxpayer excludes discharge of indebtedness income (COD income) from gross income u
     2. (b) Time and manner. To make an election under section 108(b)(5), a taxpayer must enter the appropriate information on Form 982, Reduction of Tax Attributes Due
     3. (c) Effective date. This section applies to elections concerning discharges of indebtedness occurring on or after October 22, 1998.
142. 1.108-5 · -5 Time and manner for making election under the Omnibus Budget Reconciliation Act of 1993.
     1. (a) Description. Section 108(c)(3)(C), as added by section 13150 of the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66, 107 Stat. 446), allows certai
     2. (b) Time and manner for making election. The election described in this section must be made on the timely-filed (including extensions) Federal income tax retur
     3. (c) Revocability of election. The election described in this section is revocable with the consent of the Commissioner.
     4. (d) Effective date. The rules set forth in this section are effective December 27, 1993.
143. 1.108-6 · -6 Limitations on the exclusion of income from the discharge of qualified real property business indebtedness.
     1. (a) Indebtedness in excess of value. With respect to any qualified real property business indebtedness that is discharged, the amount excluded from gross income
     2. (b) Overall limitation. The amount excluded from gross income under section 108(a)(1)(D) shall not exceed the aggregate adjusted bases of all depreciable real p
     3. (c) Effective date. This section applies to discharges of qualified real property business indebtedness occurring on or after October 22, 1998.
144. 1.108-7 · -7 Reduction of attributes.
     1. (a) In general. (1) If a taxpayer excludes discharge of indebtedness income (COD income) from gross income under section 108(a)(1)(A), (B), or (C), then the amo
     2. (b) Carryovers and carrybacks. The tax attributes subject to reduction under section 108(b)(2) and paragraph (a)(1) of this section that are carryovers to the t
     3. (c) Transactions to which section 381 applies. If a taxpayer realizes COD income that is excluded from gross income under section 108(a) either during or after
     4. (d) Special rules for S corporations—(1) In general. If an S corporation excludes COD income from gross income under section 108(a)(1)(A), (B), or (C), the amou
     5. (e) Examples. The following examples illustrate the application of this section: Example 1.(i) Facts. In Year 4, X, a corporation in a title 11 case, is entitle
     6. (f) Effective/applicability date—(1) Paragraphs (a), (b), (c), and Examples 1, 2, 3, and 4 of paragraph (e) of this section apply to discharges of indebtedness
     7. (i) Net operating losses.
     8. (ii) Multiple shareholders—(A) In general. If an S corporation has multiple shareholders, to determine the amount of the S corporation's excess deemed NOL to be
145. 1.108-8 · -8 Indebtedness satisfied by partnership interest.
     1. (a) In general. For purposes of determining income of a debtor from discharge of indebtedness (COD income), if a debtor partnership transfers a capital or profi
     2. (b) Determination of fair market value—(1) In general. All the facts and circumstances are considered in determining the fair market value of a partnership inte
     3. (ii) Tiered-partnership rule. For purposes of this paragraph (b)(2), the liquidation value of a debt-for-equity interest in a partnership (upper-tier partnershi
146. 1.108-9 · -9 Application of the bankruptcy and the insolvency provisions of section 108 to grantor trusts and disregarded entities.
     1. (a) General rule—(1) Owner is the taxpayer. For purposes of applying section 108(a)(1)(A) and (B) to discharge of indebtedness income of a grantor trust or a di
     2. (b) Application to partnerships. Under section 108(d)(6), in the case of a partnership, section 108(a)(1)(A) and (B) applies at the partner level. If a partners
     3. (c) Definitions—(1) Disregarded entity. For purposes of this section, a disregarded entity is an entity that is disregarded as an entity separate from its owner
     4. (d) Applicability date. The rules of this section apply to discharge of indebtedness income occurring on or after June 10, 2016.
147. 1.1081-1 · -1 Terms used.
148. 1.1081-10 · -10 Nonapplication of other provisions of the Internal Revenue Code of 1954.
149. 1.1081-11 · -11 Records to be kept and information to be filed with returns.
     1. (a) Distributions and exchanges; significant holders of stock or securities. Every significant holder must include a statement entitled, “STATEMENT PURSUANT TO
     2. (b) Distributions and exchanges; corporations subject to Commission orders. Each corporation which is a party to a distribution or exchange made pursuant to an
     3. (c) Sales by members of system groups. Each system group member must include a statement entitled, “STATEMENT PURSUANT TO § 1.1081-11(c) BY [INSERT NAME AND EMP
     4. (d) Definitions. (1) For purposes of this section, Commission means the Securities and Exchange Commission.
     5. (e) Substantiation information. Under § 1.6001-1(e), taxpayers are required to retain their permanent records and make such records available to any authorized
     6. (f) Effective/applicability date. This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any
150. 1.1081-2 · -2 Purpose and scope of exception.
     1. (a) The general rule is that the entire amount of gain or loss from the sale or exchange of property is to be recognized (see section 1002) and that the entire
     2. (b) The requirements for nonrecognition of gain or loss as provided in section 1081 are precisely stated with respect to the following general types of transact
     3. (c) These exceptions to the general rule are to be strictly construed. Unless both the purpose and the specific requirements of sections 1081 to 1083, inclusive
     4. (d) The application of the provisions of part VI (section 1081 and following), subchapter O, chapter 1 of the Code, is intended to result only in postponing the
151. 1.1081-3 · -3 Exchanges of stock or securities solely for stock or securities.
152. 1.1081-4 · -4 Exchanges of property for property by corporations.
     1. (a) Application of section 1081(b). Section 1081(b) applies only to the transfers specified therein with respect to which section 1081(d) is inapplicable, and d
     2. (b) Nonrecognition of gain; no nonexempt proceeds. No gain is recognized to a transferor corporation upon the sale or other disposition of property transferred
     3. (c) Nonrecognition of gain; nonexempt proceeds. If the transaction would be within the provisions of paragraph (b) of this section if it were not for the fact t
     4. (d) Recognition of gain in part; insufficient expenditure or investment in case of nonexempt proceeds. If the transaction would be within the provisions of para
     5. (e) Items treated as expenditures for the purpose of paragraphs (c) and (d) of this section. For the purposes of paragraphs (c) and (d) of this section, the fol
     6. (f) Recognition of gain in part; inability to reduce basis. If the transaction would be within the provisions of paragraph (b) or (c) of this section, if it wer
     7. (g) Consent to regulations under section 1082(a)(2). To be entitled to the benefits of the provisions of section 1081(b), a corporation must file with its retur
     8. (h) Requirements with respect to expenditure or investment. If the full amount of the expenditure or investment required for the application of paragraph (c) of
153. 1.1081-5 · -5 Distribution solely of stock or securities.
     1. (a) In general. If, without any surrender of his stock or securities as defined in section 1083(f), a shareholder in a corporation which is a registered holding
     2. (b) Special rule. (1) If there is distributed to a shareholder in a corporation rights to acquire common stock in a second corporation, no gain to the sharehold
     3. (i) The rights are received by the shareholder without the surrender by the shareholder of any stock in the distributing corporation,
     4. (ii) Such distribution is in accordance with an arrangement forming a ground for an order of the Securities and Exchange Commission issued pursuant to section 3
154. 1.1081-6 · -6 Transfers within system group.
     1. (a) The nonrecognition of gain or loss provided for in section 1081(d)(1) is applicable to an exchange of property for other property (including money and other
     2. (b) Section 1081 (d)(1) also provides for nonrecognition of gain to a corporation which is a member of a system group if property (including money or other none
     3. (c) As stated in § 1.1081-2, nonrecognition of gain or loss will not be accorded to a transaction not clearly provided for in part VI (section 1081 and followin
     4. (d) The provisions of paragraph (c) of this section may be illustrated by the following example: Example:Suppose that the A Corporation and the B Corporation ar
     5. (e) No exchange or distribution may be made without the recognition of gain or loss as provided for in section 1081 (d)(1), unless all the corporations which ar
155. 1.1081-7 · -7 Sale of stock or securities received upon exchange by members of system group.
     1. (a) Section 1081(d)(2) provides that to the extent that property received upon an exchange by corporations which are members of the same system group consists o
     2. (b) The application of paragraph (a) of this section may be illustrated by the following example: Example:The X Corporation and the Y Corporation, both of which
156. 1.1081-8 · -8 Exchanges in which money or other nonexempt property is received.
     1. (a) Under section 1081(e)(1), if in any exchange (not within any of the provisions of section 1081(d)) in which stock or securities in a corporation which is a
     2. (b) If money or other nonexempt property is received from a corporation in an exchange described in paragraph (a) of this section and if the distribution of suc
157. 1.1081-9 · -9 Requirements with respect to order of Securities and Exchange Commission.
     1. (a) The order of the Securities and Exchange Commission must recite that the exchange, expenditure, investment, distribution, or sale is necessary or appropriat
     2. (b) The order shall specify and itemize the stocks and securities and other property (including money) which are ordered to be acquired, transferred, received,
     3. (c) The exchange, acquisition, expenditure, investment, distribution, or sale shall be made in obedience to such order and shall be completed within the time pr
158. 1.1082-1 · -1 Basis for determining gain or loss.
     1. (a) For determining the basis of property acquired in a taxable year beginning before January 1, 1942, in any manner described in section 372 of the Internal Re
     2. (b) If the property was acquired in a taxable year beginning after December 31, 1941, in any manner described in section 1082 (other than subsection (a)(2)), or
     3. (c) Section 1082 makes provisions with respect to the basis of property acquired in a transfer in connection with which the recognition of gain or loss is prohi
159. 1.1082-2 · -2 Basis of property acquired upon exchanges under section 1081 (a) or (e).
     1. (a) In the case of an exchange of stock or securities for stock or securities as described in section 1081 (a), if no part of the gain or loss upon such exchang
     2. (b) If, in an exchange of stock or securities as described in section 1081 (a), gain to the taxpayer was recognized under section 1081 (e) on account of the rec
     3. (c) Section 1081(e) provides that no loss may be recognized on an exchange of stock or securities for stock or securities as described in section 1081(a), altho
     4. (d) Section 1082 (a) does not apply in ascertaining the basis of property acquired by a corporation by the issuance of its stock or securities as the considerat
     5. (e) For purposes of this section, any reference to section 1081 shall be deemed to include a reference to corresponding provisions of prior internal revenue law
160. 1.1082-3 · -3 Reduction of basis of property by reason of gain not recognized under section 1081(b).
     1. (a) Introductory. In addition to the adjustments provided in section 1016 and other applicable provisions of chapter 1 of the Code, and the regulations relating
     2. (b) General rule. (1) Section 1082 (a)(2) sets forth seven categories of property, the basis of which for determining gain or loss shall be reduced in the order
     3. (c) Special cases. (1) With the consent of the Commissioner, the taxpayer may, however, have the basis of the various units of property within a particular cate
161. 1.1082-4 · -4 Basis of property acquired by corporation under section 1081(a), 1081(b), or 1081(e) as contribution of capital or surplus, or in consideration for its own stock or securities.
162. 1.1082-5 · -5 Basis of property acquired by shareholder upon tax-free distribution under section 1081(c) (1) or (2).
     1. (a) Stock or securities. If there was distributed to a shareholder in a corporation which is a registered holding company or a majority-owned subsidiary company
     2. (b) Stock rights. If there was distributed to a shareholder in a corporation rights to acquire common stock in a second corporation, and if by virtue of section
     3. (c) Cross reference. As to the basis of stock or securities distributed by one member of a system group to another member of the same system group, see § 1.1082
163. 1.1082-6 · -6 Basis of property acquired under section 1081(d) in transactions between corporations of the same system group.
     1. (a) If property was acquired by a corporation which is a member of a system group, from a corporation which is a member of the same system group, upon a transfe
     2. (b) An exception to the general rule is provided for in case the property acquired consists of stock or securities issued by the corporation from which such sto
     3. (c) The application of paragraph (b) of this section may be illustrated by the following examples: Example 1.Suppose the A Corporation has property with an adju
164. 1.1083-1 · -1 Definitions.
     1. (a) Order of the Securities and Exchange Commission. (1) An order of the Securities and Exchange Commission as defined in section 1083(a) must be issued after M
     2. (b) Registered holding company, holding-company system, and associate company. (1) Under section 5 of the Public Utility Holding Company Act of 1935 (15 U.S.C.
     3. (c) Majority-owned subsidiary company. The term majority-owned subsidiary company is defined in section 1083 (c). Direct ownership by a registered holding compa
     4. (d) System group. The term system group is defined in section 1083 (d) to mean one or more chains of corporations connected through stock ownership with a commo
     5. (e) Nonexempt property. The term nonexempt property is defined by section 1083(e) to include—
     6. (f) Stock or securities. The term stock or securities is defined in section 1083(f) for the purposes of part VI (section 1081 and following), subchapter O, chap
165. 1.109-1 · -1 Exclusion from gross income of lessor of real property of value of improvements erected by lessee.
     1. (a) Income derived by a lessor of real property upon the termination, through forfeiture or otherwise, of the lease of such property and attributable to buildin
     2. (b) The provisions of this section may be illustrated by the following example: Example.The A Corporation leased in 1945 for a period of 50 years unimproved rea
166. 1.1091-1 · -1 Losses from wash sales of stock or securities.
     1. (a) A taxpayer cannot deduct any loss claimed to have been sustained from the sale or other disposition of stock or securities if, within a period beginning 30
     2. (b) Where more than one loss is claimed to have been sustained within the taxable year from the sale or other disposition of stock or securities, the provisions
     3. (c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or otherwise disposed of, then
     4. (d) Where the amount of stock or securities acquired within the 61-day period is not less than the amount of stock or securities sold or otherwise disposed of,
     5. (e) The acquisition of any share of stock or any security which results in the nondeductibility of a loss under the provisions of this section shall be disregar
     6. (f) The word acquired as used in this section means acquired by purchase or by an exchange upon which the entire amount of gain or loss was recognized by law, a
     7. (g) For purposes of determining under this section the 61-day period applicable to a short sale of stock or securities, the principles of paragraph (a) of § 1.1
     8. (h) The following examples illustrate the application of this section: Example 1.A, whose taxable year is the calendar year, on December 1, 1954, purchased 100
167. 1.1091-2 · -2 Basis of stock or securities acquired in “wash sales”.
     1. (a) In general. The application of section 1091(d) may be illustrated by the following examples: Example 1.A purchased a share of common stock of the X Corporat
     2. (b) Special rule. For a special rule as to the adjustment to basis required under section 1091(d) in the case of wash sales involving certain regulated investme
168. 1.1092(b)-1T · (b)-1T Coordination of loss deferral rules and wash sale rules (temporary).
     1. (a) In general. Except as otherwise provided, in the case of the disposition of a position or positions of a straddle, the rules of paragraph (a)(1) of this sec
     2. (b) Carryover of disallowed loss. Any loss that is disallowed under paragraph (a) of this section shall, subject to any further application of paragraph (a)(1)
     3. (c) Treatment of disallowed loss—(1) Character. If the disposition of a loss position would (but for the application of this section) result in a capital loss,
     4. (d) Exceptions. (1) This section shall not apply to losses sustained—
     5. (e) Coordination with section 1091. Section 1092(b) applies in lieu of section 1091 to losses sustained from the disposition of positions in a straddle. See exa
     6. (f) Effective date. The provisions of this section apply to dispositions of loss positions on or after January 24, 1985.
     7. (g) Examples. This section may be illustrated by the following examples. It is assumed in each example that the following positions are the only positions held
     8. (i) With respect to the disposition of one or more positions that constitute part of a hedging transaction;
     9. (ii) With respect to the disposition of a loss position included in a mixed straddle account (as defined in paragraph (b) of § 1.1092(b)-4T); and
169. 1.1092(b)-2T · (b)-2T Treatment of holding periods and losses with respect to straddle positions (temporary).
     1. (a) Holding period—(1) In general. Except as otherwise provided in this section, the holding period of any position that is part of a straddle shall not begin e
     2. (b) Treatment of loss—(1) In general. Except as provided in paragraph (b)(2) of this section, loss on the disposition of one or more positions (loss position) o
     3. (d) Special rule for positions held by regulated investment companies. For purposes of section 851(b)(3) (relating to the definition of a regulated investment c
     4. (e) Effective date—(1) In general. Except as provided in paragraph (e)(2) of this section, the provisions of this section apply to positions in a straddle estab
     5. (f) Examples. Paragraphs (a) through (e) may be illustrated by the following examples. It is assumed in each example that the following positions are the only p
     6. (i) On the date the taxpayer entered into the loss position the taxpayer held directly or indirectly (through a related person or flowthrough entity) one or mor
     7. (ii) All gain or loss with respect to one or more positions in the straddle would be treated as long-term capital gain or loss if such positions were disposed o
170. 1.1092(b)-3T · (b)-3T Mixed straddles; straddle-by-straddle identification under section 1092(b)(2)(A)(i)(I) (Temporary).
     1. (a) In general. Except as otherwise provided, a taxpayer shall treat in accordance with paragraph (b) of this section gains and losses on positions that are par
     2. (b) Treatment of gains and losses from positions included in a section 1092(b)(2) identified mixed straddle—(1) In general. Gains and losses from positions that
     3. (c) Coordination with loss deferral and wash sale rules of § 1.1092(b)-1T. This section shall apply prior to the application of the loss deferral and wash sale
     4. (d) Identification required—(1) In general. To elect the provisions of this section, a taxpayer must clearly identify on a reasonable and consistently applied e
     5. (e) Effective date—(1) In general. The provisions of this section shall apply to straddles established on or after January 1, 1984.
171. 1.1092(b)-4T · (b)-4T Mixed straddles; mixed straddle account (temporary).
     1. (a) In general. A taxpayer may elect (in accordance with paragraph (f) of this section) to establish one or more mixed straddle accounts (as defined in paragrap
     2. (b) Mixed straddle account defined—(1) In general. The term mixed straddle account means an account for determining gains and losses from all positions held as
     3. (c) Treatment of gains and losses from positions in a mixed straddle account—(1) Daily account net gain or loss. Except as provided in paragraphs (d) and (e) of
     4. (d) Treatment of gains and losses from positions in a mixed straddle account established on or before December 31, 1984, in taxable years ending after December
     5. (e) Treatment of gains and losses from positions in a mixed straddle account for taxable years ending on or before December 31, 1984—(1) In general. For mixed s
     6. (f) Election—(1) Time for making the election. Except as otherwise provided, the election under this section to establish one or more mixed straddle accounts fo
     7. (g) Effective date. The provisions of this section apply to positions held on or after January 1, 1984. (Secs. 1092(b)(1), 1092(b)(2) and 7805 of the Internal R
     8. (ii) Elections for new classes of activities and expanded elections. Amended elections and elections made with respect to a new class of activities that the tax
172. 1.1092(b)-5T · (b)-5T Definitions (temporary).
     1. (a) Disposing, disposes, or disposed. The term disposing, disposes, or disposed includes the sale, exchange, cancellation, lapse, expiration, or other terminati
     2. (b) Hedging transaction. The term hedging transaction means a hedging transaction as defined in section 1256(e).
     3. (c) Identified straddle. The term identified straddle means an identified straddle as defined in section 1092(a)(2)(B).
     4. (d) Loss. The term loss means a loss otherwise allowable under section 165(a) (without regard to the limitation contained in section 165(f)) and includes a writ
     5. (e) Mixed straddle. The term mixed straddle means a straddle—
     6. (f) Non-section 1256 position. The term non-section 1256 position means a position that is not a section 1256 contract.
     7. (g) Offsetting position. The term offsetting position means an offsetting position as defined in section 1092(c)(2).
     8. (h) Position. The term position means a position as defined in section 1092(d)(2).
     9. (i) [Reserved]
     10. (j) Related person or flowthrough entity. The term related person or flowthrough entity means a related person or flowthrough entity as defined in sections 1092
     11. (k) Section 1256 contract. The term section 1256 contract means a section 1256 contract as defined in section 1256(b).
     12. (l) [Reserved]
     13. (m) Straddle. The term straddle means a straddle as defined in section 1092(c)(1).
     14. (n) Successor position. The term successor position means a position (“P”) that is or was at any time offsetting to a second position if—
     15. (o) Unrecognized gain. The term unrecognized gain means unrecognized gain as defined in section 1092(a)(3)(A).
     16. (p) Substantially identical. The term substantially identical has the same meaning as substantially identical in section 1091(a).
     17. (q) Securities. The term security means a security as defined in section 1236(c). (Secs. 1092(b) and 7805 of the Internal Revenue Code of 1954 (68A Stat. 917, 9
173. 1.1092(b)-6 · (b)-6 Mixed straddles; accrued gain and loss associated with a position that becomes part of a section 1092(b)(2) identified mixed straddle that is established after August 18, 2014.
     1. (a) Treatment of unrealized gain or loss that arose before a position becomes part of an identified mixed straddle. Except as otherwise provided, if one or more
     2. (b) Holding period after a position becomes part of an identified mixed straddle. Section 1.1092(b)-2T(a)(1) applies to any position that becomes part of an ide
     3. (c) Application of the loss deferral rules of section 1092(a). When applying section 1092(a) and § 1.1092(b)-3T(b) (other than § 1.1092(b)-3T(b)(6)) to any loss
     4. (d) Examples. The rules of this section may be illustrated by the following examples. It is assumed in each example that the positions described are the only po
     5. (e) Effective/applicability date. The rules of this section apply to all section 1092(b)(2) identified mixed straddles established after August 18, 2014.
174. 1.1092(c)-1 · (c)-1 Qualified covered calls.
     1. (a) In general. Section 1092(c) defines a straddle as offsetting positions with respect to personal property. Under section 1092(d)(3)(B)(i)(I), stock is person
     2. (b) Term limitation—(1) General rule. Except as provided in paragraph (b)(2) of this section, an option is not a qualified covered call unless it is granted not
     3. (c) Effective date. This section applies to qualified covered call options entered into on or after July 29, 2002.
     4. (ii) Examples. The following examples illustrate the rules set out in paragraph (b)(2)(i) of this section: Example 1.Taxpayer owns stock in Corporation X. Taxpa
175. 1.1092(c)-2 · (c)-2 Equity options with flexible terms.
     1. (a) In general. Section 1092(c)(4) provides an exception to the general rule that a straddle exists if a taxpayer holds stock and writes a call option on that s
     2. (b) No effect on lowest qualified bench mark for standardized options. The availability of strike prices for equity options with flexible terms does not affect
     3. (c) Qualified covered call option status—(1) Requirements. An equity option with flexible terms is a qualified covered call option only if—
     4. (i) The option meets the requirements of section 1092(c)(4)(B) and § 1.1092(c)-1 (taking into account paragraph (c)(2) of this section);
     5. (ii) The only payments permitted with respect to the option are a single fixed premium paid not later than 5 business days after the day on which the option is
176. 1.1092(c)-3 · (c)-3 Qualifying over-the-counter options.
     1. (a) In general. Under section 1092(c)(4)(B)(i), an equity option is not a qualified covered call option unless it is traded on a national securities exchange th
     2. (b) Qualified covered call option status. A qualifying over-the-counter option, as defined in § 1.1092(c)-4(c), is a qualified covered call option if it meets t
     3. (c) Effective date. This section applies to qualifying over-the-counter options entered into on or after July 29, 2002.
177. 1.1092(c)-4 · (c)-4 Definitions.
     1. (a) Equity option with flexible terms means an equity option—
     2. (b) Equity option with standardized terms means an equity option—
     3. (c) Qualifying over-the-counter option means an equity option that—
     4. (d) Single fixed strike price means a strike price that is fixed, determinable, and stated as a dollar amount on the date the option is written. An option will
     5. (e) Adjusted applicable stock price means the applicable stock price, as defined in section 1092(c)(4)(G), adjusted for time. To determine the adjusted applicab
     6. (f) Securities Exchange Act Release means a release issued by the Securities and Exchange Commission. To determine identifying information for releases referenc
     7. (g) Effective dates. (1) Except for paragraph (a)(2) of this section, paragraph (a) of this section applies to equity options with flexible terms entered into o
178. 1.1092(d)-1 · (d)-1 Definitions and special rules.
     1. (a) Actively traded. Actively traded personal property includes any personal property for which there is an established financial market.
     2. (b) Established financial market—(1) In general. For purposes of this section, an established financial market includes—
     3. (e) Effective/applicability dates—(1) Paragraphs (a) and (b) of this section apply to positions entered into on or after October 14, 1993.
     4. (i) A national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f);
     5. (ii) An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934;
179. 1.1092(d)-2 · (d)-2 Personal property.
     1. (a) Special rules for stock. Under section 1092(d)(3)(B), personal property includes any stock that is part of a straddle, at least one of the offsetting positi
     2. (b) Effective date—(1) In general. This section applies to positions established on or after March 17, 1995.
180. 1.11-1 · -1 Tax on corporations.
     1. (a) Every corporation, foreign or domestic, is liable to the tax imposed under section 11 except (1) corporations specifically excepted under such section from
     2. (b) The tax imposed by section 11 consists of a normal tax and a surtax. The normal tax and the surtax are both computed upon the taxable income of the corporat
     3. (c) The normal tax is at the rate of 22 percent and is applied to the taxable income for the taxable year. However, in the case of a taxable year ending after D
     4. (d) The surtax is at the rate of 26 percent and is upon the taxable income (computed without regard to the deduction, if any, provided in section 242 for partia
     5. (e) The computation of the tax on corporations imposed under section 11 may be illustrated by the following example: Example.The X Corporation, a domestic corpo
     6. (f) For special rules applicable to foreign corporations engaged in trade or business within the United States, see section 882 and the regulations thereunder.
181. 1.110-1 · -1 Qualified lessee construction allowances.
     1. (a) Overview. Amounts provided to a lessee by a lessor for property to be constructed and used by the lessee pursuant to a lease are not includible in the lesse
     2. (b) Qualified lessee construction allowance—(1) In general. A qualified lessee construction allowance means any amount received in cash (or treated as a rent re
     3. (i) Under a short-term lease of retail space;
     4. (ii) For the purpose of constructing or improving qualified long-term real property for use in the lessee's trade or business at that retail space; and
182. 1.111-1 · -1 Recovery of certain items previously deducted or credited.
     1. (a) The difference between (1) the taxable income for such original year and (2) the taxable income computed without regard to the section 111 items for such or
     2. (b) In the case of a taxpayer subject to any income tax in lieu of normal tax or surtax or both (except the alternative tax on capital gains imposed by section
     3. (c) Provisions as to taxes imposed by section 531 (relating to the accumulated earnings tax) and section 541 (relating to the tax on personal holding companies)
     4. (ii) This rule shall be applied by determining the recovery exclusion as the aggregate amount of the section 111 items for the original year for which such item
183. 1.112-1 · -1 Combat zone compensation of members of the Armed Forces.
     1. (a) Combat zone compensation exclusion—(1) Amount excluded. In addition to the exemptions and credits otherwise applicable, section 112 excludes from gross inco
     2. (b) Service in combat zone—(1) Active service. The exclusion under section 112 applies only if active service is performed in a combat zone. A member of the Arm
     3. (c) Hospitalization—(1) Presumption of combat zone injury. If an individual is hospitalized for wound, disease, or injury while serving in a combat zone, the wo
     4. (d) Married members. The exclusion under section 112 applies without regard to the marital status of the recipient of the compensation. If both spouses meet the
     5. (e) Service in area outside combat zone—(1) Combat zone treatment. For purposes of section 112, a member of the Armed Forces who performs military service in an
     6. (f) Nonqualifying presence in combat zone—(1) Inapplicability of exclusion. The following members of the Armed Forces are not deemed to serve in a combat zone w
     7. (i) Members present in a combat zone while on leave from a duty station located outside a combat zone;
     8. (ii) Members who pass over or through a combat zone during the course of a trip between two points both of which lie outside a combat zone; or
184. 1.113-1 · -1 Mustering-out payments for members of the Armed Forces.
185. 1.117-1 · -1 Exclusion of amounts received as a scholarship or fellowship grant.
     1. (a) In general. Any amount received by an individual as a scholarship at an educational institution or as a fellowship grant, including the value of contributed
     2. (b) Exclusion of amounts received to cover expenses. (1) Subject to the limitations provided in subparagraph (2) of this paragraph, any amount received by an in
     3. (ii) In the case of a scholarship or fellowship grant awarded before July 29, 1956, the exclusion provided under subparagraph (1) of this paragraph is not appli
186. 1.117-2 · -2 Limitations.
     1. (a) Individuals who are candidates for degrees—(1) In general. Under the limitations provided by section 117(b)(1) in the case of an individual who is a candida
     2. (b) Individuals who are not candidates for degrees—(1) Conditions for exclusion. In the case of an individual who is not a candidate for a degree at an educatio
     3. (i) An organization described in section 501(c)(3) which is exempt from tax under section 501(a),
     4. (ii) The United States or an instrumentality or agency thereof, or a State, a territory, or a possession of the United States, or any political subdivision ther
187. 1.117-3 · -3 Definitions.
     1. (a) Scholarship. A scholarship generally means an amount paid or allowed to, or for the benefit of, a student, whether an undergraduate or a graduate, to aid su
     2. (b) Educational organization. For definition of “educational organization” paragraphs (a) and (b) of section 117 adopt the definition of that term which is pres
     3. (c) Fellowship grant. A fellowship grant generally means an amount paid or allowed to, or for the benefit of, an individual to aid him in the pursuit of study o
     4. (d) Contributed services and accommodations. The term “contributed services and accommodations” means such services and accommodations as room, board, laundry s
     5. (e) Candidate for a degree. The term “candidate for a degree” means an individual, whether an undergraduate or a graduate, who is pursuing studies or conducting
188. 1.117-4 · -4 Items not considered as scholarships or fellowship grants.
     1. (a) Educational and training allowances to veterans. Educational and training allowances to a veteran pursuant to section 400 of the Servicemen's Readjustment A
     2. (b) Allowances to members of the Armed Forces of the United States. Tuition and subsistence allowances to members of the Armed Forces of the United States who a
     3. (c) Amounts paid as compensation for services or primarily for the benefit of the grantor. (1) Except as provided in paragraph (a) of §§ 1.117-2 and 1.117-5, an
189. 1.117-5 · -5 Federal grants requiring future service as a Federal employee.
     1. (a) In general. Under section 117(c), amounts received by an individual under a Federal program as a scholarship or grant for qualified tuition and expenses at
     2. (b) Exception for uniformed services scholarship programs. The requirements of this section do not apply to amounts received before 1985 by a member of a unifor
     3. (c) Definitions—(1) Qualified tuition and related expenses. For purposes of section 117(c) and this section, qualified tuition and related expenses are those am
     4. (d) Records required for exclusion from gross income. To exclude amounts received under Federal programs requiring future services as a Federal employee, the re
     5. (e) Applicability of rules of §§ 117(a) and 117(b). Except where a different rule has been expressly provided in this section, amounts received under Federal gr
     6. (f) Effective date. Except as provided in paragraph (b) of this section, this section will apply to amounts received after December 31, 1980 under Federal progr
     7. (i) Tuition and fees that are required for the recipient's enrollment or attendance at an institution of higher education; and
     8. (ii) Service in a health manpower shortage area. For purposes of this section an obligation under a grant for the recipient to serve in a health related field i
190. 1.118-1 · -1 Contributions to the capital of a corporation.
191. 1.118-2 · -2 Contribution in aid of construction.
     1. (a) Special rule for water and sewerage disposal utilities—(1) In general. For purposes of section 118, the term contribution to the capital of the taxpayer inc
     2. (b) Contribution in aid of construction—(1) In general. For purposes of section 118(c) and this section, the term contribution in aid of construction means any
     3. (c) Expenditure rule—(1) In general. An amount satisfies the expenditure rule of section 118(c)(2) if the amount is expended for the acquisition or construction
     4. (d) Adjusted basis—(1) Exclusion from basis. Except for a repayment described in paragraph (d)(2) of this section, to the extent that a water or sewerage dispos
     5. (e) Statute of limitations—(1) Extension of statute of limitations. Under section 118(d)(1), the statutory period for assessment of any deficiency attributable
     6. (f) Effective date. This section is applicable for any money or other property received by a regulated public utility that provides water or sewerage disposal s
     7. (i) The amount is a contribution in aid of construction under paragraph (b) of this section;
     8. (ii) Repayment of excess amount. If the excess amount described in paragraph (c)(2)(i) of this section is repaid, in whole or in part, either—
192. 1.119-1 · -1 Meals and lodging furnished for the convenience of the employer.
     1. (a) Meals—(1) In general. The value of meals furnished to an employee by his employer shall be excluded from the employee's gross income if two tests are met: (
     2. (b) Lodging. The value of lodging furnished to an employee by the employer shall be excluded from the employee's gross income if three tests are met:
     3. (c) Business premises of the employer—(1) In general. For purposes of this section, the term “business premises of the employer” generally means the place of em
     4. (d) Camp defined—(1) In general. For the purposes of paragraph (c)(2) of this section, a camp is lodging that is all of the following:
     5. (e) Rules. The exclusion provided by section 119 applies only to meals and lodging furnished in kind by or on behalf of an employer to his employee. If the empl
     6. (f) Examples. The provisions of section 119 may be illustrated by the following examples: Example 1.A waitress who works from 7 a.m. to 4 p.m. is furnished with
     7. (i) Provided by or on behalf of the employer for the convenience of the employer because the place at which the employee renders services is in a remote area wh
     8. (ii) Located, as near as practicable, in the vicinity of the place at which the employee renders services; and
193. 1.120-1 · -1 Statutory subsistence allowance received by police.
     1. (a) Section 120 excludes from the gross income of an individual employed as a police official by a State, Territory, or possession of the United States, by any
     2. (b) The exclusion provided by section 120 is to be computed on a daily basis, that is, for each day for which the statutory allowance is paid. If the statute pr
     3. (c) Expenses in respect of which the allowance under section 120 is paid may not be deducted under any provision of the income tax laws except to the extent tha
     4. (d) In the case of taxable years ending after September 30, 1958, section 120 and this section do not apply to amounts received as a statutory subsistence allow
194. 1.120-3 · -3 Notice of application for recognition of status of qualified group legal services plan.
     1. (a) In general. In order for a plan to be a qualified group legal services plan for purposes of the exclusion from gross income provided by section 120(a), the
     2. (b) Filing of notice—(1) In general. A notice of application for recognition of the status of a qualified group legal services plan must be filed with the key d
     3. (c) Internal Revenue Service action on notice of application for recognition. The Internal Revenue Service will issue to the person submitting Form 1024 and Sch
     4. (d) Period of plan qualification—(1) In general. In the case of a favorable determination, the plan will be considered a qualified group legal services plan. If
     5. (e) Effective date. This section is effective for notices of application for recognition of the status of a qualified group legal services plan filed after May
     6. (i) The end of the first plan year (as determined under the plan),
     7. (ii) The end of the plan year within which the employer adopts the plan, or
195. 1.1201-1 · -1 Alternative tax.
     1. (a) Sales or other dispositions on or before October 9, 1969, including sales or other dispositions the income from which is returned as provided in section 453
     2. (b) Sales or other dispostions after October 9, 1969, pursuant to binding contracts entered into on or before that date, including sales or other dispositions t
     3. (c) Tax-exempt trusts and organizations. In applying section 1201 in the case of tax-exempt trusts or organizations subject to the tax imposed by section 511, t
     4. (d) Joint returns. In the case of a joint return, the excess of any net long-term capital gain over any net short-term capital loss is to be determined by combi
     5. (e) Computation of tax on capital gain in excess of subsection (d) gain—(1) In general. The tax computed for purposes of section 1201(b)(3) and paragraph (b) (2
     6. (f) Definition of subsection (d) gain—(1) In general. For purposes of section 1201 and this section, the term subsection (d) gain means the sum of the long-term
     7. (g) Illustrations. The application of this section may be illustrated by the following examples in which the assumption is made that section 56 (relating to min
     8. (i) In the case of amounts received or accrued, as the case may be, before January 1, 1975 (other than any gain from a transaction described in section 631 or 1
     9. (ii) From liquidating distributions made by a corporation which are made (a) before October 10, 1970, and (b) pursuant to a plan of complete liquidation adopted
196. 1.1202-0 · -0 Table of contents.
197. 1.1202-1 · -1 Deduction for capital gains.
     1. (a) In computing gross income, adjusted gross income, taxable income, capital gain net income (net capital gain for taxable years beginning before January 1, 19
     2. (b) For the purpose of computing the deduction allowable under section 1202 in the case of an estate or trust, any long-term or short-term capital gains which,
     3. (c) The provisions of this section may be illustrated by the following example: Example:A, an individual, had the following transactions in 1954: Long-term capi
198. 1.1202-2 · -2 Qualified small business stock; effect of redemptions.
     1. (a) Redemptions from taxpayer or related person—(1) In general. Stock acquired by a taxpayer is not qualified small business stock if, in one or more purchases
     2. (b) Significant redemptions—(1) In general. Stock is not qualified small business stock if, in one or more purchases during the 2-year period beginning on the d
     3. (c) Transfers by shareholders in connection with the performance of services not treated as purchases. A transfer of stock by a shareholder to an employee or in
     4. (d) Exceptions for termination of services, death, disability or mental incompetency, or divorce. A stock purchase is disregarded if the stock is acquired in th
     5. (e) Effective date. This section applies to stock issued after August 10, 1993.
     6. (ii) Independent contractors. [Reserved]
199. 1.121-1 · -1 Exclusion of gain from sale or exchange of a principal residence.
     1. (a) In general. Section 121 provides that, under certain circumstances, gross income does not include gain realized on the sale or exchange of property that was
     2. (b) Residence—(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used
     3. (c) Ownership and use requirements—(1) In general. The requirements of ownership and use for periods aggregating 2 years or more may be satisfied by establishin
     4. (d) Depreciation taken after May 6, 1997—(1) In general. The section 121 exclusion does not apply to so much of the gain from the sale or exchange of property a
     5. (e) Property used in part as a principal residence—(1) Allocation required. Section 121 will not apply to the gain allocable to any portion (separate from the d
     6. (f) Effective date. This section is applicable for sales and exchanges on or after Decmeber 24, 2002. For rules on electing to apply the provisions of this sect
     7. (ii) Certain single owner entities. If a residence is owned by an eligible entity (within the meaning of § 301.7701-3(a) of this chapter) that has a single owne
200. 1.121-2 · -2 Limitations.
     1. (a) Dollar limitations—(1) In general. A taxpayer may exclude from gross income up to $250,000 of gain from the sale or exchange of the taxpayer's principal res
     2. (b) Application of section 121 to only 1 sale or exchange every 2 years—(1) In general. Except as otherwise provided in § 1.121-3 (relating to the reduced maxim
     3. (c) Effective date. This section is applicable for sales and exchanges on or after December 24, 2002. For rules on electing to apply the provisions of this sect
     4. (ii) Other joint returns. For taxpayers filing jointly, if either spouse fails to meet the requirements of paragraph (a)(3)(i) of this section, the maximum limi
201. 1.121-3 · -3 Reduced maximum exclusion for taxpayers failing to meet certain requirements.
     1. (a) In general. In lieu of the limitation under section 121(b) and § 1.121-2, a reduced maximum exclusion limitation may be available for a taxpayer who sells o
     2. (b) Primary reason for sale or exchange. In order for a taxpayer to claim a reduced maximum exclusion under section 121(c), the sale or exchange must be by reas
     3. (c) Sale or exchange by reason of a change in place of employment—(1) In general. A sale or exchange is by reason of a change in place of employment if, in the
     4. (d) Sale or exchange by reason of health—(1) In general. A sale or exchange is by reason of health if the primary reason for the sale or exchange is to obtain,
     5. (e) Sale or exchange by reason of unforeseen circumstances—(1) In general. A sale or exchange is by reason of unforeseen circumstances if the primary reason for
     6. (f) Qualified individual. For purposes of this section, qualified individual means—
     7. (g) Computation of reduced maximum exclusion. (1) The reduced maximum exclusion is computed by multiplying the maximum dollar limitation of $250,000 ($500,000 f
     8. (h) Effective dates. Paragraphs (a) and (g) of this section are applicable for sales and exchanges on or after December 24, 2002. Paragraphs (b) through (f) of
202. 1.121-4 · -4 Special rules.
     1. (a) Property of deceased spouse—(1) In general. For purposes of satisfying the ownership and use requirements of section 121, a taxpayer is treated as owning an
     2. (b) Property owned by spouse or former spouse—(1) Property transferred to individual from spouse or former spouse. If a taxpayer obtains property from a spouse
     3. (c) Tenant-stockholder in cooperative housing corporation. A taxpayer who holds stock as a tenant-stockholder in a cooperative housing corporation (as those ter
     4. (d) Involuntary conversions—(1) In general. For purposes of section 121, the destruction, theft, seizure, requisition, or condemnation of property is treated as
     5. (e) Sales or exchanges of partial interests—(1) Partial interests other than remainder interests—(i) In general. Except as provided in paragraph (e)(2) of this
     6. (f) No exclusion for expatriates. The section 121 exclusion will not apply to any sale or exchange by an individual if the provisions of section 877(a) (relatin
     7. (g) Election to have section not apply. A taxpayer may elect to have the section 121 exclusion not apply to a sale or exchange of property. The taxpayer makes t
     8. (h) Residences acquired in rollovers under section 1034. If a taxpayer acquires property in a transaction that qualifies under section 1034 (section 1034 proper
     9. (i) [Reserved]
     10. (ii) Limitations—(A) Sale or exchange of any other interest. If a taxpayer elects to exclude gain from the sale or exchange of a remainder interest in the taxpa
     11. (j) Election to apply regulations retroactively. Taxpayers who would otherwise qualify under §§ 1.121-1 through 1.121-4 to exclude gain from a sale or exchange
     12. (k) Audit protection. The Internal Revenue Service will not challenge a taxpayer's position that a sale or exchange of a principal residence occurring before De
     13. (l) Effective date. This section is applicable for sales and exchanges on or after December 24, 2002. For rules on electing to apply the provisions retroactivel
203. 1.121-5 · -5 Suspension of 5-year period for certain members of the uniformed services and Foreign Service.
     1. (a) In general. Under section 121(d)(9), a taxpayer who is serving (or whose spouse is serving) on qualified official extended duty as a member of the uniformed
     2. (b) Manner of making election. The taxpayer makes the election under section 121(d)(9) and this section by filing a return for the taxable year of the sale or e
     3. (c) Application of election to closed years. A taxpayer who would otherwise qualify under §§ 1.121-1 through 1.121-4 to exclude gain from a sale or exchange of
     4. (d) Example. The provisions of this section are illustrated by the following example: Example.B purchases a house in Virginia in 2003 that he uses as his princi
     5. (e) Effective date. This section is applicable for sales and exchanges on or after May 7, 1997.
204. 1.1211-1 · -1 Limitation on capital losses.
     1. (a) The portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in the taxable year (i.e.
     2. (b) The amount by which the portion of the capital gain net income (net capital gain for taxable years beginning before January 1, 1977) actually realized in th
     3. (c) The sum of the excess of the net short-term capital loss over the net long-term capital gain; that portion of the excess of the net long-term capital loss o
     4. (i) Losses sustained during the taxable year from sales or exchanges of capital assets, plus
     5. (ii) For taxable years beginning before January 1, 1976, in case the tax is computed under section 3 and the regulations thereunder (relating to optional tax ta
     6. (v) Scope of rules. The rules provided by this subparagraph are for the purpose of computing the amount of the transitional additional allowance deductible for
205. 1.1212-1 · -1 Capital loss carryovers and carrybacks.
     1. (a) For purposes of computing a short-term capital loss carryover to the succeeding taxable year, an amount equal to the additional allowance for the taxable ye
     2. (b) For purposes of computing a long-term capital loss carryover to the succeeding taxable year, an amount equal to the sum of the additional allowance for the
     3. (c) Husband and wife. (1) The following rules shall be applied in computing capital loss carryovers by husband and wife:
     4. (d) A net capital loss of a corporation for a year for which it is not an electing small business corporation under subchapter S shall not be carried back under
     5. (e) A net capital loss of a corporation shall not be carried back under section 1212(a)(1)(A) and subdivision (i)(a) of this subparagraph to a taxable year for
     6. (f) A taxable year to which a net capital loss of a corporation cannot, by reason of (d) or (e) of this subdivision, be carried back under section 1212(a) (1)(A
     7. (g) A regulated investment company (as defined in section 851) sustaining a net capital loss shall carry over that loss to each of the 8 taxable years succeedin
     8. (i) If a husband and wife making a joint return for any taxable year made separate returns for the preceding year, any capital loss carryovers of each spouse fr
     9. (ii) If a joint return was made for the preceding taxable year, any capital loss carryover from such preceding taxable year may be carried forward to the taxabl
     10. (iv) The application of this subparagraph may be illustrated by the following examples, in each of which it is assumed that the corporation is not, and never ha
206. 1.122-1 · -1 Applicable rules relating to certain reduced uniformed services retirement pay.
     1. (a) The total amount of the reductions, if any, before January 1, 1966, in retired or retainer pay by reason of an election under Subchapter I of Chapter 73 of
     2. (b) The total amount, if any, deposited by the serviceman at any time pursuant to the provisions of sections 1438 or 1452(d) of title 10 of the United States Co
     3. (c) Special rules. In any of the following situations, the computation of the excludable portion of disability retired pay received by the member or former memb
     4. (d) Examples with respect to the Retired Serviceman's Family Protection Plan. The rules discussed in this section relating to the Retired Serviceman's Family Pr
     5. (e) Principles applicable to the Survivor Benefit Plan. The principles illustrated by the examples set forth in paragraph (d) of this section apply to an annuit
     6. (i) An election made under the Retired Serviceman's Family Protection Plan (10 U.S.C. 1431), or
     7. (ii) Upon the death of a member or former member of the uniformed services, where the “consideration for the contract” (as described in subdivision (iii) of thi
     8. (iv) In determining whether there has been a recovery of the “consideration for the contract” under subdivision (i) of this subparagraph, the exclusion of retir
207. 1.1221-1 · -1 Meaning of terms.
     1. (a) The term capital assets includes all classes of property not specifically excluded by section 1221. In determining whether property is a capital asset, the
     2. (b) Property used in the trade or business of a taxpayer of a character which is subject to the allowance for depreciation provided in section 167 and real prop
     3. (c) (1) A copyright, a literary, musical, or artistic composition, and similar property are excluded from the term capital assets if held by a taxpayer whose pe
     4. (d) Section 1221(4) excludes from the definition of capital asset accounts or notes receivable acquired in the ordinary course of trade or business for services
     5. (e) Obligations of the United States or any of its possessions, or of a State or Territory, or any political subdivision thereof, or of the District of Columbia
208. 1.1221-2 · -2 Hedging transactions.
     1. (a) Treatment of hedging transactions—(1) In general. This section governs the treatment of hedging transactions under section 1221(a)(7). Except as provided in
     2. (b) Hedging transaction defined. Section 1221(b)(2)(A) provides that a hedging transaction is any transaction that a taxpayer enters into in the normal course o
     3. (c) General rules—(1) Normal course. Solely for purposes of paragraph (b) of this section, if a transaction is entered into in furtherance of a taxpayer's trade
     4. (d) Transactions that manage risk—(1) Risk reduction transactions—(i) In general. A transaction that is entered into to reduce a taxpayer's risk, manages a taxp
     5. (e) Hedging by members of a consolidated group—(1) General rule: single-entity approach. For purposes of this section, the risk of one member of a consolidated
     6. (f) Identification and recordkeeping—(1) Same-day identification of hedging transactions. Under section 1221(a)(7), a taxpayer that enters into a hedging transa
     7. (g) Effect of identification and non-identification—(1) Transactions identified—(i) In general. If a taxpayer identifies a transaction as a hedging transaction
     8. (h) Effective date. The rules of this section apply to transactions entered into on or after March 20, 2002.
     9. (i) [Reserved]. For further guidance, see § 1.1221-2T(i) through (j)(1).
     10. (ii) Inadvertent error. If a taxpayer does not make an identification that satisfies the requirements of paragraph (f) of this section, the taxpayer may treat g
     11. (j) Effective/applicability date. Paragraph (e)(2)(iv) of this section applies to any original consolidated Federal income tax return due (without extensions) a
209. 1.1221-3 · -3 Time and manner for electing capital asset treatment for certain self-created musical works.
     1. (a) Description. Section 1221(b)(3) allows an electing taxpayer to treat the sale or exchange of a musical composition or a copyright in a musical work created
     2. (b) Time and manner for making the election. An election described in this section is made separately for each musical composition (or copyright in a musical wo
     3. (c) Revocability of election. The election described in this section is revocable with the consent of the Commissioner. To seek consent to revoke the election,
     4. (d) Effective/applicability date. This section applies to elections under section 1221(b)(3) in taxable years beginning after May 17, 2006.
210. 1.1222-1 · -1 Other terms relating to capital gains and losses.
     1. (a) The phrase short-term applies to the category of gains and losses arising from the sale or exchange of capital assets held for 1 year (6 months for taxable
     2. (b) (1) In the definition of net short-term capital gain, as provided in section 1222(5), the amounts brought forward to the taxable year under section 1212 (ot
     3. (c) Gains and losses from the sale or exchange of capital assets held for not more than 1 year (6 months for taxable years beginning before 1977; 9 months for t
     4. (d) (1) The term capital gain net income (net capital gain for taxable years beginning before January 1, 1977) means the excess of the gains from sales or excha
     5. (e) The term net capital loss means the excess of the losses from sales or exchanges of capital assets over the sum allowed under section 1211. However, in the
     6. (f) See section 165(g) and section 166(e), under which losses from worthless stocks, bonds, and other securities (if they constitute capital assets) are require
     7. (g) In the case of nonresident alien individuals not engaged in trade or business within the United States, see section 871 and the regulations thereunder for t
     8. (h) The term net capital gain (net section 1201 gain for taxable years beginning before January 1, 1977) means the excess of the net long-term capital gain for
211. 1.1223-1 · -1 Determination of period for which capital assets are held.
     1. (a) The holding period of property received in an exchange by a taxpayer includes the period for which the property which he exchanged was held by him, if the p
     2. (b) The holding period of property in the hands of a taxpayer shall include the period during which the property was held by any other person, if such property
     3. (c) In determining the period for which the taxpayer has held stock or securities received upon a distribution where no gain was recognized to the distributee u
     4. (d) If the acquisition of stock or securities resulted in the nondeductibility (under section 1091, relating to wash sales) of the loss from the sale or other d
     5. (e) The period for which the taxpayer has held stock, or stock subscription rights, received on a distribution shall be determined as though the stock dividend,
     6. (f) The period for which the taxpayer has held stock or securities issued to him by a corporation pursuant to the exercise by him of rights to acquire such stoc
     7. (g) The period for which the taxpayer has held a residence, the acquisition of which resulted under the provisions of section 1034 in the nonrecognition of any
     8. (h) If a taxpayer accepts delivery of a commodity in satisfaction of a commodity futures contract, the holding period of the commodity shall include the period
     9. (i) If shares of stock in a corporation are sold from lots purchased at different dates or at different prices and the identity of the lots cannot be determined
     10. (j) In the case of a person acquiring property, or to whom property passed, from a decedent (within the meaning of section 1014(b)) dying after December 31, 197
     11. (k) Any reference in section 1223 or this section to another provision of the Internal Revenue Code of 1954 is, where applicable, to be deemed a reference to th
     12. (l) Effective/applicability date. This section applies January 19, 2017. For rules before January 19, 2017, see § 1.1223-1 as contained in 26 CFR part 1 revised
212. 1.1223-3 · -3 Rules relating to the holding periods of partnership interests.
     1. (a) In general. A partner shall not have a divided holding period in an interest in a partnership unless—
     2. (b) Accounting for holding periods of an interest in a partnership—(1) General rule. The portion of a partnership interest to which a holding period relates sha
     3. (c) Sale or exchange of all or a portion of an interest in a partnership—(1) Sale or exchange of entire interest in a partnership. If a partner sells or exchang
     4. (d) Distributions—(1) In general. Except as provided in paragraph (b)(2) of this section, a partner's holding period in a partnership interest is not affected b
     5. (e) Section 751(c) assets. For purposes of this section, properties and potential gain treated as unrealized receivables under section 751(c) shall be treated a
     6. (f) Examples. The provisions of this section are illustrated by the following examples:
     7. (g) Applicability dates. This section applies to transfers of partnership interests and distributions of property from a partnership that occur on or after Sept
     8. (ii) Other partnerships. If a partner has a divided holding period in a partnership interest, and paragraph (c)(2)(i) of this section does not apply, then the h
213. 1.123-1 · -1 Exclusion of insurance proceeds for reimbursement of certain living expenses.
     1. (a) In general. (1) Gross income does not include insurance proceeds received by an individual on or after January 1, 1969, pursuant to the terms of an insuranc
     2. (b) Limitation—(1) Amount excludable. The amount excludable under this section is limited to amounts received which are not in excess of the amount by which (i)
     3. (c) Principal residence. Whether or not property is used by the insured taxpayer and members of his household as their principal residence depends upon all the
     4. (ii) When a lump-sum insurance settlement includes, but does not specifically identify, compensation for property damage, loss of rental income, and increased l
214. 1.1231-1 · -1 Gains and losses from the sale or exchange of certain property used in the trade or business.
     1. (a) In general. Section 1231 provides that, subject to the provisions of paragraph (e) of this section, a taxpayer's gains and losses from the disposition (incl
     2. (b) Treatment of gains and losses. For the purpose of applying section 1231, a taxpayer must aggregate his recognized gains and losses from:
     3. (c) Transactions to which section applies. Section 1231 applies to recognized gains and losses from the following:
     4. (d) Extent to which gains and losses are taken into account. All gains and losses to which section 1231 applies must be taken into account in determining whethe
     5. (e) Involuntary conversion—(1) General rule. For purposes of section 1231, the terms compulsory or involuntary conversion and involuntary conversion of property
     6. (f) Unharvested crops. Section 1231 does not apply to a sale, exchange, or involuntary conversion of an unharvested crop if the taxpayer retains any right or op
     7. (g) Examples. The provisions of this section may be illustrated by the following examples: Example 1.A, an individual, makes his income tax return on the calend
215. 1.1231-2 · -2 Livestock held for draft, breeding, dairy, or sporting purposes.
     1. (a) (1) In the case of cattle, horses, or other livestock acquired by the taxpayer after December 31, 1969, section 1231 applies to the sale, exchange, or invol
     2. (b) (1) Whether or not livestock is held by the taxpayer for draft, breeding, dairy, or sporting purposes depends upon all of the facts and circumstances in eac
     3. (c) (1) For purposes of paragraph (b) of this section, a horse held for racing purposes shall be considered as held for sporting purposes. Whether a horse is he
     4. (i) A horse which has actually been raced at a public race track shall, except in rare and unusual circumstances, be considered as held for racing purposes.
     5. (ii) A horse which has not been raced at a public track shall be considered as held for racing purposes if it has been trained to race and other facts and circu
216. 1.1232-1 · -1 Bonds and other evidences of indebtedness; scope of section.
     1. (a) In general. Section 1232 applies to any bond, debenture, note, or certificate or other evidence of indebtedness (referred to in this section and §§ 1.1232-3
     2. (b) Requirement that obligations be capital assets. In order for section 1232 to be applicable, an obligation must be a capital asset in the hands of the taxpay
     3. (c) Face-amount certificates—(1) In general. For purposes of section 1232, this section and §§ 1.1232-3 and 1.1232-3A, the term other evidence of indebtedness i
     4. (d) Certain deposits in financial institutions. For purposes of section 1232, this section and §§ 1.1232-3 and 1.1232-3A, the term other evidence of indebtednes
217. 1.1232-2 · -2 [Reserved]
218. 1.1232-3 · -3 Gain upon sale or exchange of obligations issued at a discount after December 31, 1954.
     1. (a) If at the time of original issue there was no intention to call the obligation before maturity, such gain shall be considered as long-term capital gain, or
     2. (b) Circumstances indicating absence of understanding. Examples of circumstances which would be evidence that there was no understanding at the time of original
     3. (c) Gain treated as ordinary income in certain cases; computation. The amount of gain treated as ordinary income under paragraph (a) (3)(ii) or (5) of this sect
     4. (d) Exceptions to the general rule—(1) In general. Section 1232(a)(2)(C) provides that section 1232(a)(2) does not apply (i) to obligations the interest on whic
     5. (e) Amounts previously includible in income. Nothing in section 1232(a)(2) shall require the inclusion of any amount previously includible in gross income. Thus
     6. (f) Recordkeeping requirements. In the case of any obligation held by a taxpayer which was issued at an original issue discount after December 31, 1954, the tax
     7. (ii) Proof of intent—(a) In general. Ordinarily, the existence or non-existance of an understanding at the time of original issue that the obligation will be re
     8. (iv) Serial obligations—(a) In general. If an issue of obligations which matures serially is issued by a corporation, and if on the basis of the facts and circu
219. 1.1232-3A · -3A Inclusion as interest of original issue discount on certain obligations issued after May 27, 1969.
     1. (a) Last credited on a similar account, or
     2. (b) Equal to the average rate credited for the preceding 5 calendar years on a similar account.
     3. (c) The date of maturity shall be the fixed maturity date of the deposit, and
     4. (d) The stated redemption price at maturity is the sum of the amount of such contingent interest plus any interest to be earned thereon at the guaranteed minimu
     5. (e) Application of section 1232 to certain deposits in financial institutions and similar arrangements—(1) In general. Under paragraph (d) of § 1.1232-1, the te
     6. (f) Application of section 1232(a)(3) to face-amount certificates—(1) In general. Under paragraph (c)(3) of § 1.1232-1, the provisions of section 1232(a)(3) and
     7. (ii) Adjustments for additional interest. The rate taken into account under this subparagraph in computing the redemption price shall be treated as the guarante
220. 1.1233-1 · -1 Gains and losses from short sales.
     1. (a) General. (1) For income tax purposes, a short sale is not deemed to be consummated until delivery of property to close the short sale. Whether the recognize
     2. (b) Hedging transactions. Under section 1233(g), the provisions of section 1233 and this section shall not apply to any bona fide hedging transaction in commodi
     3. (c) Special short sales—(1) General. Section 1233 provides rules as to the tax consequences of a short sale of property if gain or loss from the short sale is c
     4. (d) Other rules for the application of section 1233—(1) Substantially identical property. The term substantially identical property is to be applied according t
     5. (e) Special rule for short sales by dealers in securities under certain circumstances. In the case of a short sale of stock (as defined in subparagraph (3) of t
     6. (f) Arbitrage operations in stocks and securities and holding periods—(1) General rule. (i) In the case of a short sale entered into as part of an arbitrage ope
     7. (ii) If the substantially identical property acquired for arbitrage operations is disposed of without closing the short sale so that a net short position in ass
221. 1.1233-2 · -2 Hedging transactions.
222. 1.1234-1 · -1 Options to buy or sell.
     1. (a) Sale or exchange—(1) Capital assets. Gain or loss from the sale or exchange of an option (or privilege) to buy or sell property which is (or if acquired wou
     2. (b) Failure to exercise option. If the holder of an option to buy or sell property incurs a loss on failure to exercise the option, the option is deemed to have
     3. (c) Certain options to sell property at a fixed price. Section 1234 does not apply to a loss on the failure to exercise an option to sell property at a fixed pr
     4. (d) Dealers in options to buy or sell. Any gain or loss realized by a dealer in options from the sale or exchange or an option to buy or sell property is consid
     5. (e) Other exceptions. Section 1234 does not apply to gain resulting from the sale or exchange of an option:
     6. (f) Limitations on effect of section. Losses to which section 1234 applies are subject to the limitations on losses under sections 165(c) and 1211 when applicab
     7. (g) Examples. The rules set forth in this section may be illustrated by the following examples: Example 1.A taxpayer is considering buying a new house for his r
223. 1.1234-2 · -2 Special rule for grantors of straddles applicable to certain options granted on or before September 1, 1976.
     1. (a) In general. Section 1234(c)(1) provides a special rule applicable in the case of gain on the lapse of an option granted by the taxpayer as part of a straddl
     2. (b) Definitions. The following definitions apply for purposes of section 1234(c) and this section.
     3. (c) Special rules in the case of a multiple option. (1) If, in the case of a multiple option, the number of the options to sell and the number of the options to
     4. (d) Allocation of premium. The allocation of a premium received for a straddle or a multiple option between or among the component options thereof shall be made
     5. (e) Effective date—(1) In general. This section, relating to special rules for grantors of straddles, shall apply only with respect to straddle transactions ent
     6. (f) Illustrations. The application of section 1234(c) and this section may be illustrated by the following examples: Example 1.On February 1, 1971, taxpayer A,
224. 1.1234-3 · -3 Special rules for the treatment of grantors of certain options granted after September 1, 1976.
     1. (a) In general. In the case of the grantor of an option (including an option granted as part of a straddle or multiple option), gain of loss from any closing tr
     2. (b) Definitions. The following definitions apply for purposes of this section.
     3. (c) Nonapplicability to broker-dealers. The provisions of this section do not apply to any option granted in the ordinary course of the taxpayer's trade or busi
     4. (d) Nonapplicability to compensatory options. Section 1234 does not apply to options to purchase stock or other property which are issued as compensation for se
     5. (e) Premium allocation for simultaneously granted options. The allocation of a premium received for a straddle or multiple option between or among the component
     6. (f) Effective date. This section, relating to special rules for the treatment of grantors of certain options, shall apply to options granted after September 1,
225. 1.1234-4 · -4 Hedging transactions.
226. 1.1235-1 · -1 Sale or exchange of patents.
     1. (a) General rule. Section 1235 provides that a transfer (other than by gift, inheritance, or devise) of all substantial rights to a patent, or of an undivided i
     2. (b) Scope of section 1235. If a transfer is not one described in paragraph (a) of this section, section 1235 shall be disregarded in determining whether or not
     3. (c) Special rules—(1) Payments for infringement. If section 1235 applies to the transfer of all substantial rights to a patent (or an undivided interest therein
     4. (d) Payor's treatment of payments in a transfer under section 1235. Payments made by the transferee of patent rights pursuant to a transfer satisfying the requi
     5. (e) Effective date. Amounts received or accrued, and payments made or accrued, during any taxable year beginning after December 31, 1953 and ending after August
     6. (f) Nonresident aliens. For the special rule relating to nonresident aliens who have gains arising from a transfer to which section 1235 applies, see section 87
227. 1.1235-2 · -2 Definition of terms.
     1. (a) Patent. The term patent means a patent granted under the provisions of title 35 of the United States Code, or any foreign patent granting rights generally s
     2. (b) All substantial rights to a patent. (1) The term all substantial rights to a patent means all rights (whether or not then held by the grantor) which are of
     3. (e) Actual reduction to practice. For the purposes of determining whether an individual is a holder under paragraph (d) of this section, the term actual reducti
     4. (f) Related person. (1) The term related person means one whose relationship to another person at the time of the transfer is described in section 267(b), excep
     5. (i) Which is limited geographically within the country of issuance;
     6. (ii) Which is limited in duration by the terms of the agreement to a period less than the remaining life of the patent;
228. 1.1236-1 · -1 Dealers in securities.
     1. (a) Capital gains. Section 1236(a) provides that gain realized by a dealer in securities from the sale or exchange of a security (as defined in paragraph (c) of
     2. (b) Ordinary losses. Section 1236(b) provides that a loss sustained by a dealer in securities from the sale or exchange of a security shall not be considered a
     3. (c) Definitions—(1) Security. For the purposes of this section, the term security means any share of stock in any corporation, any certificate of stock or inter
     4. (d) Identification of security in dealer's records. (1) A security is clearly identified in the dealer's records as a security held for investment when there is
229. 1.1237-1 · -1 Real property subdivided for sale.
     1. (a) The property in question was acquired by the taxpayer through the foreclosure of a lien thereon,
     2. (b) The lien foreclosed secured the payment of an indebtedness to the taxpayer or (in the case of a corporation) secured the payment of an indebtedness to a cre
     3. (c) In the case of a corporate taxpayer, no shareholder of the corporation holds real property for sale to customers in the ordinary course of his trade or busi
     4. (d) Holding period required—(1) General rules. To apply section 1237, the taxpayer must either have inherited the lot sold or have held it for 5 years. Generall
     5. (e) Tax consequences if section 1237 applies—(1) Introductory. Where there is no substantial evidence other than subdivision and related selling activities that
     6. (f) Relationship of section 1237 and section 1231. Application of section 1237 to a sale of real property may, in some cases, result in the property being treat
     7. (g) Definition of tract—(1) Aggregation of properties. For the purposes of section 1237, the term tract means either (i) a single piece of real property or (ii)
     8. (h) Effective date. This section shall apply only to gain realized on sales made after December 31, 1953, or, in the case of a person meeting the requirements o
     9. (i) Held the lot sold (or the tract of which it was a part) primarily for sale in the ordinary course of his business in a prior year, or
     10. (ii) If the taxpayer has sold the sixth lot or parcel from the same tract within the taxable year, then the amount, if any, by which 5 percent of the selling pr
     11. (iv) Exceptions with respect to necessary improvements and certain corporations. For taxable years beginning after December 31, 1954, individual taxpayers and c
230. 1.1238-1 · -1 Amortization in excess of depreciation.
     1. (a) In general. Section 1238 provides that if a taxpayer is entitled to a deduction for amortization of an emergency facility under section 168, and if the faci
     2. (b) Substituted basis. If a taxpayer acquires other property in an exchange for an emergency facility with respect to which amortization deductions have been al
231. 1.1239-1 · -1 Gain from sale or exchange of depreciable property between certain related taxpayers after October 4, 1976.
     1. (a) In general. In the case of a sale or exchange of property, directly or indirectly, between related persons after October 4, 1976 (other than a sale or excha
     2. (b) Related persons. For purposes of paragraph (a) of this section, the term related persons means:
     3. (c) Rules of construction—(1) Husband and wife. For purposes of paragraph (b)(1) of this section, if on the date of the sale or exchange a taxpayer is legally s
232. 1.1239-2 · -2 Gain from sale or exchange of depreciable property between certain related taxpayers on or before October 4, 1976.
233. 1.1240-1 · -1 Capital gains treatment of certain termination payments.
     1. (a) The employee was employed by the employer, in whose future profits or receipts the employee had an interest, for a period of more than 20 years before the a
     2. (b) The full rights of the employee to the percentage of the future profits or receipts on such employer, which rights are the subject of the assignment or rele
     3. (c) The assignment or release was made after the termination of the employee's employment with such employer,
     4. (d) The assignment or release conveyed all the rights of the employee in the future profits or receipts of such employer and conveyed no other rights of the emp
     5. (e) The total amount to which the employee became entitled pursuant to the assignment or release was received by the employee after the termination of his emplo
234. 1.1241-1 · -1 Cancellation of lease or distributor's agreement.
     1. (a) In general. Section 1241 provides that proceeds received by lessees or distributors from the cancellation of leases or of certain distributorship agreements
     2. (b) Definition of cancellation. The term cancellation of a lease or a distributor's agreement, as used in section 1241, means a termination of all the contractu
     3. (c) Amounts received upon cancellation of a distributorship agreement. Section 1241 applies to distributorship agreements only if they are for marketing or mark
235. 1.1242-1 · -1 Losses on small business investment company stock.
     1. (a) In general. Any taxpayer who sustains a loss for a taxable year beginning after September 2, 1958, as a result of the worthlessness, or from the sale or exc
     2. (b) Treatment of losses for purposes of section 172. For the purposes of section 172 (relating to the net operating loss deduction), any amount of loss treated
     3. (c) Statement to be filed with return. A taxpayer claiming a deduction for a loss on the stock of a small business investment company shall file with his income
236. 1.1243-1 · -1 Loss of small business investment company.
     1. (a) In general—(1) Taxable years beginning after July 11, 1969. For taxable years beginning after July 11, 1969, a small business investment company to which se
     2. (b) Material to be filed with return. A small business investment company which claims a deduction for a loss on the convertible debentures (pursuant to paragra
     3. (i) The stock was issued pursuant to the conversion privilege of the convertible debentures acquired in accordance with the provisions of section 304 of the Sma
     4. (ii) Such loss would, but for the provisions of section 1243, be a loss from the sale or exchange of a capital asset, and
237. 1.1244(a)-1 · (a)-1 Loss on small business stock treated as ordinary loss.
     1. (a) In general. Subject to certain conditions and limitations, section 1244 provides that a loss on the sale or exchange (including a transaction treated as a s
     2. (b) Taxpayers entitled to ordinary loss. The allowance of an ordinary loss deduction for a loss of section 1244 stock is permitted only to the following two cla
     3. (c) Examples. The provisions of paragraph (b) of this section may be illustrated by the following examples: Example 1.A and B, both individuals, and C, a trust,
238. 1.1244(b)-1 · (b)-1 Annual limitation.
     1. (a) In general. Subsection (b) of section 1244 imposes a limitation on the aggregate amount of loss that for any taxable year may be treated as an ordinary loss
     2. (b) Amount of loss—(1) Taxable years beginning after December 31, 1978. For any taxable year beginning after December 31, 1978, the maximum amount that may be t
     3. (i) $50,000, or
     4. (ii) $100,000, if a husband and wife file a joint return under section 6013. These limitations on the maximum amount of ordinary loss apply whether the loss or
239. 1.1244(c)-1 · (c)-1 Section 1244 stock defined.
     1. (a) In general. For purposes of §§ 1.1244(a)-1 to 1.1244(e)-1, inclusive:
     2. (b) The meaning of the term gross receipts as used in section 1244(c)(1)(C) may be further illustrated by the following examples: Example 1.A corporation on the
     3. (c) Small business corporation. At the time the stock is issued (or, in the case of pre-November 1978 stock, at the time of adoption of the plan described in pa
     4. (d) Issued for money or other property. (1) The stock must be issued to the taxpayer for money or other property transferred by the taxpayer to the corporation.
     5. (e) Gross receipts. (1)(i)(a) Except as provided in subparagraph (2) of this paragraph, stock will not qualify under section 1244, if 50 percent or more of the
     6. (f) Special rules applicable to pre-November 1978 stock. (1)(i) Pre-November 1978 common stock must have been issued under a written plan adopted by the corpora
     7. (ii) To qualify, the pre-November 1978 stock must be issued during the period of the offer, which period must end not later than two years after the date the pl
240. 1.1244(c)-2 · (c)-2 Small business corporation defined.
     1. (a) In general. A corporation is treated as a small business corporation if it is a domestic corporation that satisfies the requirements described in paragraph
     2. (b) Post-November 1978 stock—(1) Amount received by corporation for stock. Capital receipts of a small business corporation may not exceed $1,000,000. For purpo
     3. (ii) Post-November 1978 common stock issued for money or other property before the transitional year qualifies as section 1244 stock without affirmative designa
241. 1.1244(d)-1 · (d)-1 Contributions of property having basis in excess of value.
     1. (a) In general. (1) Section 1244(d)(1) (A) provides a special rule which limits the amount of loss on section 1244 stock that may be treated as an ordinary loss
     2. (b) Transfer of more than one item. If a taxpayer exchanges several items of property for stock in a single transaction so that the basis of the property transf
     3. (c) Examples. The provisions of this section may be illustrated by the following examples: Example 1.B transfers property with an adjusted basis of $1,000 and a
242. 1.1244(d)-2 · (d)-2 Increases in basis of section 1244 stock.
     1. (a) In general. If subsequent to the time of its issuance there is for any reason, including the operation of section 1376(a), an increase in the basis of secti
     2. (b) Example. The provisions of paragraph (a) of this section may be illustrated by the following example: Example:For $10,000 a corporation issues 100 shares of
243. 1.1244(d)-3 · (d)-3 Stock dividend, recapitalizations, changes in name, etc.
     1. (a) In general. Section 1244(c)(1) provides that stock may not qualify for the benefits of section 1244 unless it is issued to the taxpayer for money or other p
     2. (b) Stock dividends. (1) If common stock is received by an individual or partnership in a nontaxable distribution under section 305(a) made solely with respect
     3. (c) Recapitalizations. (1) If, pursuant to a recapitalization described in section 368(a)(1)(E), common stock of a corporation is received by an individual or p
     4. (d) Change of name, etc. (1) If, pursuant to a reorganization described in section 368(a)(1)(F), common stock of a successor corporation is received by an indiv
244. 1.1244(d)-4 · (d)-4 Net operating loss deduction.
     1. (a) General rule. For purpose of section 172, relating to the net operating loss deduction, any amount of loss that is treated as an ordinary loss under section
     2. (b) Example. The provisions of this section may be illustrated by the following example: Example:A, a single individual, computes a net operating loss of $15,00
245. 1.1244(e)-1 · (e)-1 Records to be kept.
     1. (a) By the corporation—(1) Mandatory records. A plan to issue pre-November 1978 stock must appear upon the records of the corporation. Any designation of post-N
     2. (b) By the taxpayer. A person who claims an ordinary loss with respect to stock under section 1244 must have records sufficient to establish that the taxpayer i
246. 1.1245-1 · -1 General rule for treatment of gain from dispositions of certain depreciable property.
     1. (a) General. (1) In general, section 1245(a)(1) provides that, upon a disposition of an item of section 1245 property, the amount by which the lower of (i) the
     2. (b) Sale, exchange, or involuntary conversion. (1) In the case of a sale, exchange, or involuntary conversion of section 1245 property, the gain to which sectio
     3. (c) Other dispositions. (1) In the case of a disposition of section 1245 property other than by way of a sale, exchange, or involuntary conversion, the gain to
     4. (d) Losses. Section 1245(a)(1) does not apply to losses. Thus, section 1245(a)(1) does not apply if a loss is realized upon a sale, exchange, or involuntary con
     5. (e) Treatment of partnership and partners. (1) The manner of determining the amount of gain recognized under section 1245(a)(1) to a partnership may be illustra
     6. (ii) There shall be allocated to such partner, in the same proportion as the partnership's total gain is allocated to him as his distributive share under sectio
247. 1.1245-2 · -2 Definition of recomputed basis.
     1. (a) A disposition which is a like kind exchange or an involuntary conversion to which section 1245(b)(4) applies, or
     2. (b) A disposition to which the provisions of section 1071 and paragraph (e)(1) of § 1.1245-4 apply.
     3. (c) Adjustments reflected in adjusted basis immediately after certain acquisitions—(1) Zero. (i) If on the date a person acquires property his basis for the pro
     4. (i) The adjusted basis of the property, as defined in section 1011, plus
     5. (ii) The transactions referred to in subdivision (i) of this subparagraph are:
248. 1.1245-3 · -3 Definition of section 1245 property.
     1. (a) In general. (1) The term section 1245 property means any property (other than livestock excluded by the effective date limitation in subparagraph (4) of thi
     2. (b) Personal property defined. The term personal property means:
     3. (c) Property described in section 1245(a)(3)(B). (1) The term property described in section 1245(a)(3)(B) means tangible property of the requisite depreciable c
     4. (d) Effective/applicability date. This section applies on and after January 19, 2017. For rules before January 19, 2017, see § 1.1245-3 as contained in 26 CFR p
     5. (i) Was used as an integral part of manufacturing, production, or extraction, or as an integral part of furnishing transportation, communications, electrical en
     6. (ii) Constituted a research or storage facility used in connection with any of the foregoing activities. Thus, even though during the period immediately precedi
249. 1.1245-4 · -4 Exceptions and limitations.
     1. (a) Exception for gifts—(1) General rule. Section 1245(b)(1) provides that no gain shall be recognized under section 1245(a)(1) upon a disposition by gift. For
     2. (b) Exception for transfers at death—(1) General rule. Section 1245(b)(2) provides that, except as provided in section 691 (relating to income in respect of a d
     3. (c) Limitation for certain tax-free transactions—(1) Limitation on amount of gain. Section 1245(b)(3) provides that upon a transfer of property described in sub
     4. (d) Limitation for like kind exchanges and involuntary conversions—(1) General rule. Section 1245(b)(4) provides that if property is disposed of and gain (deter
     5. (e) Limitation for section 1071 and 1081 transactions—(1) Section 1071 and 1081(b) transactions. If property is disposed of and gain (determined without regard
     6. (f) Limitation for property distributed by a partnership—(1) In general. For purposes of section 1245(b)(3) (relating to certain tax-free transactions), the bas
     7. (g) [Reserved]
     8. (h) Timber property subject to amortization under section 194—(1) In general. For purposes of section 1245(a)(2), in determining the recomputed basis of propert
     9. (i) Effective/applicability date. This section applies on and after January 19, 2017. For rules before January 19, 2017, see § 1.1245-4 as contained in 26 CFR p
     10. (ii) In the case of a transaction to which section 1071 applies, the fair market value of property acquired which is not section 1245 property and which is not
250. 1.1245-5 · -5 Adjustments to basis.
     1. (a) Property acquired in like kind exchange or involuntary conversion. (1) If property is acquired in a transaction to which section 1245(b)(4) applies, its bas
     2. (b) Sections 1071 and 1081 transactions. (1) If property is acquired in a transaction to which section 1071 and paragraph (e)(1) of § 1.1245-4 (relating to limi
251. 1.1245-6 · -6 Relation of section 1245 to other sections.
     1. (a) General. The provisions of section 1245 apply notwithstanding any other provision of subtitle A of the Code. Thus, unless an exception or limitation under s
     2. (b) Nonrecognition sections overridden. The nonrecognition provisions of subtitle A of the Code which section 1245 overrides include, but are not limited to, se
     3. (c) Normal retirement of asset in multiple asset account. Section 1245(a)(1) does not require recognition of gain upon normal retirements of section 1245 proper
     4. (d) Installment method. (1) Gain from a disposition to which section 1245(a)(1) applies may be reported under the installment method if such method is otherwise
     5. (e) Exempt income. The fact that section 1245 provides for recognition of gain as ordinary income does not change into taxable income any income which is exempt
     6. (f) Treatment of gain not recognized under section 1245. Section 1245 does not prevent gain which is not recognized under section 1245 from being considered as
252. 1.1248(f)-1 · (f)-1 Certain nonrecognition distributions.
     1. (a) Scope and purpose. This section and §§ 1.1248(f)-2 and 1.1248(f)-3 provide rules under section 1248(f) that apply when a domestic corporation (domestic dist
     2. (b) General rule—(1) Section 337 distribution. This paragraph (b)(1) applies if a domestic distributing corporation that is a section 1248 shareholder of a fore
     3. (c) Definitions. Except as otherwise provided, the following definitions apply for purposes of this section and §§ 1.1248(f)-2 and 1.1248(f)-3:
253. 1.1248(f)-2 · (f)-2 Exceptions for certain distributions and attribution rules.
     1. (a) Section 337 stock distribution—(1) General exception. In the case of a section 337 distribution (as defined in § 1.1248-1(b)(1)), § 1.1248(f)-1(b)(1) shall
     2. (b) Existing stock distribution under sections 355 or 361. In the case of an existing stock distribution (as defined in § 1.1248(f)-1(b)(2)), § 1.1248(f)-1(b)(2
     3. (c) New stock distribution under section 361. In the case of a new stock distribution (as defined in § 1.1248(f)-1(b)(3)), the amount that the domestic distribu
     4. (e) Examples. The rules of this section are illustrated by the following examples. See also § 1.367(a)-3(e)(8), Example 3. For purposes of the examples, unless
     5. (f) Applicable cross-references. For rules relating to the attribution of earnings and profits to the stock of a foreign corporation following certain nonrecogn
     6. (i) One portion attributable to all property transferred in the section 361 exchange, other than property that is stock of a foreign corporation with respect to
     7. (ii) Fair market value. The fair market value of a portion of a share of stock of the foreign distributed corporation created under paragraph (c)(2) of this sec
254. 1.1248(f)-3 · (f)-3 Reasonable cause and effective/applicability dates.
     1. (a) Reasonable cause for failure to comply—(1) Request for relief. If an 80-percent distributee, a distributee that is a section 1248 shareholder, or the domest
     2. (b) Effective/applicability date—(1) General rule. Except as provided in paragraph (b)(2)(ii) of this section, §§ 1.1248(f)-1 and 1.1248(f)-2 apply to distribut
     3. (ii) Section 355 distributions. Taxpayers may apply the provisions of § 1.1248(f)-2(b) to distributions occurring on or after September 21, 1987.
255. 1.1248-1 · -1 Treatment of gain from certain sales or exchanges of stock in certain foreign corporations.
     1. (a) In general. (1) If a United States person (as defined in section 7701(a)(30)) recognizes gain on a sale or exchange after December 31, 1962, of stock in a f
     2. (b) Sale or exchange. For purposes of section 1248(a), the term sale or exchange includes the receipt of a distribution which is treated as in exchange for stoc
     3. (c) Gain recognized. Section 1248(a) applies to a sale or exchange of stock in a foreign corporation only if gain is recognized in whole or in part upon the sal
     4. (d) Credit for foreign taxes. (1) If a domestic corporation includes an amount in its gross income as a dividend under section 1248(a) upon a sale or exchange o
     5. (e) Exceptions. Under section 1248(g), this section and §§ 1.1248-2 through 1.1248-8 do not apply to:
     6. (f) Installment method. (1) Gain from a sale or exchange to which section 1248 applies may be reported under the installment method if such method is otherwise
     7. (g) Effective/applicability date. (1) The third sentence in paragraph (a)(1), paragraph (a)(4), and paragraph (a)(5), Example 4, of this section apply to income
     8. (i) The foreign tax credit provisions of sections 901 through 908 shall apply in the same manner and subject to the same conditions and limitations as if the fi
     9. (ii) If on such date such first tier corporation owns directly 50 percent or more of the voting stock of a lower tier corporation described in paragraph (a)(3)
256. 1.1248-2 · -2 Earnings and profits attributable to a block of stock in simple cases.
     1. (a) For any taxable year beginning before January 1, 1967 (computed without any reduction for distributions), shall not include the excess of any item includibl
     2. (b) For any taxable year beginning after December 31, 1966 (computed without any reduction for distributions), shall not include the excess of any item includib
     3. (c) Conditions to application. This section shall apply only if the following conditions are satisfied:
     4. (d) Earnings and profits accumulated for a taxable year—(1) General. For purposes of this section, the earnings and profits accumulated for a taxable year of a
     5. (e) Earnings and profits attributable to block—(1) General. Except as provided in subparagraph (3) of this paragraph, the earnings and profits attributable to a
     6. (i) The sum of the earnings and profits accumulated for each taxable year of the corporation beginning after December 31, 1962 (computed under paragraph (d) of
     7. (ii) The excess computed under this subdivision is the excess (if any) of (a) amounts included under section 951 in the gross income of such person (or such oth
257. 1.1248-3 · -3 Earnings and profits attributable to stock in complex cases.
     1. (a) The conditions of paragraph (a)(2) of § 1.1248-1 are satisfied by the person in respect of such stock;
     2. (b) By reason of his ownership of such stock, on the date of such sale or exchange such person owned, within the meaning of section 958(a)(2), stock in another
     3. (c) The conditions of paragraph (a)(2) of § 1.1248-1 would be satisfied by such person in respect of such stock in the lower tier corporation if such person wer
     4. (d) Tentative ratable share if deficit in earnings and profits accumulated for taxable year—(1) General rule. For purposes of paragraph (a)(2)(ii) of this secti
     5. (e) Ratable share of earnings and profits accumulated for a taxable year—(1) In general. For purposes of paragraph (a)(2)(iii) of this section, in respect of a
     6. (f) Earnings and profits of subsidiaries of foreign corporations—(1) Application of paragraph. (i) In respect of a person who sells or exchanges stock in a fore
     7. (g) Lower tier corporation a less developed country corporation—(1) General. If the lower tier corporation was a less developed country corporation as defined i
     8. (i) The requirements of paragraph (a)(1) of § 1.1248-5 with respect to such stock, and
     9. (ii) The requirements of paragraph (d)(1) of § 1.1248-5 with respect to any stock of the lower tier corporation which such person, by reason of his direct owner
258. 1.1248-4 · -4 Limitation on tax applicable to individuals.
     1. (a) General rule—(1) Limitation on tax. Under section 1248(b), if during a taxable year an individual sells or exchanges stock in a foreign corporation, then in
     2. (b) Tax attributable to amount treated as dividend—(1) General. For purposes of paragraph (a)(1) of this section, in respect of a share (or block) of stock in a
     3. (c) Excess (of United States taxes which would have been paid over taxes actually paid) attributable to a share (or block)—(1) General. For purposes of paragrap
     4. (d) Taxable income. For purposes of paragraph (c)(2)(i) of this section, taxable income shall be computed in respect of an individual's share (or block) in acco
     5. (e) Excess attributable to a share (or block) of stock—(1) Excess of United States taxes which would have been paid over taxes actually paid. For purposes of pa
     6. (f) Subsidiaries of foreign corporations—(1) Excess for lower tier corporation attributable to taxable year of first tier corporation. For purposes of paragraph
     7. (g) Taxable income of lower tier corporations—(1) General. For purposes of paragraph (f)(1)(i) of this section, in respect of the individual's share (or block)
     8. (i) The excess (if any) of (a) the United States taxes which would have been paid by the lower tier corporation on its taxable income (computed under paragraph
     9. (ii) Multiplied by each of the percentages described under paragraph (f)(2)(ii), (iii), and (iv) of § 1.1248-3 in respect of such taxable year of the first tier
259. 1.1248-5 · -5 Stock ownership requirements for less developed country corporations.
     1. (a) General rule—(1) Requirements. For purposes of paragraph (e)(4) of § 1.1248-3, a United States person shall be considered as satisfying the requirements of
     2. (b) 10-year stock ownership requirement—(1) General. A United States person meets the 10-year stock ownership requirement with respect to a share (or block) of
     3. (c) Disqualification of domestic corporation as a result of changes in ownership of its stock—(1) General. (i) For purposes of paragraph (a)(1)(ii) of this sect
     4. (i) The 10-year stock ownership requirement of paragraph (b) of this section is met with respect to such share (or block), and
     5. (ii) The requirement of this paragraph is that if one or more persons are noncorporate United States shareholders on the first such day (referred to in subdivis
260. 1.1248-6 · -6 Sale or exchange of stock in certain domestic corporations.
     1. (a) General rule. If a United States person recognizes gain upon the sale or exchange of a share (or block) of stock of a domestic corporation which was formed
     2. (b) Application. (1) The gain referred to in paragraph (a) of this section shall be included in the gross income of the United States person as a dividend under
     3. (e) Effective/applicability date. Paragraph (d) of this section applies to a sale, exchange, or other disposition of the stock of a domestic corporation on or a
     4. (i) The domestic corporation shall be treated as if it were a first tier foreign corporation;
     5. (ii) If, after the application of subdivision (i) of this subparagraph, the provisions of paragraph (a)(3) of § 1.1248-2 or paragraph (f) of § 1.1248-3 (as the
261. 1.1248-7 · -7 Taxpayer to establish earnings and profits and foreign taxes.
     1. (a) In general. (1) If a taxpayer sells or exchanges stock in a foreign corporation which was a controlled foreign corporation and the Commissioner determines t
     2. (b) Schedule attached to return. (1) The taxpayer shall attach to his income tax return for his taxable year in which he sold or exchanged the stock, a schedule
     3. (c) Foreign taxes. (1) If the taxpayer fails to establish any portion of the amount of any foreign taxes which he is required to establish by subparagraph (2) o
     4. (d) Establishing amounts on schedules. (1) A taxpayer shall be considered to have established, in respect of the stock he sold or exchanged, the correctness of
     5. (e) Insufficient information at time return is filed. If stock in a foreign corporation, which was a controlled foreign corporation, is sold or exchanged by a t
     6. (i) The books of original entry, or similar systematic accounting records maintained by any person or persons on a current basis as supplements to such books, w
     7. (ii) In respect of any such books or records which are not in the English language, either an accurate English translation of any such records as are demanded,
262. 1.1248-8 · -8 Earnings and profits attributable to stock following certain non-recognition transactions.
     1. (a) Scope. This section sets forth rules for the attribution of earnings and profits for purposes of section 1248 and § 1.1248-1(a)(1) and to supplement the rul
     2. (b) Earnings and profits attributable to stock following a restructuring transaction—(1) Definitions. The following definitions apply for purposes of this secti
     3. (i) Acquired corporation is a corporation whose stock or assets are acquired in exchange for stock in (or stock in and other property of) either the acquiring c
     4. (ii) Acquiring corporation is a corporation that acquires the stock or assets of an acquired corporation in a restructuring transaction.
263. 1.1249-1 · -1 Gain from certain sales or exchanges of patents, etc., to foreign corporations.
     1. (a) General rule. Section 1249 provides that if gain is recognized from the sale or exchange after December 31, 1962, of a patent, an invention, model, or desig
     2. (b) Control. For purposes of paragraph (a) of this section, the term control means, with respect to any foreign corporation, the ownership, directly or indirect
264. 1.125-3 · -3 Effect of the Family and Medical Leave Act (FMLA) on the operation of cafeteria plans.
     1. (1) FMLA does not permit the pre-pay option to be the sole option offered to employees on FMLA leave. However, the cafeteria plan may include pre-payment as an
     2. (2) (i) If an employee's coverage under the health FSA terminates while the employee is on FMLA leave, the employee is not entitled to receive reimbursements fo
     3. (3) The following examples illustrate the rules in this Q&A-6: Example 1.(i) Employee B elects $1,200 worth of coverage under a calendar year health FSA provide
265. 1.125-4 · -4 Permitted election changes.
     1. (a) Election changes. A cafeteria plan may permit an employee to revoke an election during a period of coverage and to make a new election only as provided in p
     2. (b) Special enrollment rights—(1) In general. A cafeteria plan may permit an employee to revoke an election for coverage under a group health plan during a peri
     3. (c) Changes in status—(1) Change in status rule. A cafeteria plan may permit an employee to revoke an election during a period of coverage with respect to a qua
     4. (e) Entitlement to Medicare or Medicaid. If an employee, spouse, or dependent who is enrolled in an accident or health plan of the employer becomes entitled to
     5. (f) Significant cost or coverage changes—(1) In general. Paragraphs (f)(2) through (5) of this section set forth rules for election changes as a result of chang
     6. (g) Special requirements relating to the Family and Medical Leave Act. An employee taking leave under the Family and Medical Leave Act (FMLA) (Public Law 103-3
     7. (h) Elective contributions under a qualified cash or deferred arrangement. The provisions of this section do not apply with respect to elective contributions un
     8. (i) Definitions. Unless otherwise provided, the definitions in paragraphs (i)(1) though (8) of this section apply for purposes of this section.
     9. (ii) Significant cost changes. If the cost charged to an employee for a benefit package option (as defined in paragraph (i)(2) of this section) significantly in
     10. (j) Effective date—(1) General rule. Except as provided in paragraph (j)(2) of this section, this section is applicable for cafeteria plan years beginning on or
266. 1.1250-1 · -1 Gain from dispositions of certain depreciable realty.
     1. (a) In the case of property disposed of pursuant to a written contract which was, on July 24, 1969, and at all times thereafter binding on the owner of the prop
     2. (b) In the case of property constructed, reconstructed, or acquired by the taxpayer before January 1, 1975, with respect to which a mortgage is insured under se
     3. (c) In the case of residential rental property (as defined in section 167(j)(2)(B)) other than that covered by (a) and (b) of this subdivision, 100 percent minu
     4. (d) In the case of property with respect to which a deduction was allowed under section 167(k) (relating to the depreciation of expenditures to rehabilitate low
     5. (e) Section 1250 property—(1) Definition. The term section 1250 property means any real property (other than section 1245 property, as defined in section 1245(a
     6. (f) Treatment of partnerships and partners. If a partnership disposes of section 1250 property, the amount of gain recognized under section 1250(a) by the partn
     7. (g) Examples. The principles of this section may be illustrated by the following examples: Example 1.Section 1250 property which has an adjusted basis of $350,0
     8. (i) The additional depreciation (as defined in § 1.1250-2) attributable to periods before January 1, 1970, in respect of the property, or
     9. (ii) The provisions of this subparagraph may be illustrated by the following example: Example:A owns and leases to B for a single lump-sum payment of $100,000 p
267. 1.1250-2 · -2 Additional depreciation defined.
     1. (a) In general—(1) Definition for purposes of section 1250(b)(1). Except as otherwise provided in paragraph (e) of this section, for purposes of section 1250(b)
     2. (b) Computation of depreciation adjustments in excess of straight line—(1) General rule. For purposes of paragraph (a)(1) of this section, depreciation adjustme
     3. (c) Property held by lessee—(1) Amount depreciation would have been. For purposes of paragraph (b) of this section, in case of a leasehold which is section 1250
     4. (e) Additional depreciation immediately after certain acquisitions—(1) Zero. If on the date a person acquires property his basis for the property is determined
     5. (f) Records to be kept and information to be filed—(1) Records to be kept. In any case in which it is necessary to determine the additional depreciation of an i
     6. (i) The date, and the manner in which, the property was acquired,
     7. (ii) The taxpayer's basis on the date the property was acquired and the manner in which the basis was determined,
268. 1.1250-3 · -3 Exceptions and limitations.
     1. (a) The amount of gain recognized under section 1039 (determined without regard to section 1250), or
     2. (b) The excess, if any, of the amount of gain which would, but for section 1250(d)(8)(A), be taken into account under section 1250(a), over the cost of the sect
     3. (c) Any gain not applied under (a) of this subdivision shall be applied to the amount by which the basis of the nonsection 1250 property was reduced.
     4. (d) For purposes of applying (c) of this subdivision, the fair market value of acquired property shall be taken into account only once and in such manner as the
     5. (e) Sections 1071 and 1081 transactions—(1) General. This paragraph prescribes regulations under section 1250(d)(5) which apply in the case of a disposition of
     6. (f) Property distributed by a partnership to a partner—(1) General. For purposes of section 1250 (d)(3) and (e)(2), the basis of section 1250 property distribut
     7. (g) Disposition of principal residence—(1) In general. (i) Section 1250(d)(7)(A) provides that section 1250(a) shall not apply to a disposition of property by a
     8. (h) Limitation for disposition of qualified low-income housing—(1) Limitation on gain. (i) Under section 1250(d)(8)(A), if section 1250 property is disposed of
     9. (ii) The portion of the net amount realized upon such a disposition which shall be allocated to each element of the section 1250 property disposed of is that am
     10. (iv) The provisions of this subparagraph may be illustrated by the following example: Example:A taxpayer receives $96,000 of insurance proceeds upon the destruc
269. 1.1250-4 · -4 Holding period.
     1. (a) General. In general, for purposes only of determining the applicable percentage (as defined in section 1250 (1)(C) and (2)(B)) of section 1250 property, the
     2. (b) Beginning of holding period. (1) For the purpose of determining the applicable percentage, in the case of property acquired by the taxpayer (other than by m
     3. (c) Property with transferred basis. Under section 1250(e)(2), if the basis of property acquired in a transaction described in this subparagraph is determined b
     4. (d) Principal residence acquired in certain transactions. The holding period of a principal residence acquired in a transaction to which section 1034 and paragr
     5. (e) Application of transferred basis and principal residence rules. The determination of holding period under this section shall be made without regard to wheth
     6. (f) Qualified low-income housing project acquired in certain transactions. The holding period of a reinvestment element (and of subelements thereof) of section
     7. (g) Cross reference. If the adjusted basis of the property in the hands of the transferee immediately after a transaction to which paragraph (c) or (d) of this
     8. (h) Effective/applicability date. This section applies on and after January 19, 2017. For rules before January 19, 2017, see § 1.1250-4 as contained in 26 CFR p
270. 1.1250-5 · -5 Property with two or more elements.
     1. (a) There shall not be taken into account under the 36-month test for separate improvements in this subparagraph any amount treated under subparagraph (3) of th
     2. (b) Such test shall be made in respect of each 36-month period ending on the last day of each taxable year of such person (and of any prior transferor) if at le
     3. (c) $5,000, Then each such improvement during such period shall be treated as a separate improvement, and thus as an element. For purposes of (a) and (b) of thi
     4. (d) Separate improvement—(1) Definition. For purposes of this section, with respect to any section 1250 property, the term separate improvement means an additio
     5. (e) Additional depreciation and holding period of property acquired in certain transactions—(1) Transferred basis. If property consisting of two or more element
     6. (f) Holding period for small separate improvements—(1) General. This paragraph prescribes a special holding period solely for the purpose of computing the appli
     7. (i) $2,000, or
     8. (ii) One percent of the unadjusted basis (within the meaning of paragraph (d)(3)(ii) of this section) of such property, determined as of the beginning of the ta
     9. (iv) The provisions of this subparagraph may be illustrated by the following examples: Example 1.The unadjusted basis of section 1250 property as of the beginni
271. 1.1251-1 · -1 General rule for treatment of gain from disposition of property used in farming where farm losses offset nonfarm income.
     1. (a) Applicability. The provisions of section 1251, this section, and §§ 1.1251-2 through 1.1251-4 shall apply with respect to any taxable year beginning after D
     2. (b) Ordinary income—(1) General rule. In general, subject to the provisions of subparagraphs (2), (3), (4), and (5) of this paragraph, upon a disposition of an
     3. (e) Relation of section 1251 to other provisions—(1) General. The provisions of section 1251 apply (after applying paragraph (b)(5) of this section, relating to
     4. (i) In the case of a sale, exchange, or involuntary conversion, the amount realized, or
     5. (ii) Special rule. If a taxpayer disposes of property used in the trade or business of farming which qualifies as both section 1245 property as well as farm rec
272. 1.1251-2 · -2 Excess deductions account.
     1. (a) The spouse who had such deficit shall have an excess deductions account of zero, and
     2. (b) The other spouse shall have an excess deductions account equal to the amount prescribed in subdivision (i) of this subparagraph minus the amount of such def
     3. (c) Property held by a taxpayer on the first day of a one-year period which property becomes farm recapture property in the hands of such taxpayer during such o
     4. (d) For purposes of this subparagraph (3), if during a taxable year property becomes subject to the requirements of subparagraph (1)(ii) of this paragraph, it s
     5. (e) Transfer of excess deductions account—(1) Certain corporate transactions—(i) In general. Under section 1251(b)(5)(A), in the case of a transfer described in
     6. (f) Joint return—(1) Joint excess deductions account. If for a taxable year a taxpayer and his spouse file a joint return under section 6013, then for such taxa
     7. (i) The $50,000 amount in the nonfarm adjusted gross income limitation in paragraph (b)(2)(i) of this section shall be considered satisfied if the combined nonf
     8. (ii) The $25,000 amount in the farm net loss exclusion in paragraph (b)(2)(ii) of this section shall be allocated between the two spouses in proportion to the f
     9. (v) Example. The provisions of subdivision (iv) of this subparagraph may be illustrated by the following example: Example:On January 1, 1974, A, an individual t
     10. (vi) Part-sale-part-gift transaction. If property is disposed of in a transaction which is in part a sale or exchange and in part a gift, then for purposes of s
273. 1.1251-3 · -3 Definitions relating to section 1251.
     1. (a) Property acquired by gift and property acquired in a transaction to which section 1251(b)(5)(A) applies, if such property was farm recapture property within
     2. (b) Farm net loss—(1) In general. The term farm net loss means the amount by which:
     3. (e) Trade or business of farming—(1) In general. For purposes of section 1251, the term trade or business of farming includes any trade or business with respect
     4. (i) The deductions allowed or allowable for the taxable year by chapter 1 of subtitle A of the Code which are directly connected with the carrying on of the tra
     5. (ii) No portion of a farm net loss added to the excess deductions account in the year a net operating loss arose (or which would have been added to such account
274. 1.1251-4 · -4 Exceptions and limitations.
     1. (a) Exception for gifts—(1) General rule. Section 1251(d)(1) provides that no gain shall be recognized under section 1251(c)(1) upon a disposition by gift. For
     2. (b) Exception for transfers at death—(1) General rule. Section 1251(d)(2) provides that, except as provided in section 691 (relating to income in respect of a d
     3. (c) Certain corporate transactions—(1) Limitation on amount of gain. Under section 1251(d)(3), upon a transfer of property described in subparagraph (2) of this
     4. (d) Limitation for like kind exchanges and involuntary conversions—(1) General rule. Under section 1251(d)(4), if farm recapture property is disposed of and gai
     5. (e) Partnerships. [Reserved]
     6. (f) Property transferred to controlled corporation. [Reserved]
     7. (g) Treatment of land received by a transferee in a disposition by gift and certain tax-free transactions—(1) General rule. If farm recapture property which is
     8. (i) The aggregate of the deductions allowable under sections 175 and 182 in respect of the land in the hands of the transferee immediately after the disposition
     9. (ii) Upon a subsequent disposition by the transferee (including a computation of potential gain as defined in paragraph (b)(2)(ii) of § 1.1251-1), such deductio
275. 1.1252-1 · -1 General rule for treatment of gain from disposition of farm land.
     1. (a) The gain realized, that is, the excess of the amount realized (in the case of a sale, exchange, or involuntary conversion) or the fair market value of the f
     2. (b) Instances of non-application—(1) In general. Section 1252 does not apply if a taxpayer disposes of farm land for which the holding period is in excess of 9
     3. (c) Treatment of partnerships and partners. [Reserved]
     4. (d) Relation of section 1252 to other provisions—(1) General. The provisions of section 1252 apply notwithstanding any other provisions of subtitle A of the Cod
     5. (e) Examples. The provisions of this section may be illustrated by the following examples: Example 1.Individual A uses the calendar year as his taxable year. On
     6. (ii) The amount computed in this subdivision is an amount equal to:
     7. (iv) If a deduction under section 175 is allowed in respect of the farm land disposed of for a taxable year every day of which falls within the period after the
276. 1.1252-2 · -2 Special rules.
     1. (a) Exception for gifts—(1) General rule. In general, no gain shall be recognized under section 1252(a)(1) upon a disposition of farm land by gift. For purposes
     2. (b) Exception for transfers at death—(1) In general. Except as provided in section 691 (relating to income in respect of a decedent), no gain shall be recognize
     3. (c) Limitation for certain tax-free transactions—(1) Limitation on amount of gain. Upon a transfer of farm land described in subparagraph (2) of this paragraph,
     4. (d) Limitation for like kind exchanges and involuntary conversions—(1) General rule. If farm land is disposed of and gain (determined without regard to section
     5. (e) Partnerships. [Reserved]
     6. (f) Treatment of farm land received by a transferee in a disposition by gift and certain tax-free transactions—(1) General rule. If farm land is disposed of in
     7. (g) Disposition of farm land not specifically covered. If farm land is disposed of in a transaction not specifically covered under § 1.1252-1 and this section,
     8. (i) The aggregate of the deductions allowed under sections 175 and 182 in respect of the land in the hands of the tranferee immediately after the disposition sh
     9. (ii) For purposes of applying section 1252 upon a subsequent disposition by the transferee (including a computation of the applicable percentage), the holding p
277. 1.1254-0 · -0 Table of contents for section 1254 recapture rules.
278. 1.1254-1 · -1 Treatment of gain from disposition of natural resource recapture property.
     1. (a) In general. Upon any disposition of section 1254 property or any disposition after December 31, 1975 of oil, gas, or geothermal property, gain is treated as
     2. (b) Definitions—(1) Section 1254 costs—(i) Property placed in service after December 31, 1986. With respect to any property placed in service by the taxpayer af
     3. (ii) Section 1254 property. The term section 1254 property means any property (within the meaning of section 614) that is placed in service by the taxpayer afte
279. 1.1254-2 · -2 Exceptions and limitations.
     1. (a) Exception for gifts and section 1041 transfers—(1) General rule. No gain is recognized under section 1254(a)(1) upon a disposition of natural resource recap
     2. (b) Exception for transfers at death. Except as provided in section 691 (relating to income in respect of a decedent), no gain is recognized under section 1254(
     3. (c) Limitation for certain tax-free transactions—(1) General rule. Upon a transfer of property described in paragraph (c)(3) of this section, the amount of gain
     4. (d) Limitation for like kind exchanges and involuntary conversions—(1) General rule. If natural resource recapture property is disposed of and gain (determined
     5. (i) The amount of gain recognized on the disposition (determined without regard to section 1254); plus
     6. (ii) The fair market value of property acquired that is not natural resource recapture property (determined without regard to § 1.1254-1(b)(2)(vii)) and is not
280. 1.1254-3 · -3 Section 1254 costs immediately after certain acquisitions.
     1. (a) Transactions in which basis is determined by reference to cost or fair market value of property transferred—(1) Basis determined under section 1012. If, on
     2. (b) Gifts and certain tax-free transactions—(1) General rule. If natural resource recapture property is transferred in a transaction described in paragraph (b)(
     3. (e) Property transferred in cases to which section 1071 or 1081(b) applies. Rules similar to the rules of section 1245(b)(5) shall apply under section 1254.
     4. (i) The amount of section 1254 costs with respect to the natural resource recapture property in the hands of the transferor immediately before the disposition (
     5. (ii) The amount of any gain taken into account as ordinary income under section 1254(a)(1) by the transferor upon the disposition (and in the case of an S corpo
281. 1.1254-4 · -4 Special rules for S corporations and their shareholders.
     1. (a) In general. This section provides rules for applying the provisions of section 1254 to S corporations and their shareholders upon the disposition by an S co
     2. (b) Determination of gain treated as ordinary income under section 1254 upon a disposition of natural resource recapture property by an S corporation—(1) Genera
     3. (c) Character of gain recognized by a shareholder upon a sale or exchange of S corporation stock—(1) General rule. Except as provided in paragraph (c)(2) of thi
     4. (d) Section 1254 costs of a shareholder. An S corporation shareholder's section 1254 costs with respect to any natural resource recapture property held by the c
     5. (e) Section 1254 costs of an acquiring shareholder after certain acquisitions—(1) Basis determined under section 1012. If stock in an S corporation that holds n
     6. (f) Special rules for a corporation that was formerly an S corporation or formerly a C corporation—(1) Section 1254 costs of an S corporation that was formerly
     7. (g) Determination of a shareholder's section 1254 costs upon certain stock transactions—(1) Issuance of stock. Upon an issuance of stock (whether such stock is
     8. (i) Each recipient of shares must be allocated a pro rata share (determined solely with respect to the shares issued in the transaction) of the aggregate of the
     9. (ii) Written data. An S corporation may determine a shareholder's section 1254 costs by using written data provided by a shareholder showing the shareholder's s
282. 1.1254-5 · -5 Special rules for partnerships and their partners.
     1. (a) In general. This section provides rules for applying the provisions of section 1254 to partnerships and their partners upon the disposition of natural resou
     2. (b) Determination of gain treated as ordinary income under section 1254 upon the disposition of natural resource recapture property by a partnership—(1) General
     3. (c) Section 1254 costs of a partner—(1) General rule. A partner's section 1254 costs with respect to property held by a partnership include all of the partner's
     4. (i) The partner's section 1254 costs with respect to the property disposed of; or
     5. (ii) Basis determined by reason of the application of section 1014(a). If a transferee partner acquires an interest in a partnership that holds natural resource
283. 1.1254-6 · -6 Effective/applicability date.
     1. (a) Sections 1.1254-1 through 1.1254-3 and 1.1254-5 are effective with respect to any disposition of natural resource recapture property occurring after March 1
     2. (b) The provisions of §§ 1.1254-2(a)(1), 1.1254-3(b)(2), 1.1254-4(e)(4), and 1.1254-5(c)(2)(iv) that relate to section 1022 are effective on and after January 1
284. 1.1256(e)-1 · (e)-1 Identification of hedging transactions.
     1. (a) Identification and recordkeeping requirements. Under section 1256(e)(2), a taxpayer that enters into a hedging transaction must identify the transaction as
     2. (b) Requirements for identification. The identification of a hedging transaction for purposes of section 1256(e)(2) must satisfy the requirements of § 1.1221-2(
     3. (c) Consistency with § 1.1221-2. Any identification for purposes of § 1.1221-2(f)(1) is also an identification for purposes of this section. If a taxpayer satis
     4. (d) Effective date. The rules of this section apply to transactions entered into on or after March 20, 2002.
285. 1.1256(e)-2 · (e)-2 Special rules for syndicates.
     1. (a) Allocation of losses. For purposes of section 1256(e)(3), syndicate means any partnership or other entity (other than a corporation that is not an S corpora
     2. (b) Determination of loss amount. For purposes of section 1256(e)(3), the amount of losses to be allocated under paragraph (a) of this section is calculated wit
     3. (c) Example. The following example illustrates the rules in this section:
     4. (d) Applicability date. This section applies to taxable years beginning on or after March 22, 2021. However, taxpayers and their related parties, within the mea
286. 1.1258-1 · -1 Netting rule for certain conversion transactions.
     1. (a) Purpose. The purpose of this section is to provide taxpayers with a method to net certain gains and losses from positions of the same conversion transaction
     2. (b) Netting of gain and loss for identified transactions—(1) In general. If a taxpayer disposes of or terminates all the positions of an identified netting tran
     3. (c) Definition of built-in loss. For purposes of this section, built-in loss means—
     4. (d) Examples. These examples illustrate this section: Example 1.Identified netting transaction with simultaneous actual dispositions. (i) On December 1, 1995, A
     5. (e) Effective date and transition rule—(1) In general. These regulations are effective for conversion transactions that are outstanding on or after December 21,
287. 1.127-1 · -1 Amounts received under a qualified educational assistance program.
     1. (a) Exclusion from gross income. The gross income of an employee does not include—
     2. (b) Disallowance of excluded amounts as credit or deduction. Any amount excluded from the gross income of an employee under paragraph (a) of this section shall
     3. (c) Amounts received under a nonqualified program. Any amount received under an educational assistance program that is not a “qualified program” described in §
     4. (d) Definitions. For rules relating to the meaning of the terms “employee” and “employer”, see paragraph (h) of § 1.127-2.
     5. (e) Effective date. This section is effective for taxable years of the employee beginning after December 31, 1978, and before January 1, 1984.
288. 1.127-2 · -2 Qualified educational assistance program.
     1. (a) In general. A qualified educational assistance program is a plan established and maintained by an employer under which the employer provides educational ass
     2. (b) Separate written plan. The program must be a separate written plan of the employer. This requirement means that the terms of the program must be set forth i
     3. (c) Educational assistance—(1) In general. The benefits provided under the program must consist solely of educational assistance. The term “educational assistan
     4. (d) Exclusive benefit. The program may benefit only the employees of the employer, including, at the employer's option, individuals who are employees within the
     5. (e) Prohibited discrimination—(1) Eligibility for benefits. The program must benefit the employer's employees generally. Among those benefited may be employees
     6. (f) Benefit limitation—(1) In general. Under section 127(b)(3), a program is a qualified program for a program year only if no more than 5% of the amounts paid
     7. (g) Notification of employees. A program is not a qualified program unless employees eligible to participate in the program are given reasonable notice of the t
     8. (h) Definitions. For purposes of this section and § 1.127-1—
     9. (i) A retired, disabled or laid-off employee,
     10. (ii) A present employee who is on leave, as, for example, in the Armed Forces of the United States, or
289. 1.1271-0 · -0 Original issue discount; effective date; table of contents.
     1. (a) Effective date. Except as otherwise provided, §§ 1.1271-1 through 1.1275-5 apply to debt instruments issued on or after April 4, 1994. Taxpayers, however, m
     2. (b) Table of contents. This section lists captioned paragraphs contained in §§ 1.1271-1 through 1.1275-7. § 1.1271-1 Special rules applicable to amounts receive
290. 1.1271-1 · -1 Special rules applicable to amounts received on retirement, sale, or exchange of debt instruments.
     1. (a) Intention to call before maturity—(1) In general. For purposes of section 1271(a)(2), all or a portion of gain realized on a sale or exchange of a debt inst
     2. (b) Short-term obligations—(1) In general. Under sections 1271 (a)(3) and (a)(4), all or a portion of the gain realized on the sale or exchange of a short-term
291. 1.1272-1 · -1 Current inclusion of OID in income.
     1. (a) Overview—(1) In general. Under section 1272(a)(1), a holder of a debt instrument includes accrued OID in gross income (as interest), regardless of the holde
     2. (b) Accrual of OID—(1) Constant yield method. Except as provided in paragraphs (b)(2) and (b)(3) of this section, the amount of OID includible in the income of
     3. (e) Convertible debt instruments. For purposes of section 1272, an option is ignored if it is an option to convert a debt instrument into the stock of the issue
     4. (f) Special rules to determine whether a debt instrument is a short-term obligation—(1) Counting of either the issue date or maturity date. For purposes of dete
     5. (g) Basis adjustment. The basis of a debt instrument in the hands of the holder is increased by the amount of OID included in the holder's gross income and decr
     6. (h) Debt instruments denominated in a currency other than the U.S. dollar. Section 1272 and this section apply to a debt instrument that provides for all paymen
     7. (i) [Reserved]
     8. (ii) Step two: Determine the accrual periods. An accrual period is an interval of time over which the accrual of OID is measured. Accrual periods may be of any
     9. (j) Examples. The following examples illustrate the rules of this section. Each example assumes that all taxpayers use the calendar year as the taxable year. In
292. 1.1272-2 · -2 Treatment of debt instruments purchased at a premium.
     1. (a) In general. Under section 1272(c)(1), if a holder purchases a debt instrument at a premium, the holder does not include any OID in gross income. Under secti
     2. (b) Definitions and special rules—(1) Purchase. For purposes of section 1272 and this section, purchase means any acquisition of a debt instrument, including th
     3. (c) Examples. The following examples illustrate the rules of this section. Example 1. Debt instrument purchased at an acquisition premium.(i) Facts. On July 1,
     4. (ii) Acquisition by gift. For purposes of this section, a donee's adjusted basis in a debt instrument is the donee's basis for determining gain under section 10
293. 1.1272-3 · -3 Election by a holder to treat all interest on a debt instrument as OID.
     1. (a) Election. A holder of a debt instrument may elect to include in gross income all interest that accrues on the instrument by using the constant yield method
     2. (b) Scope of election—(1) In general. Except as provided in paragraph (b)(2) of this section, a holder may make the election for any debt instrument.
     3. (e) Revocation of election. The election may not be revoked unless approved by the Commissioner.
     4. (f) Effective date. This section applies to debt instruments acquired on or after April 4, 1994.
     5. (ii) Debt instrument with market discount. (A) A holder may make the election under this section for a debt instrument with market discount only if the holder i
294. 1.1273-1 · -1 Definition of OID.
     1. (a) In general. Section 1273(a)(1) defines OID as the excess of a debt instrument's stated redemption price at maturity over its issue price. Section 1.1273-2 d
     2. (b) Stated redemption price at maturity. A debt instrument's stated redemption price at maturity is the sum of all payments provided by the debt instrument othe
     3. (c) Qualified stated interest—(1) Definition—(i) In general. Qualified stated interest is stated interest that is unconditionally payable in cash or in property
     4. (e) Definitions—(1) Installment obligation. An installment obligation is a debt instrument that provides for the payment of any amount other than qualified stat
     5. (f) Examples. The following examples illustrate the rules of this section. Example 1. Qualified stated interest.(i) Facts. On January 1, 1995, A purchases at or
     6. (ii) Unconditionally payable. Interest is unconditionally payable only if reasonable legal remedies exist to compel timely payment or the debt instrument otherw
295. 1.1273-2 · -2 Determination of issue price and issue date.
     1. (a) Debt instruments issued for money—(1) Issue price. If a substantial amount of the debt instruments in an issue is issued for money, the issue price of each
     2. (b) Publicly traded debt instruments issued for property—(1) Issue price. If a substantial amount of the debt instruments in an issue is traded on an establishe
     3. (c) Debt instruments issued for publicly traded property—(1) Issue price. If a substantial amount of the debt instruments in an issue is issued for property tha
     4. (d) Other debt instruments—(1) Issue price. If an issue of debt instruments is not described in paragraph (a)(1), (b)(1), or (c)(1) of this section, the issue p
     5. (e) Special rule for certain sales to bond houses, brokers, or similar persons. For purposes of determining the issue price and issue date of a debt instrument
     6. (f) Traded on an established market (publicly traded)—(1) In general. Except as provided in paragraph (f)(6) of this section, property (including a debt instrum
     7. (g) Treatment of certain cash payments incident to lending transactions—(1) Applicability. The provisions of this paragraph (g) apply to cash payments made inci
     8. (h) Investment units—(1) In general. Under section 1273(c)(2), an investment unit is treated as if the investment unit were a debt instrument. The issue price o
     9. (i) A portion of the initial purchase price of the instrument is allocable to interest that has accrued prior to the issue date (pre-issuance accrued interest);
     10. (ii) The instrument provides for a payment of stated interest on the first payment date within 1 year of the issue date that equals or exceeds the amount of the
     11. (j) Convertible debt instruments. The issue price of a debt instrument includes any amount paid for an option to convert the instrument into stock (or another d
     12. (k) Below-market loans subject to section 7872(b). The issue price of a below-market loan subject to section 7872(b) (a term loan other than a gift loan) is the
     13. (l) [Reserved]
     14. (m) Treatment of amounts representing pre-issuance accrued interest—(1) Applicability. Paragraph (m)(2) of this section provides an alternative to the general r
296. 1.1274-1 · -1 Debt instruments to which section 1274 applies.
     1. (a) In general. Subject to the exceptions and limitations in paragraph (b) of this section, section 1274 and this section apply to any debt instrument issued in
     2. (b) Exceptions—(1) Debt instrument with adequate stated interest and no OID. Section 1274 does not apply to a debt instrument if—
     3. (i) All interest payable on the instrument is qualified stated interest;
     4. (ii) The stated rate of interest is at least equal to the test rate of interest (as defined in § 1.1274-4);
297. 1.1274-2 · -2 Issue price of debt instruments to which section 1274 applies.
     1. (a) In general. If section 1274 applies to a debt instrument, section 1274 and this section determine the issue price of the debt instrument. For rules relating
     2. (b) Issue price—(1) Debt instruments that provide for adequate stated interest; stated principal amount. The issue price of a debt instrument that provides for
     3. (c) Determination of whether a debt instrument provides for adequate stated interest—(1) In general. A debt instrument provides for adequate stated interest if
     4. (d) Treatment of certain options. This paragraph (d) provides rules for determining the issue price of a debt instrument to which section 1274 applies (other th
     5. (e) Mandatory sinking funds. In determining the issue price of a debt instrument to which section 1274 applies (other than a debt instrument issued in a potenti
     6. (f) Treatment of variable rate debt instruments—(1) Stated interest at a qualified floating rate—(i) In general. For purposes of paragraph (c) of this section,
     7. (g) Treatment of contingent payment debt instruments. Notwithstanding paragraph (b) of this section, if a debt instrument subject to section 1274 provides for o
     8. (h) Examples. The following examples illustrate the rules of this section. Each example assumes a 30-day month, 360-day year. In addition, each example assumes
     9. (i) [Reserved]
     10. (ii) Interest rate restrictions. Notwithstanding paragraph (f)(1)(i) of this section, if, as a result of interest rate restrictions (such as an interest rate ca
     11. (j) Special rules for tax-exempt obligations—(1) Certain variable rate debt instruments. Notwithstanding paragraph (b) of this section, if a tax-exempt obligati
298. 1.1274-3 · -3 Potentially abusive situations defined.
     1. (a) In general. For purposes of section 1274, a potentially abusive situation means-—
     2. (b) Operating rules—(1) Debt instrument exchanged for nonrecourse financing. Nonrecourse financing does not include an exchange of a nonrecourse debt instrument
     3. (c) Other situations to be specified by Commissioner. The Commissioner may designate in the Internal Revenue Bulletin situations that, although described in par
     4. (d) Consistency rule. The issuer's determination that the debt instrument is or is not issued in a potentially abusive situation is binding on all holders of th
     5. (ii) Effective/applicability date. Paragraph (b)(4)(i) of this section applies to a debt instrument issued on or after November 13, 2012.
299. 1.1274-4 · -4 Test rate.
     1. (a) Determination of test rate of interest—(1) In general—(i) Test rate is the 3-month rate. Except as provided in paragraph (a)(2) of this section, the test ra
     2. (b) Applicable Federal rate. Except as otherwise provided in this section, the applicable Federal rate for a debt instrument is based on the term of the instrum
     3. (c) Special rules to determine the term of a debt instrument for purposes of determining the applicable Federal rate—(1) Installment obligation. If a debt instr
     4. (d) Foreign currency loans. If all of the payments of a debt instrument are denominated in, or determined by reference to, a currency other than the U.S. dollar
     5. (e) Examples. The following examples illustrate the rules of this section. Example 1. Variable rate debt instrument that limits the amount of increase and decre
     6. (ii) Restrictions on adjustments. If, due to significant restrictions on variations in a qualified floating rate or the use of certain formulae pursuant to § 1.
300. 1.1274-5 · -5 Assumptions.
     1. (a) In general. Section 1274 does not apply to a debt instrument if the debt instrument is assumed, or property is taken subject to the debt instrument, in conn
     2. (b) Modifications of debt instruments—(1) In general. Except as provided in paragraph (b)(2) of this section, if a debt instrument is assumed, or property is ta
     3. (c) Wraparound indebtedness. For purposes of paragraph (a) of this section, the issuance of wraparound indebtedness is not considered an assumption.
     4. (d) Consideration attributable to assumed debt. If, as part of the consideration for the sale or exchange of property, the buyer assumes, or takes the property
     5. (ii) Time and manner of making the election. The buyer and seller make the election under paragraph (b)(2)(i) of this section by jointly signing a statement tha
301. 1.1274A-1 · -1 Special rules for certain transactions where stated principal amount does not exceed $2,800,000.
     1. (a) In general. Section 1274A allows the use of a lower test rate for purposes of sections 483 and 1274 in the case of a qualified debt instrument (as defined i
     2. (b) Rules for both qualified and cash method debt instruments—(1) Sale-leaseback transactions. A debt instrument issued in a sale-leaseback transaction (within
     3. (c) Rules for cash method debt instruments—(1) Time and manner of making cash method election. The borrower and lender make the election described in section 12
     4. (ii) Examples. The following examples illustrate the application of section 1274A(d)(1) and paragraph (b)(3)(i) of this section. Example 1. Aggregation of two s
302. 1.1275-1 · -1 Definitions.
     1. (a) Applicability. The definitions contained in this section apply for purposes of sections 163(e) and 1271 through 1275 and the regulations thereunder.
     2. (b) Adjusted issue price—(1) In general. The adjusted issue price of a debt instrument at the beginning of the first accrual period is the issue price. Thereaft
     3. (c) OID. OID means original issue discount (as defined in section 1273(a) and § 1.1273-1).
     4. (d) Debt instrument. Except as provided in section 1275(a)(1)(B) (relating to certain annuity contracts; see paragraph (j) of this section), debt instrument mea
     5. (e) Tax-exempt obligations. For purposes of section 1275(a)(3)(B), exempt from tax means exempt from Federal income tax.
     6. (f) Issue. (1) Debt instruments issued on or after March 13, 2001.
     7. (g) Debt instruments issued by a natural person. If an entity is a primary obligor under a debt instrument, the debt instrument is considered to be issued by th
     8. (h) Publicly offered debt instrument. A debt instrument is publicly offered if it is part of an issue of debt instruments the initial offering of which—
     9. (i) Under section 3 of the Securities Act of 1933 (relating to exempted securities);
     10. (ii) Definition of maximum payout provision. A maximum payout provision is a contractual provision that provides that no distributions under the contract may be
     11. (iv) Examples. The following examples illustrate the rules of this paragraph (j)(5): Example 1.(i) Facts. On March 1, 1998, X issues a contract to D for cash. T
     12. (j) Life annuity exception under section 1275(a)(1)(B)(i)—(1) Purpose. Section 1275(a)(1)(B)(i) excepts an annuity contract from the definition of debt instrume
     13. (k) Exception under section 1275(a)(1)(B)(ii) for annuities issued by an insurance company subject to tax under subchapter L of the Internal Revenue Code—(1) Ru
303. 1.1275-2 · -2 Special rules relating to debt instruments.
     1. (a) Payment ordering rule—(1) In general. Except as provided in paragraph (a)(2) of this section, each payment under a debt instrument is treated first as a pay
     2. (b) Debt instruments distributed by corporations with respect to stock—(1) Treatment of distribution. For purposes of determining the issue price of a debt inst
     3. (c) Aggregation of debt instruments—(1) General rule. Except as provided in paragraph (c)(2) of this section, debt instruments issued in connection with the sam
     4. (d) Special rules for Treasury securities—(1) Issue price and issue date. The issue price of an issue of Treasury securities is the average price of the securit
     5. (e) Disclosure of certain information to holders. Certain provisions of the regulations under section 163(e) and sections 1271 through 1275 provide that the iss
     6. (f) Treatment of pro rata prepayments—(1) Treatment as retirement of separate debt instrument. A pro rata prepayment is treated as a payment in retirement of a
     7. (g) Anti-abuse rule—(1) In general. If a principal purpose in structuring a debt instrument or engaging in a transaction is to achieve a result that is unreason
     8. (h) Remote and incidental contingencies—(1) In general. This paragraph (h) applies to a debt instrument if one or more payments on the instrument are subject to
     9. (ii) Additional debt instruments. Additional debt instruments are debt instruments that, without the application of this paragraph (k)—
     10. (j) Treatment of certain modifications. If the terms of a debt instrument are modified to defer one or more payments, and the modification does not cause an exc
     11. (k) Reopenings—(1) In general. Notwithstanding § 1.1275-1(f), additional debt instruments issued in a qualified reopening are part of the same issue as the orig
304. 1.1275-3 · -3 OID information reporting requirements.
     1. (a) In general. This section provides legending and information reporting requirements intended to facilitate the reporting of OID.
     2. (b) Information required to be set forth on face of debt instruments that are not publicly offered—(1) In general. Except as provided in paragraph (b)(4) or par
     3. (c) Information required to be reported to Secretary upon issuance of publicly offered debt instruments—(1) In general. Except as provided in paragraph (c)(3) o
     4. (d) Application to foreign issuers and U.S. issuers of foreign-targeted debt instruments. A foreign or domestic issuer is subject to the rules of this section w
     5. (e) Penalties. See section 6706 for rules relating to the penalty imposed for failure to meet the information reporting requirements imposed by this section.
     6. (f) Effective date. Paragraphs (c), (d), and (e) of this section are effective for an issue of debt instruments issued after September 2, 1992.
     7. (i) Set forth on the face of the debt instrument the issue price, the amount of OID, the issue date, the yield to maturity, and, in the case of a debt instrumen
     8. (ii) Provide the name or title and either the address or telephone number of a representative of the issuer who will, beginning no later than 10 days after the
305. 1.1275-4 · -4 Contingent payment debt instruments.
     1. (a) Applicability—(1) In general. Except as provided in paragraph (a)(2) of this section, this section applies to any debt instrument that provides for one or m
     2. (b) Noncontingent bond method—(1) Applicability. The noncontingent bond method described in this paragraph (b) applies to a contingent payment debt instrument t
     3. (e) Amounts treated as interest under this section. Amounts treated as interest under this section are treated as OID for all purposes of the Internal Revenue C
     4. (f) Effective date. This section applies to debt instruments issued on or after August 13, 1996.
     5. (ii) Definition of adjusted issue price. The adjusted issue price of a debt instrument is equal to the debt instrument's issue price, increased by the interest
306. 1.1275-5 · -5 Variable rate debt instruments.
     1. (a) Applicability—(1) In general. This section provides rules for variable rate debt instruments. Except as provided in paragraph (a)(6) of this section, a vari
     2. (b) Qualified floating rate—(1) In general. A variable rate is a qualified floating rate if variations in the value of the rate can reasonably be expected to me
     3. (c) Objective rate—(1) Definition—(i) In general. For debt instruments issued on or after August 13, 1996, an objective rate is a rate (other than a qualified f
     4. (d) Examples. The following examples illustrate the rules of paragraphs (b) and (c) of this section. For purposes of these examples, assume that the debt instru
     5. (e) Qualified stated interest and OID with respect to a variable rate debt instrument—(1) In general. This paragraph (e) provides rules to determine the amount
     6. (f) Special rule for certain reset bonds. Notwithstanding paragraph (e) of this section, this paragraph (f) provides a special rule for a variable rate debt ins
     7. (ii) Example. The following example illustrates the rule in paragraph (e)(4)(i) of this section. Example: Variable rate debt instrument that provides for a sing
307. 1.1275-6 · -6 Integration of qualifying debt instruments.
     1. (a) In general. This section generally provides for the integration of a qualifying debt instrument with a hedge or combination of hedges if the combined cash f
     2. (b) Definitions—(1) Qualifying debt instrument. A qualifying debt instrument is any debt instrument (including an integrated transaction as defined in paragraph
     3. (e) Identification requirements. For each integrated transaction, a taxpayer must enter and retain as part of its books and records the following information—
     4. (f) Taxation of integrated transactions—(1) General rule. An integrated transaction is generally treated as a single transaction by the taxpayer during the peri
     5. (g) Predecessors and successors. For purposes of this section, any reference to a taxpayer, holder, issuer, or person includes, where appropriate, a reference t
     6. (h) Examples. The following examples illustrate the provisions of this section. In each example, assume that the qualifying debt instrument is a debt instrument
     7. (i) [Reserved]
     8. (ii) Synthetic debt instruments that are held by the taxpayer. In general, if the synthetic debt instrument is held by the taxpayer, the instrument's stated red
     9. (j) Effective date. This section applies to a qualifying debt instrument issued on or after August 13, 1996. This section also applies to a qualifying debt inst
308. 1.1275-7 · -7 Inflation-indexed debt instruments.
     1. (a) Overview. This section provides rules for the Federal income tax treatment of an inflation-indexed debt instrument. If a debt instrument is an inflation-ind
     2. (b) Applicability—(1) In general. Except as provided in paragraph (b)(2) of this section, this section applies to an inflation-indexed debt instrument as define
     3. (c) Definitions. The following definitions apply for purposes of this section:
     4. (d) Coupon bond method—(1) In general. This paragraph (d) describes the method (coupon bond method) to be used to account for qualified stated interest and infl
     5. (e) Discount bond method—(1) In general. This paragraph (e) describes the method (discount bond method) to be used to account for OID on an inflation-indexed de
     6. (f) Special rules. The following rules apply to an inflation-indexed debt instrument:
     7. (g) TIPS—(1) Reopenings. For rules concerning a reopening of TIPS, see paragraphs (d)(2), (k)(3)(iii), and (k)(3)(v) of § 1.1275-2.
     8. (h) Effective/applicability dates—(1) In general. This section applies to an inflation-indexed debt instrument issued on or after January 6, 1997.
     9. (ii) Example. The following example illustrates the application of the bond premium rules to a TIPS issued with bond premium: Example.(i) Facts. X, a calendar y
309. 1.1286-1 · -1 Tax treatment of certain stripped bonds and stripped coupons.
     1. (a) De minimis OID. If the original issue discount determined under section 1286(a) with respect to the purchase of a stripped bond or stripped coupon is less t
     2. (b) Treatment of certain stripped bonds as market discount bonds—(1) In general. By publication in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of
     3. (c) Effective date. This section is effective on and after August 8, 1991.
310. 1.1286-2 · -2 Stripped inflation-protected debt instruments.
311. 1.1287-1 · -1 Denial of capital gains treatment for gains on registration-required obligations not in registered form.
     1. (a) In general. Except as provided in paragraph (c) of this section, any gain on the sale or other disposition of a registration-required obligation held after
     2. (b) Registered form—(1) Obligations issued after September 21, 1984. With respect to any obligation originally issued after September 21, 1984, the term registe
     3. (c) Registration-required obligations not in registered form which are not subject to section 1287(c). Notwithstanding the fact than an obligation is a registra
     4. (d) Effective date. These regulations apply generally to obligations issued after January 20, 1987. However, a taxpayer may choose to apply the rules of § 1.128
312. 1.1288-1 · -1 Adjustment of applicable Federal rate for tax-exempt obligations.
     1. (a) In general. In applying section 483 or section 1274 to a tax-exempt obligation, the applicable Federal rate is adjusted to take into account the tax exempti
     2. (b) Adjustment factor. The adjustment factor is a percentage equal to—
     3. (c) Effective/applicability date. The rules of this section apply to the determination of adjusted applicable Federal rates beginning with the rates determined
313. 1.1291-0 · -0 Treatment of shareholders of certain passive foreign investment companies; table of contents.
314. 1.1291-1 · -1 Taxation of U.S. persons that are shareholders of section 1291 funds.
     1. (a) through (b)(2)(i) [Reserved]
     2. (b) (2)(iii) and (iv) [Reserved]
     3. (c) Coordination with other PFIC rules.
     4. (d) [Reserved]
     5. (e) Exempt organization as shareholder—(1) In general. If the shareholder of a PFIC is an organization exempt from tax under this chapter, section 1291 and thes
     6. (f) -(i) [Reserved]
     7. (ii) Coordination rule. (A) Notwithstanding any provision in this section to the contrary, the rule of paragraph (c)(4)(ii)(B) of this section shall apply to th
     8. (iv) Successive application. Stock considered to be owned by a person by reason of paragraphs (b)(8)(ii) or (iii) of this section is, for purposes of applying s
     9. (j) Applicability dates. (1) Paragraphs (c)(3) and (4) of this section apply for taxable years beginning on or after May 3, 2004.
     10. (v) Examples. The rules of this paragraph (b)(8) are illustrated by the following examples:
315. 1.1291-10 · -10 Deemed sale election.
     1. (a) Deemed sale election. This section provides rules for making the election under section 1291(d)(2)(A) (deemed sale election). Under that section, a sharehol
     2. (b) Who may make the election. A shareholder of an unpedigreed QEF may make the deemed sale election provided the shareholder held stock of that PFIC on the qua
     3. (c) Time for making the election. The shareholder makes the deemed sale election in the shareholder's return for the taxable year that includes the qualificatio
     4. (d) Manner of making the election. A shareholder makes the deemed sale election by filing Form 8621 with the return for the taxable year of the shareholder that
     5. (e) Qualification date—(1) In general. Except as otherwise provided in this paragraph (e), the qualification date is the first day of the PFIC's first taxable y
     6. (f) Adjustments to basis—(1) In general. A shareholder that makes the deemed sale election increases its adjusted basis of the PFIC stock owned directly by the
     7. (g) Treatment of holding period. For purposes of applying sections 1291 through 1297 to the shareholder after the deemed sale, the shareholder's holding period
     8. (h) Election inapplicable to shareholder of former PFIC. A shareholder may not make the section 1295 and deemed sale elections if the foreign corporation is a f
     9. (i) Effective date. The rules of this section are applicable as of April 1, 1995.
     10. (ii) Exception. A shareholder who made the deemed sale election after May 1, 1992, and before January 27, 1997, may elect to change its qualification date to th
316. 1.1291-9 · -9 Deemed dividend election.
     1. (a) Deemed dividend election—(1) In general. This section provides rules for making the election under section 1291(d)(2)(B) (deemed dividend election). Under t
     2. (b) Who may make the election. A shareholder of an unpedigreed QEF that is a CFC for the taxable year of the PFIC for which the shareholder makes the section 12
     3. (c) Time for making the election. The shareholder makes the deemed dividend election in the shareholder's return for the taxable year that includes the qualific
     4. (d) Manner of making the election—(1) In general. A shareholder makes the deemed dividend election by filing Form 8621 and the attachment to Form 8621 described
     5. (e) Qualification date—(1) In general. Except as otherwise provided in this paragraph (e), the qualification date is the first day of the PFIC's first taxable y
     6. (f) Adjustment to basis. A shareholder that makes the deemed dividend election increases its adjusted basis of the stock of the PFIC owned directly by the share
     7. (g) Treatment of holding period. For purposes of applying sections 1291 through 1297 to the shareholder after the deemed dividend, the shareholder's holding per
     8. (h) Coordination with section 959(e). For purposes of section 959(e), the entire deemed dividend is treated as included in gross income under section 1248(a).
     9. (i) Election inapplicable to shareholder of a former PFIC or of a section 1297(e) PFIC. A shareholder may not make the section 1295 and deemed dividend election
     10. (ii) Pedigreed QEF. A PFIC is a pedigreed QEF with respect to a shareholder if the PFIC has been a QEF with respect to the shareholder for all taxable years dur
     11. (j) Definitions—(1) Passive foreign investment company (PFIC). A passive foreign investment company (PFIC) is a foreign corporation that satisfies either the in
     12. (k) Effective/applicability date. (1) The rules of this section, except for paragraph (j)(2)(v) of this section, are applicable as of April 1, 1995.
317. 1.1293-0 · -0 Table of contents.
318. 1.1293-1 · -1 Current taxation of income from qualified electing funds.
     1. (a) In general. [Reserved]
     2. (b) Other rules. [Reserved]
     3. (c) Application of rules of inclusion with respect to stock held by a pass through entity—(1) In general. If a domestic pass through entity makes a section 1295
     4. (ii) Pass through entity does not make a section 1295 election. If the pass through entity does not make a section 1295 election with respect to the PFIC, the s
319. 1.1294-0 · -0 Table of contents.
320. 1.1294-1T · -1T Election to extend the time for payment of tax on undistributed earnings of a qualified electing fund (temporary).
     1. (a) Purpose and scope. This section provides rules for making the annual election under section 1294. Under that section, a U.S. person that is a shareholder in
     2. (b) Election to extend time for payment—(1) In general. A U.S. person that is a shareholder of a QEF on the last day of the QEF's taxable year may elect under s
     3. (c) Time for making the election—(1) In general. An election under this § 1.1294-1T may be made for any taxable year in which a shareholder reports income pursu
     4. (d) Manner of making the election—(1) In general. A shareholder shall make the election by (i) attaching to its return for the year of the election Form 8621 or
     5. (e) Termination of the extension. The election to extend the date for payment of tax will be terminated in whole or in part upon the occurrence of any of the fo
     6. (f) Undistributed PFIC earnings tax liability. The electing shareholder's tax liability attributable to the ordinary earnings and net capital gain included in g
     7. (g) Authority to require a bond. Pursuant to the authority granted in section 6165 and in the manner provided therein, and subject to notification, the District
     8. (h) Annual reporting requirement. The electing shareholder must attach Form 8621 or a statement to its income tax return for each year during which an election
     9. (ii) Effect of a loan, pledge or guarantee. A loan, pledge, or guarantee described in § 1.1294-1T(e) (2) or (4) will be treated as a distribution of earnings fo
321. 1.1295-0 · -0 Table of contents.
322. 1.1295-1 · -1 Qualified electing funds.
     1. (a) In general. [Reserved]
     2. (b) Application of section 1295 election. [Reserved]
     3. (e) Time for making a section 1295 election—(1) In general. Except as provided in § 1.1295-3, a shareholder making the section 1295 election must make the elect
     4. (f) Manner of making a section 1295 election and the annual election requirements of the shareholder—(1) Manner of making the election. A shareholder must make
     5. (g) Annual election requirements of the PFIC or intermediary—(1) PFIC Annual Information Statement. For each year of the PFIC ending in a taxable year of a shar
     6. (h) Transition rules. Taxpayers may rely on Notice 88-125 (1988-2 C.B. 535) (see § 601.601(d)(2) of this chapter), for rules on making and maintaining elections
     7. (i) Invalidation, termination, or revocation of section 1295 election—(1) Invalidation or termination of election at the discretion of the Commissioner—(i) In g
     8. (ii) Deferral of section 1293 inclusion. The Commissioner may invalidate any pass through entity section 1295 election with respect to an interest holder or ben
     9. (j) Definitions. For purposes of this section— Intermediary is a nominee or shareholder of record that holds stock on behalf of the shareholder or on behalf of
     10. (k) Effective dates. Except as otherwise provided, paragraphs (b)(2)(iii), (b)(3), (b)(4), and (c) through (j) of this section are applicable to taxable years o
323. 1.1295-3 · -3 Retroactive elections.
     1. (a) In general. This section prescribes the exclusive rules under which a shareholder, as defined in § 1.1295-1(j), may make a section 1295 election for a taxab
     2. (b) General rule. Except as provided in paragraphs (e) and (f) of this section, a shareholder may make a retroactive election for a taxable year of the sharehol
     3. (c) Protective Statement—(1) In general. A Protective Statement is a statement executed under penalties of perjury by the shareholder, or a person authorized to
     4. (e) Special rules for qualified shareholders—(1) In general. A shareholder that is a qualified shareholder, as defined in paragraph (e)(2) of this section, for
     5. (f) Special consent—(1) In general. A shareholder that has not satisfied the requirements of paragraph (b) or (e) of this section may request the consent of the
     6. (g) Time for and manner of making a retroactive election—(1) Time for making a retroactive election—(i) In general. Except as otherwise provided in paragraph (g
     7. (h) Effective date. The rules of this section are effective as of January 2, 1998.
     8. (i) The shareholder reasonably relied on a qualified tax professional, within the meaning of paragraph (f)(2) of this section;
     9. (ii) Transition rule. A shareholder that files a Protective Statement for a taxable year described in paragraph (c)(5)(ii) of this section may make a retroactiv
324. 1.1296-1 · -1 Mark to market election for marketable stock.
     1. (a) Definitions—(1) Eligible RIC. An eligible RIC is a regulated investment company that offers for sale, or has outstanding, any stock of which it is the issue
     2. (b) Application of section 1296 election—(1) In general. Any United States person and any controlled foreign corporation (CFC) that owns directly, or is treated
     3. (c) Effect of election—(1) Recognition of gain. If the fair market value of section 1296 stock on the last day of the United States person's taxable year exceed
     4. (d) Adjustment to basis—(1) Stock held directly. The adjusted basis of the section 1296 stock shall be increased by the amount included in the gross income of t
     5. (e) Stock owned through certain foreign entities—(1) In general. Except as provided in paragraph (e)(2) of this section, the following rules shall apply in dete
     6. (f) Holding period. Solely for purposes of sections 1291 through 1298, if section 1296 applied to stock with respect to the taxpayer for any prior taxable year,
     7. (g) Special rules—(1) Certain dispositions of stock. To the extent a United States person is treated as actually owning stock in a PFIC under paragraph (e) of t
     8. (h) Elections—(1) Timing and manner for making a section 1296 election—(i) United States persons. A United States person that owns marketable stock in a PFIC, o
     9. (ii) Controlled foreign corporations. A section 1296 election by a CFC shall be made by its controlling United States shareholders, as defined in § 1.964-1(c)(5
     10. (j) Effective/applicability date. The provisions in this section are applicable for taxable years beginning on or after May 3, 2004. The provisions of paragraph
325. 1.1296-2 · -2 Definition of marketable stock.
     1. (a) General rule. For purposes of section 1296, the term marketable stock means—
     2. (b) Regularly traded—(1) General rule. For purposes of paragraph (a)(1) of this section, a class of stock that is traded on one or more qualified exchanges or o
     3. (c) Qualified exchange or other market—(1) General rule. For purposes of paragraph (a)(1) of this section, the term qualified exchange or other market means, fo
     4. (d) Stock in certain PFICs—(1) General rule. Except as provided in paragraph (d)(2) of this section, a foreign corporation is a corporation described in section
     5. (e) [Reserved]
     6. (f) Special rules for regulated investment companies (RICs)—(1) General rule. In the case of any RIC that is offering for sale, or has outstanding, any stock of
     7. (g) Effective date. This section applies to shareholders whose taxable year ends on or after January 25, 2000 for stock in a foreign corporation whose taxable y
     8. (i) At all times during the calendar year, the foreign corporation has more than one hundred shareholders with respect to the class, other than shareholders who
     9. (ii) At all times during the calendar year, the class of shares of the foreign corporation is readily available for purchase by the general public at its net as
326. 1.1297-0 · -0 Table of contents.
327. 1.1297-1 · -1 Definition of passive foreign investment company.
     1. (a) Overview. This section provides rules concerning the income test set forth in section 1297(a)(1) and the asset test set forth in section 1297(a)(2). Paragra
     2. (b) Dividends included in gross income—(1) General rule. For purposes of section 1297, gross income includes dividends that are excluded from gross income under
     3. (c) Passive income—(1) Foreign personal holding company income—(i) General rule. For purposes of section 1297(b)(1), except as otherwise provided in section 129
     4. (e) Stapled stock. If a United States person that would be a shareholder (within the meaning of § 1.1291-1(b)(7) and (b)(8)) of a stapled entity (as defined in
     5. (f) Definitions. The following definitions apply for purposes of this section and § 1.1297-2:
     6. (g) Applicability date—(1) In general. Except as otherwise provided in paragraph (g)(2) of this section, the rules of this section apply to taxable years of sha
     7. (ii) Determination of gross income or gain on a net basis for certain items of foreign personal holding company income. For purposes of section 1297, the excess
328. 1.1297-2 · -2 Special rules regarding look-through subsidiaries and look-through partnerships.
     1. (a) Overview. This section provides rules concerning the treatment of income and assets of a look-through subsidiary (as defined in § 1.1297-2(g)(3)) or look-th
     2. (b) General rules—(1) Tested foreign corporation's ownership of a corporation. For purposes of section 1297(c) and this section, the principles of section 958(a
     3. (c) Elimination of certain intercompany assets and income—(1) General rule for asset test—(i) LTS stock. For purposes of section 1297(a)(2), a tested foreign co
     4. (d) Related person determination for purposes of section 1297(b)(2)(C)—(1) General rule. For purposes of section 1297(b)(2)(C), interest, dividends, rents or ro
     5. (e) Treatment of activities of certain look-through subsidiaries and look-through partnerships for purposes of certain exceptions—(1) General rule. An item of i
     6. (f) Gain on disposition of a look-through subsidiary or look-through partnership—(1) [Reserved].
     7. (g) Definitions. The following definitions apply for purposes of § 1.1297-1 and this section:
     8. (h) Applicability date. The rules of this section apply to taxable years of shareholders beginning on or after January 14, 2021. A shareholder may choose to app
     9. (i) Section 954(c)(1)(B) and § 1.954-2(e)(1)(ii) and (3)(ii), (iii) and (iv);
     10. (ii) Active partner test with respect to partnership income. Pursuant to section 1297(c) and § 1.1297-2(b)(2), TFC is treated as if it received directly its pro
     11. (iv) Example 4—(A) Facts. TFC directly owns 80% of the value of LTS1 stock on each of the measuring dates, and thus is treated under paragraph (b)(1) of this se
     12. (v) Example 5—(A) Facts. TFC directly owns 80% of the value of the stock of LTS1 and 60% of the value of the stock of LTS2 on each of the measuring dates, and t
329. 1.1297-3 · -3 Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a section 1297(e) PFIC.
     1. (a) In general. A shareholder (as defined in § 1.1291-9(j)(3)) of a foreign corporation that is a section 1297(e) passive foreign investment company (PFIC) (as
     2. (b) Application of deemed sale election rules—(1) Eligibility to make the deemed sale election. A shareholder of a foreign corporation that is a section 1297(e)
     3. (c) Application of deemed dividend election rules—(1) Eligibility to make the deemed dividend election. A shareholder of a foreign corporation that is a section
     4. (d) CFC qualification date. For purposes of this section, the CFC qualification date is the first day on which the qualified portion of the shareholder's holdin
     5. (e) Late purging elections requiring special consent—(1) In general. This section prescribes the exclusive rules under which a shareholder of a section 1297(e)
     6. (f) Effective/applicability date. The rules of this section are applicable as of December 8, 2005.
     7. (i) In a case where the shareholder is requesting consent under this paragraph (e) after December 31, 2005, the shareholder requests such consent before a repre
     8. (ii) The shareholder has agreed in a closing agreement with the Commissioner, described in paragraph (e)(3) of this section, to eliminate any prejudice to the i
330. 1.1297-4 · -4 Qualifying insurance corporation.
     1. (a) Scope. This section provides rules for determining whether a foreign corporation is a qualifying insurance corporation for purposes of section 1297(f). Para
     2. (b) Qualifying insurance corporation. For purposes of section 1297(b)(2)(B), this section, and §§ 1.1297-5 and 1.1297-6, with respect to a U.S. person, a qualif
     3. (c) 25 percent test. A foreign corporation satisfies the 25 percent test if the amount of its applicable insurance liabilities exceeds 25 percent of its total a
     4. (d) Election to apply the alternative facts and circumstances test—(1) In general. A United States person that owns stock in a foreign corporation that fails to
     5. (e) Rules limiting the amount of applicable insurance liabilities—(1) In general. For purposes of determining whether a foreign corporation satisfies the 25 per
     6. (f) Definitions. The following definitions apply for purposes of this section.
     7. (g) Applicability date. The rules of this section apply to taxable years of shareholders beginning on or after January 14, 2021. A shareholder may choose to app
     8. (i) Is predominantly engaged in an insurance business as described in paragraph (d)(2) of this section;
     9. (ii) [Reserved]
331. 1.1297-5 · -5 [Reserved]
332. 1.1297-6 · -6 Exception from the definition of passive income for active insurance income.
     1. (a) Scope. This section provides rules pertaining to the exception from passive income under section 1297(b)(2)(B) for income derived in the active conduct of a
     2. (b) Exclusion from passive income of active insurance income. For purposes of section 1297 and § 1.1297-1, passive income does not include—
     3. (c) Exclusion of assets for purposes of the passive asset test under section 1297(a)(2). For purposes of section 1297 and § 1.1297-1, passive assets (as defined
     4. (d) Treatment of income and assets of certain look-through subsidiaries and look-through partnerships for purposes of the section 1297(b)(2)(B) exception—(1) Ge
     5. (e) Qualifying domestic insurance corporation—(1) General rule. A domestic corporation (or a foreign corporation that is treated as a domestic corporation pursu
     6. (f) Applicability date. The rules of this section apply to taxable years of shareholders beginning on or after January 14, 2021. A shareholder may choose to app
     7. (i) Subject to tax as an insurance company under subchapter L of the Internal Revenue Code;
     8. (ii) Subject to federal income tax on its net income; and
333. 1.1298-0 · -0 Passive foreign investment company—table of contents.
334. 1.1298-1 · -1 Section 1298(f) annual reporting requirements for United States persons that are shareholders of a passive foreign investment company.
     1. (a) Overview. This section provides rules regarding the reporting requirements under section 1298(f) applicable to a United States person that is a shareholder
     2. (b) Requirement to file—(1) General rule. Except as otherwise provided in this section, a United States person that is a shareholder of a PFIC must complete and
     3. (e) Separate annual report for each PFIC—(1) General rule. If a United States person is required under section 1298(f) and these regulations to file Form 8621 (
     4. (f) Coordination rule. A United States person that is a shareholder of a PFIC may file a single Form 8621 (or successor form) with respect to the PFIC that cont
     5. (g) Examples. The following examples illustrate the rules of this section: Example 1.General requirement to file. (i) Facts. In 2013, J, a United States citizen
     6. (h) Applicability dates. (1) Except as provided in paragraph (h)(2) of this section, this section applies to taxable years of shareholders ending on or after De
     7. (i) Directly owns stock of the PFIC;
     8. (ii) Is an indirect shareholder under § 1.1291-1(b)(8) that holds any interest in the PFIC through one or more entities, each of which is foreign; or
335. 1.1298-2 · -2 Rules for certain corporations changing businesses.
     1. (a) Overview. This section provides rules under section 1298(b)(3) and 1298(g) that apply to certain foreign corporations that dispose of one or more active tra
     2. (b) Change of business exception. A corporation is not treated as a PFIC for a taxable year if—
     3. (c) Special rules. The rules in this paragraph (c) apply for purposes of section 1298(b)(3) and this section.
     4. (d) Disposition of stock of a look-through subsidiary or partnership interests in a look-through partnership. For purposes of paragraph (b) of this section, the
     5. (e) Application of change of business exception. A tested foreign corporation can apply the exception in paragraph (b) of this section with respect to a taxable
     6. (f) Examples. The following examples illustrate the rules of this section. For purposes of these examples: USP is a domestic corporation; TFC and FS are foreign
     7. (g) Applicability date. The rules of this section apply to taxable years of shareholders beginning on or after January 14, 2021. A shareholder may choose to app
     8. (ii) Results. The results are the same as in paragraph (f)(1)(ii) of this section (the results in Example 1), except that under paragraph (c)(1) of this section
336. 1.1298-3 · -3 Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a former PFIC.
     1. (a) In general. A shareholder (as defined in § 1.1291-9(j)(3)) of a foreign corporation that is a former PFIC, (as defined in § 1.1291-9(j)(2)(iv)) with respect
     2. (b) Application of deemed sale election rules—(1) Eligibility to make the deemed sale election. A shareholder of a foreign corporation that is a former PFIC wit
     3. (c) Application of deemed dividend election rules—(1) Eligibility to make the deemed dividend election. A shareholder of a foreign corporation that is a former
     4. (d) Termination date. For purposes of this section, the termination date is the last day of the last taxable year of the foreign corporation during which it qua
     5. (e) Late purging elections requiring special consent—(1) In general. This section prescribes the exclusive rules under which a shareholder of a former PFIC may
     6. (f) Effective/applicability date. The rules of this section are applicable as of December 8, 2005.
     7. (i) In a case where the shareholder is requesting consent under this paragraph (e) after December 31, 2005, the shareholder requests such consent before a repre
     8. (ii) The shareholder has agreed in a closing agreement with the Commissioner, described in paragraph (e)(3) of this section, to eliminate any prejudice to the i
337. 1.1298-4 · -4 Rules for certain foreign corporations owning stock in 25-percent-owned domestic corporations.
     1. (a) Overview. This section provides rules under section 1298(b)(7) that apply to certain foreign corporations that own stock in 25-percent-owned domestic corpor
     2. (b) Treatment of certain foreign corporations owning stock in a 25-percent-owned domestic corporation—(1) General rule. Except as otherwise provided in paragrap
     3. (c) Indirect ownership of stock through a partnership. For purposes of paragraph (b)(1) of this section, a tested foreign corporation that is a partner in a par
     4. (d) Section 531 tax—(1) Subject to section 531 tax. For purposes of paragraph (b) of this section, a tested foreign corporation is considered subject to the sec
     5. (e) Anti-abuse rule—(1) General rule. Paragraph (b) of this section does not apply with respect to qualified stock in a second-tier domestic corporation owned b
     6. (f) Applicability date. The rules of this section apply to taxable years of shareholders beginning on or after January 14, 2021. A shareholder may choose to app
     7. (ii) Tested foreign corporation that is not required to file a Federal income tax return. For purposes of paragraph (b) of this section, a tested foreign corpor
338. 1.1301-1 · -1 Averaging of farm and fishing income.
     1. (a) Overview. An individual engaged in a farming or fishing business may make a farm income averaging election to compute current year (election year) income ta
     2. (b) Individual engaged in a farming or fishing business—(1) In general—(i) Farming or fishing business. “Farming business” has the same meaning as provided in s
     3. (e) Electible farm income—(1) Identification of items attributable to a farming or fishing business—(i) In general. Farm and fishing income includes items of in
     4. (f) Miscellaneous rules—(1) Short taxable year—(i) In general. If a base year or an election year is a short taxable year, the rules of section 443 and the regu
     5. (g) Effective/applicability date. This section applies for taxable years beginning after December 15, 2010. See the provisions of §§ 1.1301-1 and 1.1301-1T as i
     6. (ii) Base year is a short taxable year. If a base year is a short taxable year, elected farm income is allocated to such year for purposes of paragraph (a)(2) o
339. 1.1311(a)-1 · (a)-1 Introduction.
     1. (a) Part II (section 1311 and following), subchapter Q, chapter 1 of the Code, provides certain rules for the correction of the effect of an erroneous treatment
     2. (b) In most situations falling within this part the correction of the effect of the error on a closed year can be made only if either the Commissioner or the ta
     3. (c) There are two special circumstances which fall within this part but which do not require that an inconsistent position be maintained. One of these circumsta
340. 1.1311(a)-2 · (a)-2 Purpose and scope of section 1311.
     1. (a) Section 1311 provides for the correction of the effect of certain errors under circumstances specified in section 1312 when one or more provisions of law, s
     2. (b) The determination (including a determination under section 1313 (a)(4)) may be with respect to any of the taxes imposed by subtitle A of the Internal Revenu
     3. (c) Section 1311 is not applicable if, on the date of the determination, correction of the effect of the error is permissible without recourse to said section.
     4. (d) If the tax liability for the year with respect to which the error was made has been compromised under section 7122 or the corresponding provisions of prior
     5. (e) No adjustment may be made under section 1311 for any taxable year beginning prior to January 1, 1932. See section 1314(d).
     6. (f) Section 1311 applies only to a determination (as defined in section 1313(a) and §§ 1.1313(a)-1 to 1.1313 (a)-4, inclusive) made after November 14, 1954. Sec
341. 1.1311(b)-1 · (b)-1 Maintenance of an inconsistent position.
     1. (a) In general. Under the circumstances stated in § 1.1312-1, § 1.1312-2, paragraph (a) of § 1.1312-3, § 1.1312-5, § 1.1312-6, and § 1.1312-7, the maintenance o
     2. (b) Adjustments resulting in refund or credit. (1) An adjustment under any of the circumstances stated in § 1.1312-1, § 1.1312-5, § 1.1312-6, or § 1.1312-7 whic
     3. (c) Adjustments resulting in additional assessments. (1) An adjustment under any of the circumstances stated in § 1.1312-2, paragraph (a) of § 1.1312-3, § 1.131
342. 1.1311(b)-2 · (b)-2 Correction not barred at time of erroneous action.
     1. (a) An adjustment under the circumstances stated in paragraph (b) of § 1.1312-3 (relating to the double exclusion of an item of gross income) which would result
     2. (b) An adjustment under the circumstances stated in § 1.1312-4 (relating to the double disallowance of a deduction or credit), which would result in the allowan
     3. (c) Under the circumstances of adjustment with respect to which the conditions stated in this section are applicable, the conditions stated in § 1.1311(b)-1 (ma
343. 1.1311(b)-3 · (b)-3 Existence of relationship in case of adjustment by way of deficiency assessment.
     1. (a) Except for cases described in paragraph (b) of § 1.1312-3, no adjustment by way of a deficiency assessment shall be made, with respect to a related taxpayer
     2. (b) If the inconsistent position is maintained in a return, claim for refund, or petition (or amended petition) to the Tax Court of the United States for the ta
344. 1.1312-1 · -1 Double inclusion of an item of gross income.
     1. (a) Paragraph (1) of section 1312 applies if the determination requires the inclusion in a taxpayer's gross income of an item which was erroneously included in
     2. (b) The application of paragraph (a) of this section may be illustrated by the following examples: Example 1.A taxpayer who keeps his books on the cash method e
345. 1.1312-2 · -2 Double allowance of a deduction or credit.
     1. (a) Paragraph (2) of section 1312 applies if the determination allows the taxpayer a deduction or credit which was erroneously allowed the same taxpayer for ano
     2. (b) The application of paragraph (a) of this section may be illustrated by the following examples: Example 1.A taxpayer in his return for 1950 claimed and was a
346. 1.1312-3 · -3 Double exclusion of an item of gross income.
     1. (a) Items included in income or with respect to which a tax was paid. (1) Paragraph (3)(A) of section 1312 applies if the determination requires the exclusion,
     2. (b) Items not included in income and with respect to which the tax was not paid. (1) Paragraph (3)(B) of section 1312 applies if the determination requires the
347. 1.1312-4 · -4 Double disallowance of a deduction or credit.
     1. (a) Paragraph (4) of section 1312 applies if the determination disallows a deduction or credit which should have been, but was not, allowed to the same taxpayer
     2. (b) The application of paragraph (a) of this section may be illustrated by the following examples: Example 1.The taxpayer, A, who computes his income by use of
348. 1.1312-5 · -5 Correlative deductions and inclusions for trusts or estates and legatees, beneficiaries, or heirs.
     1. (a) Paragraph (5) of section 1312 applies to distributions by a trust or an estate to the beneficiaries, heirs, or legatees. If the determination relates to the
     2. (b) The application of paragraph (a)(1) of this section may be illustrated by the following example: Example:For the taxable year 1954, a trustee, directed by t
     3. (c) The application of paragraph (a)(2) of this section may be illustrated by the following example: Example:Assume the same facts as in the example in paragrap
     4. (d) The application of paragraph (a)(3) of this section may be illustrated by the following example: Example:A trustee claimed in the trust return for 1954 for
     5. (e) The application of paragraph (a)(4) of this section may be illustrated by the following example: Example:Assume the same facts as in the example in paragrap
349. 1.1312-6 · -6 Correlative deductions and credits for certain related corporations.
     1. (a) Paragraph (6) of section 1312 applies if the determination allows or disallows a deduction (including a credit) to a corporation, and if a correlative deduc
     2. (b) The application of paragraph (a) of this section may be illustrated by the following examples: Example 1.X Corporation is a wholly-owned subsidiary of Y Cor
350. 1.1312-7 · -7 Basis of property after erroneous treatment of a prior transaction.
     1. (a) Paragraph (7) of section 1312 applies if the determination establishes the basis of property, and there occurred one of the following types of errors in res
     2. (b) (1) For this section to apply, the taxpayer with respect to whom the erroneous treatment occurred must be:
     3. (i) The taxpayer with respect to whom the determination is made; or
     4. (ii) A taxpayer who acquired title to the property in the erroneously treated transaction and from whom, mediately or immediately, the taxpayer with respect to
351. 1.1312-8 · -8 Law applicable in determination of error.
352. 1.1313(a)-1 · (a)-1 Decision by Tax Court or other court as a determination.
     1. (a) A determination may take the form of a decision by the Tax Court of the United States or a judgment, decree, or other order by any court of competent jurisd
     2. (b) The date upon which a decision by the Tax Court becomes final is prescribed in section 7481.
     3. (c) The date upon which a judgment of any other court becomes final must be determined upon the basis of the facts in the particular case. Ordinarily, a judgmen
353. 1.1313(a)-2 · (a)-2 Closing agreement as a determination.
354. 1.1313(a)-3 · (a)-3 Final disposition of claim for refund as a determination.
     1. (a) In general. A determination may take the form of a final disposition of a claim for refund. Such disposition may result in a determination with respect to t
     2. (b) Items with respect to which the taxpayer's claim is allowed. (1) The disposition with respect to an item as to which the taxpayer's contention in the claim
     3. (e) Elimination of waiting period. The necessity of waiting for the expiration of the 2-year period of limitations provided in section 6532 may be avoided in su
     4. (i) The taxpayer's claim for refund is unqualifiedly allowed; or
     5. (ii) The taxpayer's contention with respect to an item is sustained and with respect to other items is denied, so that the net result is an allowance of refund
355. 1.1313(a)-4 · (a)-4 Agreement pursuant to section 1313(a)(4) as a determination.
     1. (a) In general. (1) A determination may take the form of an agreement made pursuant to this section. This section is intended to provide an expeditious method f
     2. (b) Contents of agreement. An agreement made pursuant to this section shall be so designated in the heading of the agreement, and it shall contain the following
     3. (c) Execution and effect of agreement. An agreement made pursuant to this section shall be signed by the taxpayer with respect to whom the determination is made
     4. (d) Finality of determination. A determination made by an agreement pursuant to this section becomes final when the tax liability for the open taxable year to w
356. 1.1313(c)-1 · (c)-1 Related taxpayer.
357. 1.1314(a)-1 · (a)-1 Ascertainment of amount of adjustment in year of error.
     1. (a) In computing the amount of the adjustment under sections 1311 to 1315, inclusive, there must first be ascertained the amount of the tax previously determine
     2. (b) (1) The tax previously determined may consist of tax for any taxable year beginning after December 31, 1931, imposed by subtitle A of the Internal Revenue C
     3. (c) No change shall be made in the treatment given any item upon which the tax previously determined was based other than in the correction of the item or items
     4. (d) Any interest or additions to the tax collected as a result of the error shall be taken into account in determining the amount of the adjustment.
     5. (e) The application of this section may be illustrated by the following example: Example:(1) For the taxable year 1949 a taxpayer with no dependents, who kept h
358. 1.1314(a)-2 · (a)-2 Adjustment to other barred taxable years.
     1. (a) An adjustment is authorized under section 1311 with respect to a taxable year or years other than the year of the error, but only if all of the following re
     2. (b) The amount of the adjustment for such other year or years shall be computed in a manner similar to that provided in § 1.1314(a)-1. The tax previously determ
     3. (c) A net operating loss deduction or a capital loss carryback or carryover determined with reference to the year of the error may affect, or may have been trea
     4. (d) The application of this section may be illustrated by the following example: Example:The taxpayer is a corporation which makes its income tax returns on a c
359. 1.1314(b)-1 · (b)-1 Method of adjustment.
     1. (a) If the amount of the adjustment ascertained pursuant to § 1.1314(a)-1 or § 1.1314(a)-2 represents an increase in tax, it is to be treated as if it were a de
     2. (b) For the purpose of the adjustments authorized by section 1311, the period of limitations upon the making of an assessment or upon refund or credit, as the c
     3. (c) The amount of an adjustment treated as if it were a deficiency or an overpayment, as the case may be, will bear interest and be subject to additions to the
     4. (d) If, as a result of a determination provided for in § 1.1313(a)-4, an adjustment has been made by the assessment and collection of a deficiency or the refund
360. 1.1314(c)-1 · (c)-1 Adjustment unaffected by other items.
     1. (a) The amount of any adjustment ascertained under § 1.1314(a)-1 or § 1.1314(a)-2 shall not be diminished by any credit or set-off based upon any item other tha
     2. (b) The application of this section may be illustrated by the following examples: Example 1.In the example set forth in paragraph (e) of § 1.1314(a)-1, if, afte
     3. (c) If the Commissioner has refunded the amount of an adjustment under section 1311, the amount so refunded may not subsequently be recovered by the Commissione
     4. (d) If the Commissioner has assessed and collected the amount of an adjustment under section 1311, no part thereof may be recovered by the taxpayer in any suit
     5. (e) If the amount of the adjustment is considered an overpayment, it may be credited, under applicable law and regulations, together with any interest allowed t
361. 1.132-0 · -0 Outline of regulations under section 132.
362. 1.132-1 · -1 Exclusion from gross income for certain fringe benefits.
     1. (a) In general. Gross income does not include any fringe benefit which qualifies as a—
     2. (b) Definition of employee—(1) No-additional-cost services and qualified employee discounts. For purposes of section 132(a)(1) (relating to no-additional-cost s
     3. (e) Treatment of on-premises athletic facilities—(1) In general. Gross income does not include the value of any on-premises athletic facility provided by an emp
     4. (f) Nonapplicability of section 132 in certain cases—(1) Tax treatment provided for in another section. If the tax treatment or a particular fringe benefit is e
     5. (g) Effective date. Sections 1.132-0, 1.132-1, 1.132-2, 1.132-3, 1.132-4, 1.132-5, 1.132-6, 1.132-7 and 1.132-8 are effective as of January 1, 1989, except that
     6. (i) Which is located on the premises of the employer, (ii) Which is operated by the employer, and (iii) Substantially all of the use of which during the calenda
     7. (ii) Any individual who was formerly employed by the employer in the line of business and who separated from service with the employer in the line of business b
363. 1.132-2 · -2 No-additional-cost services.
     1. (a) In general—(1) Definition. Gross income does not include the value of a no-additional-cost service. A “no-additional-cost service” is any service provided b
     2. (b) Reciprocal agreements. For purposes of the exclusion from gross income for a no-additional-cost service, an exclusion is available to an employee of one emp
     3. (c) Example. The rules of this section are illustrated by the following example: Example.Assume that a commercial airline permits its employees to take personal
     4. (i) The service is offered for sale by the employer to its customers in the ordinary course of the line of business of the employer in which the employee perfor
     5. (ii) Labor intensive services. An employer must include the cost of labor incurred in providing services to employees when determining whether the employer has
364. 1.132-3 · -3 Qualified employee discounts.
     1. (a) In general—(1) Definition. Gross income does not include the value of a qualified employee discount. A “qualified employee discount” is any employee discoun
     2. (b) Employee discount—(1) Definition. The term “employee discount” means the excess of—
     3. (e) Excess discounts. Unless excludable under a provision of the Internal Revenue Code of 1986 other than section 132(a)(2), an employee discount provided on pr
     4. (i) The price at which the property or service is being offered by the employer for sale to customers, over
     5. (ii) Quantity discount not reflected. The price at which a property or service is being offered to customers cannot reflect any quantity discount unless the emp
365. 1.132-4 · -4 Line of business limitation.
     1. (a) In general—(1) Applicability—(i) General rule. A no-additional-cost service or a qualified employee discount provided to an employee is only available with
     2. (b) Grandfather rule for certain retail stores—(1) In general. The line of business limitation may be relaxed under the special grandfather rule of this paragra
     3. (c) Grandfather rule for telephone service provided to predivestiture retirees. All entities subject to the modified final judgment (as defined in section 559(c
     4. (d) Special rule for certain affiliates of commercial airlines—(1) General rule. If a qualified affiliate is a member of an airline affiliated group and employe
     5. (e) Grandfather rule for affiliated groups operating airlines. The line of business limitation may be relaxed under the special grandfather rule of this paragra
     6. (f) Special rule for qualified air transportation organizations. A qualified air transportation organization is treated as engaged in the line of business of pr
     7. (g) Relaxation of line of business requirement. The line of business requirement may be relaxed under an elective grandfather rule provided in section 4977. For
     8. (h) Line of business requirement does not expand benefits eligible for exclusion. The line of business requirement limits the benefits eligible for the no-addit
     9. (i) On October 5, 1983, at least 85 percent of the employees of one member of an affiliated group (as defined in section 1504 without regard to subsections (b)(
     10. (ii) More than 50 percent of the previous year's sales of the affiliated group are attributable to the operation of retail department stores, then, for purposes
366. 1.132-5 · -5 Working condition fringes.
     1. (a) In general—(1) Definition. Gross income does not include the value of a working condition fringe. A “working condition fringe” is any property or service pr
     2. (b) Vehicle allocation rules—(1) In general—(i) General rule. In general, with respect to an employer-provided vehicle, the amount excludable as a working condi
     3. (e) Safe harbor substantiation rule for vehicles not used for personal purposes. For a vehicle described in § 1.274-6T(a)(2) (relating to certain vehicles not u
     4. (f) Safe harbor substantiation rule for vehicles not available to employees for personal use other than commuting. For a vehicle described in § 1.274-6T(a)(3) (
     5. (g) Safe harbor substantiation rule for vehicles used in connection with the business of farming that are available to employees for personal use—(1) In general
     6. (h) Qualified nonpersonal use vehicles—(1) In general. Except as provided in paragraph (h)(2) of this section, 100 percent of the value of the use of a qualifie
     7. (i) Such use is provided primarily to facilitate the salesman's performance of services for the employer; and
     8. (ii) Liability insurance coverage for a bona fide volunteer. For purposes of this paragraph (r), the receipt of liability insurance coverage by a volunteer, or
     9. (j) Application of section 280F. In determining the amount, if any, of an employee's working condition fringe, section 280F and the regulations thereunder do no
     10. (k) Aircraft allocation rule. In general, with respect to a flight on an employer-provided aircraft, the amount excludable as a working condition fringe is the
     11. (l) [Reserved]
     12. (m) Employer-provided transportation for security concerns—(1) In general. The amount of a working condition fringe exclusion with respect to employer-provided
     13. (n) Product testing—(1) In general. The fair market value of the use of consumer goods, which are manufactured for sale to nonemployees, for product testing and
     14. (o) Qualified automobile demonstration use—(1) In general. The value of qualified automobile demonstration use is excludable from gross income as a working cond
     15. (p) Parking—(1) In general. The value of parking provided to an employee on or near the business premises of the employer is excludable from gross income as a w
     16. (q) Nonapplicability of nondiscrimination rules. Except to the extent provided in paragraph (n)(3) of this section (relating to discriminating classifications o
     17. (r) Volunteers—(1) In general. Solely for purposes of section 132(d) and paragraph (a)(1) of this section, a bona fide volunteer (including a director or office
     18. (s) Application of section 274(a)(3)—(1) In general. If an employer's deduction under section 162(a) for dues paid or incurred for membership in any club organi
     19. (t) Application of section 274(m)(3)—(1) In general. If an employer's deduction under section 162(a) for amounts paid or incurred for the travel expenses of a s
367. 1.132-6 · -6 De minimis fringes.
     1. (a) In general. Gross income does not include the value of a de minimis fringe provided to an employee. The term “de minimis fringe” means any property or servi
     2. (b) Frequency—(1) Employee-measured frequency. Generally, the frequency with which similar fringes are provided by the employer to the employer's employees is d
     3. (c) Administrability. Unless excluded by a provision of chapter 1 of the Internal Revenue Code of 1986 other than section 132(a)(4), the value of any fringe ben
     4. (d) Special rules—(1) Transit passes. A public transit pass provided at a discount to defray an employee's commuting costs may be excluded from the employee's g
     5. (e) Examples—(1) Benefits excludable from income. Examples of de minimis fringe benefits are occasional typing of personal letters by a company secretary; occas
     6. (f) Nonapplicability of nondiscrimination rules. Except to the extent provided in § 1.132-7, the nondiscrimination rules of section 132(h)(1) and § 1.132-8 do n
     7. (ii) Applicability of other exclusions for certain meals and for transportation provided for security concerns. The value of meals furnished to an employee, an
368. 1.132-7 · -7 Employer-operated eating facilities.
     1. (a) In general—(1) Condition for exclusion—(i) General rule. The value of meals provided to employees at an employer-operated eating facility for employees is e
     2. (b) Direct operating costs—(1) In general. For purposes of this section, the direct operating costs of an eating facility are—
     3. (c) Valuation of non-excluded meals provided at an employer-operated eating facility for employees. If the exclusion for meals provided at an employer-operated
     4. (i) The cost of food and beverages, and
     5. (ii) The cost of labor for personnel whose services relating to the facility are performed primarily on the premises of the eating facility. Direct operating co
369. 1.132-8 · -8 Fringe benefit nondiscrimination rules.
     1. (a) Application of nondiscrimination rules—(1) General rule. A highly compensated employee who receives a no-additional cost service, a qualified employee disco
     2. (b) Aggregation of employees—(1) Section 132(a) (1) and (2). For purposes of determining whether the exclusions for no-additional-cost services and qualified em
     3. (c) Availability on substantially the same terms—(1) General rule. The determination of whether a benefit is available on substantially the same terms shall be
     4. (d) Testing for discrimination—(1) Classification test. In the event that a benefit described in section 132 (a)(1), (a)(2) or (e)(2) is not available on substa
     5. (e) Cash bonuses or rebates. A cash bonus or rebate provided to an employee by an employer that is determined with reference to the value of employer-provided p
     6. (f) Highly compensated employee—(1) Government and nongovernment employees. A highly compensated employee of any employer is any employee who, during the year o
     7. (i) Was a 5-percent owner,
     8. (ii) Received compensation from the employer in excess of $75,000,
370. 1.132-9 · -9 Qualified transportation fringes.
     1. (a) The election is pursuant to an arrangement described in Q/A-12 of this section;
     2. (b) The last sentence of paragraph (b)(5) of Q/A-16 of this section (relating to whether transit system vouchers for transit passes are readily available) is ap
     3. (c) Parking. The working condition fringe rules under section 132(d) do not apply to commuter parking. See § 1.132-5(a)(1). However, the de minimis fringe rules
     4. (d) Example. The following example illustrates the principles of this Q/A-24: Example.(i) Individual G is a partner in partnership P. Individual G commutes to a
     5. (e) Value of van pool transportation benefits. Section 1.61-21(b)(2) provides that the fair market value of a fringe benefit is based on all the facts and circu
     6. (f) Qualified parking prime member. If an employee obtains a qualified parking space as a result of membership in a car or van pool, the applicable statutory mo
371. 1.1321-1 · -1 Involuntary liquidation of lifo inventories.
     1. (a) Section 22(d)(6)(B) of the Internal Revenue Code of 1939 provides as follows: Sec. 22. Gross income. * * * (d) * * * (6) Involuntary liquidation and replace
     2. (b) (1) If, during any taxable year ending after June 30, 1950, and before January 1, 1955, the disruption of normal trade relations between countries, or one o
     3. (c) (1) A failure on the part of the taxpayer to have on hand in his closing inventory for the taxable year merchandise of the kind, description, and quantity o
     4. (d) If the taxpayer would have the involuntary liquidation and replacement provisions applicable with respect to any inventory decrease, he must so elect within
     5. (e) The election of the taxpayer to treat an involuntary decrease of inventory as subject to the replacement adjustments is to be exercised separately for each
     6. (f) Notwithstanding the ultimate purchase price or the cost of production ultimately incurred by the taxpayer in effecting replacement of a stock involuntarily
     7. (g) The goods reflected in any inventory increase in a year subsequent to a year of involuntary liquidation, to the extent that they constitute items of the kin
     8. (h) In some cases it may appear that, at the time of the filing of the income tax return for the year of replacement, or within three years thereafter, an adjus
372. 1.1321-2 · -2 Liquidation and replacement of lifo inventories by acquiring corporations.
373. 1.133-1T · -1T Questions and answers relating to interest on certain loans used to acquire employer securities (temporary).
374. 1.1331-1 · -1 Recoveries in respect of war losses.
     1. (a) (1) The amount of any recovery in respect of war loss property must be included in gross income to the extent provided in section 1332 unless, pursuant to t
     2. (b) The recoveries in respect of any war loss property include the recovery of the same war loss property and the recovery of any money or property in lieu of s
     3. (c) For the purpose of this section, the recoveries considered are only those with respect to war losses sustained in prior taxable years. Similarly, the only d
     4. (d) If a deduction was claimed under section 127(a) of the Internal Revenue Code of 1939 by a taxpayer in computing his tax for any taxable year and if such ded
375. 1.1332-1 · -1 Inclusion in gross income of war loss recoveries.
     1. (a) Such gain is recognized or not recognized under the provisions of section 1033, relating to gain on the involuntary conversion of property. For the purpose
     2. (b) If such gain is recognized, it is included in gross income as ordinary income or, if the provisions of section 1231(a) apply and require such treatment, as
     3. (c) Section 1336 provides that in determining the unadjusted basis of recovered property, the total gain and the recognized gain with respect to such property m
376. 1.1333-1 · -1 Tax adjustment measured by prior benefits.
     1. (a) Such gain is recognized or not recognized under the provisions of section 1033, relating to gain on the involuntary conversion of property. For the purpose
     2. (b) If such gain is recognized it is included in gross income as ordinary income or, if the provisions of section 1231(a) apply and require such treatment, as g
377. 1.1334-1 · -1 Restoration of value of investments.
378. 1.1335-1 · -1 Elective method; time and manner of making election and effect thereof.
     1. (a) In general. If the taxpayer elects to have the provisions of section 1333 applicable to any taxable year in which any money or property is recovered in resp
     2. (b) Manner of election. In all cases the election to have the provisions of section 1333 apply must be made by the taxpayer not later than six months from the l
     3. (c) Effect of election. (1) If the provisions of section 1333 are applicable to any taxable year pursuant to an election made by the taxpayer in accordance with
379. 1.1336-1 · -1 Basis of recovered property.
     1. (a) General rule. (1) Under section 1336(a), the unadjusted basis of any war loss property which is recovered and the unadjusted basis of any property which is
     2. (b) Property recovered in taxable year to which section 1333 is applicable. If, pursuant to an election made by the taxpayer under section 1335 and paragraph (a
     3. (i) If the sum of the recoveries for the day such property is recovered and of all previous recoveries exceeds the aggregate of the allowable deductions for pri
     4. (ii) Such fair market value, as reduced under subdivision (i) of this subparagraph, is increased by the portion, if any, of the recognized gain resulting from t
380. 1.1337-1 · -1 Determination of tax benefits from allowable deductions.
     1. (a) That part of the aggregate of the deductions allowed a taxpayer for any taxable year on account of war losses under section 127(a) of the Internal Revenue C
     2. (b) Any deduction allowable for a taxable year on account of a war loss under section 127(a) of the Internal Revenue Code of 1939 which was not claimed by the t
     3. (c) If the taxpayer elected under section 127(b) of the Internal Revenue Code of 1939 to decrease the amount of a war loss by treating the obligations and liabi
381. 1.1341-1 · -1 Restoration of amounts received or accrued under claim of right.
     1. (a) The amount of decrease in tax for a prior taxable year (or years) computed under section 1341(a)(5)(B), over
     2. (b) The tax for the taxable year computed under section 1341(a)(5)(A), The tax imposed for the taxable year under chapter 1 shall be the tax determined under se
     3. (c) Application to deductions which are capital in nature. Section 1341 and this section shall also apply to a deduction which is capital in nature otherwise al
     4. (d) Determination of decrease in tax for prior taxable years—(1) Prior taxable years. (i) Except as otherwise provided in subdivision (ii) of this subparagraph,
     5. (e) Method of accounting. The provisions of section 1341 and this section shall be applicable in the case of a taxpayer on the cash receipts and disbursements m
     6. (f) Inventory items, stock in trade, and property held primarily for sale in the ordinary course of trade or business. (1) Except for amounts specified in subpa
     7. (g) Bad debts. The provisions of sections 1341 and this section do not apply to deductions attributable to bad debts.
     8. (h) Legal fees and other expenses. Section 1341 and this section do not apply to legal fees or other expenses incurred by a taxpayer in contesting the restorati
     9. (i) Refunds. If the decrease in tax for the prior taxable year (or years) determined under section 1341(a)(5)(B) and paragraph (b)(1)(ii) of this section exceed
     10. (ii) In the case of taxable years beginning before January 1, 1958, the provisions of section 1341 and this section apply to deductions which arise out of refun
382. 1.1342-1 · -1 Computation of tax where taxpayer recovers substantial amount held by another under claim of right; effective date.
383. 1.1346-1 · -1 Recovery of unconstitutional taxes.
     1. (a) In general. (1) A taxpayer who recovers unconstitutional Federal taxes which were paid or accrued and for which a deduction was allowed in a prior taxable y
     2. (b) Manner of making election. (1) The election provided for in paragraph (a) of this section shall be made by the taxpayer filing a statement in writing that h
384. 1.1347-1 · -1 Tax on certain amounts received from the United States.
     1. (a) In the case of an amount (other than interest) received from the United States by an individual under a claim involving acquisition of property and remainin
     2. (b) To determine the application of section 1347 and this section to a particular amount, the taxpayer shall first compute the tax (or, in the case of taxable y
     3. (c) In determining the portion of the taxable income attributable to any amount specified in paragraph (a) of this section, the taxpayer shall allocate to such
385. 1.1348-1 · -1 Fifty-percent maximum tax on earned income.
386. 1.1348-2 · -2 Computation of the fifty-percent maximum tax on earned income.
     1. (a) Computation of tax for taxable years beginning after 1971. If, for a taxable year beginning after December 31, 1971, an individual has earned taxable income
     2. (b) Computation of tax for taxable years beginning in 1971. If, for a taxable year beginning after December 31, 1970, and before January 1, 1972, an individual
     3. (c) Short taxable periods. If a taxpayer is required under section 443(a)(1) to make a return for a period of less than 12 months, the tax under section 1348 an
     4. (d) Earned taxable income—(1) In general. For purposes of section 1348 and this section, the term earned taxable income means the excess of (i) the portion of t
     5. (ii) The items of tax preference to be taken into account under subdivision (i) of this subparagraph for any taxable year shall be those items of tax preference
387. 1.1348-3 · -3 Definitions.
     1. (a) Earned income—(1) In general. (i) For purposes of section 1348 and the regulations thereunder, the term earned income means any item of gross income which i
     2. (b) Deferred compensation—(1) In general. For purposes of section 1348 and the regulations thereunder, the term deferred compensation means, except as otherwise
     3. (ii) Pension, etc., plans. (A) In accordance with subparagraph (1) of this paragraph, the taxable portion of distributions under a pension, annuity, profit-shar
388. 1.1361-0 · -0 Table of contents.
389. 1.1361-1 · -1 S corporation defined.
     1. (a) In general. For purposes of this title, with respect to any taxable year—
     2. (b) Small business corporation defined—(1) In general. For purposes of subchapter S, chapter 1 of the Code and the regulations thereunder, the term small busine
     3. (e) Number of shareholders—(1) General rule. A corporation does not qualify as a small business corporation if it has more than the number of shareholders provi
     4. (f) Shareholder must be an individual or estate. Except as otherwise provided in paragraph (e)(1) of this section (relating to nominees), paragraph (h) of this
     5. (g) Nonresident alien shareholder—(1) General rule. (i) A corporation having a shareholder who is a nonresident alien as defined in section 7701(b)(1)(B) does n
     6. (h) Special rules relating to trusts—(1) General rule. In general, a trust is not a permitted small business corporation shareholder. However, except as provide
     7. (i) All of the income (within the meaning of § 1.643(b)-1) of the trust is distributed (or is required to be distributed) currently to one individual who is a c
     8. (ii) Transition rules. Taxpayers may apply paragraph (h)(1)(iv)(B) of this section on and after December 24, 2002, and before July 17, 2003, to treat a trust as
     9. (iv) Protective QSST election when a person is an owner under subpart E. If the grantor of a trust is treated as the owner under subpart E of all of the trust,
     10. (j) Qualified subchapter S trust—(1) Definition. A qualified subchapter S trust (QSST) is a trust (whether intervivos or testamentary), other than a foreign tru
     11. (k) (1) Examples. The provisions of paragraphs (h) and (j) of this section are illustrated by the following examples in which it is assumed that all noncorporat
390. 1.1361-2 · -2 Definitions relating to S corporation subsidiaries.
     1. (a) In general. The term qualified subchapter S subsidiary (QSub) means any domestic corporation that is not an ineligible corporation (as defined in section 13
     2. (b) Stock treated as held by S corporation. For purposes of satisfying the 100 percent stock ownership requirement in section 1361(b)(3)(B)(i) and paragraph (a)
     3. (c) Straight debt safe harbor. Section 1.1361-1(l)(5)(iv) and (v) apply to an obligation of a corporation for which a QSub election is made if that obligation w
     4. (d) Examples. The following examples illustrate the application of this section: Example 1.X, an S corporation, owns 100 percent of Y, a corporation for which a
391. 1.1361-3 · -3 QSub election.
     1. (a) Time and manner of making election—(1) In general. The corporation for which the QSub election is made must meet all the requirements of section 1361(b)(3)(
     2. (b) Revocation of QSub election—(1) Manner of revoking QSub election. An S corporation may revoke a QSub election under section 1361 by filing a statement with
392. 1.1361-4 · -4 Effect of QSub election.
     1. (a) Separate existence ignored—(1) In general. Except as otherwise provided in paragraphs (a)(3), (a)(6), (a)(7), (a)(8), and (a)(9) of this section, for Federa
     2. (b) Timing of the liquidation—(1) In general. Except as otherwise provided in paragraph (b)(3) or (4) of this section, the liquidation described in paragraph (a
     3. (c) Carryover of disallowed losses and deductions. If an S corporation (S1) acquires the stock of another S corporation (S2), and S1 makes a QSub election with
     4. (d) Examples. The following examples illustrate the application of this section: Example 1.X, an S corporation, owns 100 percent of the stock of Y, a C corporat
     5. (i) A corporation that is a QSub shall not be treated as a separate corporation; and
     6. (ii) Special rules for acquired S corporations. Except as provided in paragraph (b)(4) of this section, if a corporation (Y) for which an election under section
393. 1.1361-5 · -5 Termination of QSub election.
     1. (a) In general—(1) Effective date. The termination of a QSub election is effective—
     2. (b) Effect of termination of QSub election—(1) Formation of new corporation—(i) In general. If a QSub election terminates under paragraph (a) of this section, t
     3. (c) Election after QSub termination—(1) In general. Absent the Commissioner's consent, and except as provided in paragraph (c)(2) of this section, a corporation
     4. (i) On the effective date contained in the revocation statement if a QSub election is revoked under § 1.1361-3(b);
     5. (ii) Termination for tiered QSubs. If QSub elections terminate for tiered QSubs on the same day, the formation of any higher tier subsidiary precedes the format
394. 1.1361-6 · -6 Effective date.
395. 1.1362-0 · -0 Table of contents.
396. 1.1362-1 · -1 Election to be an S corporation.
     1. (a) In general. Except as provided in § 1.1362-5, a small business corporation as defined in section 1361 may elect to be an S corporation under section 1362(a)
     2. (b) Years for which election is effective. An election under section 1362(a) is effective for the entire taxable year of the corporation for which it is made an
397. 1.1362-2 · -2 Termination of election.
     1. (a) Termination by revocation—(1) In general. An election made under section 1362(a) is terminated if the corporation revokes the election for any taxable year
     2. (b) Termination by reason of corporation ceasing to be a small business corporation—(1) In general. If a corporation ceases to be a small business corporation,
     3. (c) Termination by reason of excess passive investment income—(1) In general. A corporation's election under section 1362(a) terminates if the corporation has s
     4. (ii) Exception. An S corporation that disposes of a general partner interest may treat the disposition, for purposes of this paragraph (c), in the same manner a
398. 1.1362-3 · -3 Treatment of S termination year.
     1. (a) In general. If an S election terminates under section 1362(d) on a date other than the first day of a taxable year of the corporation, the corporation's tax
     2. (b) Allocations other than pro rata—(1) Elections under section 1362(e)(3). The pro rata allocation rules of section 1362(e)(2) do not apply if the corporation
     3. (c) Special rules—(1) S corporation that is a partner in a partnership. For purposes of section 706(c) only, the termination of the election of an S corporation
     4. (d) Examples The provisions of this section are illustrated by the following examples:
     5. (i) The pro rata allocation rules do not apply to the corporation; and
     6. (ii) Application of section 163(j). For purposes of section 163(j), a separate limitation (as defined in § 1.163(j)-1(b)(36)) applies to each S short year and e
399. 1.1362-4 · -4 Inadvertent terminations and inadvertently invalid elections.
     1. (a) In general. A corporation is treated as continuing to be an S corporation or a QSub (or, an invalid election to be either an S corporation or a QSub is trea
     2. (b) Inadvertent termination or inadvertently invalid election. For purposes of paragraph (a) of this section, the determination of whether a termination or inva
     3. (c) Corporation's request for determination of an inadvertent termination or invalid election. A corporation that believes that the termination or invalidity of
     4. (d) Adjustments. The Commissioner may require any adjustments that are appropriate. In general, the adjustments required should be consistent with the treatment
     5. (e) Corporation and shareholder consents. The corporation and all persons who were shareholders of the corporation at any time during the period specified by th
     6. (f) Status of corporation. The status of the corporation after the terminating event or invalid election and before the determination of inadvertence is determi
     7. (g) Effective/applicability date. Paragraphs (a), (b), (c), (d), and (f) of this section are effective on August 14, 2008.
400. 1.1362-5 · -5 Election after termination.
     1. (a) In general. Absent the Commissioner's consent, an S corporation whose election has terminated (or a successor corporation) may not make a new election under
     2. (b) Successor corporation. A corporation is a successor corporation to a corporation whose election under section 1362 has been terminated if—
     3. (c) Automatic consent after certain terminations. A corporation may, without requesting the Commissioner's consent, make a new election under section 1362(a) be
401. 1.1362-6 · -6 Elections and consents.
     1. (a) Time and manner of making elections—(1) In general. An election statement made under this section must identify the election being made, set forth the name,
     2. (b) Shareholders' consents—(1) Manner of consents in general. A shareholder's consent required under paragraph (a) of this section must be in the form of a writ
     3. (ii) Examples. The principles of this section are illustrated by the following examples: Example 1. Effective election; shareholder consents.On January 1, 1993,
402. 1.1362-7 · -7 Effective dates.
     1. (a) In general. The provisions of §§ 1.1362-1 through 1.1362-6 apply to taxable years of corporations beginning after December 31, 1992. For taxable years to wh
     2. (b) Special effective date for passive investment income provisions. For taxable years of an S corporation and all affected shareholders that are not closed, th
403. 1.1362-8 · -8 Dividends received from affiliated subsidiaries.
     1. (a) In general. For purposes of section 1362(d)(3), if an S corporation holds stock in a C corporation meeting the requirements of section 1504(a)(2), the term
     2. (b) Determination of active or passive earnings and profits—(1) In general. An S corporation may use any reasonable method to determine the amount of dividends
     3. (c) Allocating distributions to active or passive earnings and profits—(1) Distributions from current earnings and profits. Dividends distributed by a C corpora
     4. (d) Examples. The following examples illustrate the principles of this section: Example 1.(i) X, an S corporation, owns 85 percent of the one class of stock of
     5. (e) Effective date. This section applies to dividends received in taxable years beginning on or after January 20, 2000; however, taxpayers may elect to apply th
404. 1.1363-1 · -1 Effect of election on corporation.
     1. (a) Exemption of corporation from income tax—(1) In general. Except as provided in this paragraph (a), a small business corporation that makes a valid election
     2. (b) Computation of corporate taxable income. The taxable income of an S corporation is computed as described in section 1363(b).
     3. (c) Elections of the S corporation—(1) In general. Any elections (other than those described in paragraph (c)(2) of this section) affecting the computation of i
     4. (ii) Each shareholder may elect to amortize that shareholder's pro rata share of any qualified expenditure described in section 59(e) paid or accrued by the S c
405. 1.1363-2 · -2 Recapture of LIFO benefits.
     1. (a) In general. A C corporation must include the LIFO recapture amount (as defined in section 1363(d)(3)) in its gross income—
     2. (b) LIFO inventory held indirectly through partnership. A C corporation must include the lookthrough LIFO recapture amount (as defined in paragraph (c)(4) of th
     3. (c) Definitions and special rules—(1) Recapture date. In the case of a transaction described in paragraph (a)(1) or (b)(1) of this section, the recapture date i
     4. (e) Basis adjustments—(1) General rule. Appropriate adjustments to the basis of inventory are to be made to reflect any amount included in income under paragrap
     5. (f) Examples. The following examples illustrate the rules of this section: Example 1.(i) G is a C corporation with a taxable year ending on June 30. GH is a par
     6. (g) Effective dates. (1) The provisions of paragraph (a)(1) of this section apply to S elections made after December 17, 1987. For an exception, see section 102
     7. (ii) Basis of partnership assets. A partnership directly holding LIFO inventory that is taken into account under paragraph (b) of this section may elect to adju
406. 1.1366-0 · -0 Table of contents.
407. 1.1366-1 · -1 Shareholder's share of items of an S corporation.
     1. (a) Determination of shareholder's tax liability—(1) In general. An S corporation must report, and a shareholder is required to take into account in the shareho
     2. (b) Character of items constituting pro rata share—(1) In general. Except as provided in paragraph (b)(2) or (3) of this section, the character of any item of i
     3. (c) Gross income of a shareholder—(1) In general. Where it is necessary to determine the amount or character of the gross income of a shareholder, the sharehold
     4. (d) Shareholders holding stock subject to community property laws. If a shareholder holds S corporation stock that is community property, then the shareholder's
     5. (e) Net operating loss deduction of shareholder of S corporation. For purposes of determining a net operating loss deduction under section 172, a shareholder of
     6. (f) Cross-reference. For rules relating to the consistent tax treatment of subchapter S items, see section 6037(c).
     7. (ii) Example. The following example illustrates the provisions of paragraph (c)(2)(i) of this section: Example.Shareholder A, an individual, owns 25 percent of
408. 1.1366-2 · -2 Limitations on deduction of passthrough items of an S corporation to its shareholders.
     1. (a) In general—(1) Limitation on losses and deductions. The aggregate amount of losses and deductions taken into account by a shareholder under § 1.1366-1(a) (2
     2. (b) Special rules for carryover of disallowed losses and deductions to post-termination transition period described in section 1377(b)—(1) In general. If, for t
     3. (c) Carryover of disallowed losses and deductions in the case of liquidations, reorganizations, and divisions—(1) Liquidations and reorganizations. If a corpora
     4. (i) The adjusted basis of the shareholder's stock in the corporation (as determined under paragraph (a)(4)(i) of this section); and
     5. (ii) Special rule for guarantees. A shareholder does not obtain basis of indebtedness in the S corporation merely by guaranteeing a loan or acting as a surety,
409. 1.1366-3 · -3 Treatment of family groups.
     1. (a) In general. Under section 1366(e), if an individual, who is a member of the family of one or more shareholders of an S corporation, renders services for, or
     2. (b) Examples. The provisions of this section may be illustrated by the following examples: Example 1.The stock of an S corporation is owned 50 percent by F and
410. 1.1366-4 · -4 Special rules limiting the passthrough of certain items of an S corporation to its shareholders.
     1. (a) Passthrough inapplicable to section 34 credit. Section 1.1366-1(a) does not apply to any credit allowable under section 34 (relating to certain uses of gaso
     2. (b) Reduction in passthrough for tax imposed on built-in gains. For purposes of § 1.1366-1(a), if for any taxable year of the S corporation a tax is imposed on
     3. (c) Reduction in passthrough for tax imposed on excess net passive income. For purposes of § 1.1366-1(a), if for any taxable year of the S corporation a tax is
411. 1.1366-5 · -5 Effective/applicability date.
     1. (a) Sections 1.1366-1, 1.1366-2(a)(1), and 1.1366-2(b) through 1.1366-4 apply to taxable years of an S corporation beginning on or after August 18, 1998.
     2. (b) Section 1.1366-2(a)(2) applies to indebtedness between an S corporation and its shareholder resulting from any transaction occurring on or after July 23, 20
     3. (c) Sections 1.1366-2(a)(3) through (7), and this section apply on and after July 23, 2014. For rules that apply before that date, see 26 CFR part 1 (revised as
412. 1.1367-0 · -0 Table of contents.
413. 1.1367-1 · -1 Adjustments to basis of shareholder's stock in an S corporation.
     1. (a) In general—(1) Adjustments under section 1367. This section provides rules relating to adjustments required by section 1367 to the basis of a shareholder's
     2. (b) Increase in basis of stock—(1) In general. Except as provided in § 1.1367-2(c) (relating to restoration of basis of indebtedness to the shareholder), the ba
     3. (c) Decrease in basis of stock—(1) In general. The basis of a shareholder's stock in an S corporation is decreased (but not below zero) by the sum of the items
     4. (d) Time at which adjustments to basis of stock are effective—(1) In general. The adjustments described in section 1367(a) to the basis of a shareholder's stock
     5. (e) Ordering rules for taxable years beginning before January 1, 1997. For any taxable year of a corporation beginning before January 1, 1997, except as provide
     6. (f) Ordering rules for taxable years beginning on or after August 18, 1998. For any taxable year of a corporation beginning on or after August 18, 1998, except
     7. (g) Elective ordering rule. A shareholder may elect to decrease basis under paragraph (e)(3) or (f)(4) of this section, whichever applies, prior to decreasing b
     8. (h) Examples. The following examples illustrate the principles of § 1.1367-1. In each example, the corporation is a calendar year S corporation: Example 1. Adju
     9. (i) [Reserved]
     10. (j) Adjustments for items of income in respect of a decedent. The basis determined under section 1014 of any stock in an S corporation is reduced by the portion
414. 1.1367-2 · -2 Adjustments to basis of indebtedness to shareholder.
     1. (a) In general—(1) Adjustments under section 1367. This section provides rules relating to adjustments required by subchapter S to the basis of indebtedness (in
     2. (b) Reduction in basis of indebtedness—(1) General rule. If, after making the adjustments required by section 1367(a)(1) for any taxable year of the S corporati
     3. (c) Restoration of basis—(1) General rule. If, for any taxable year of an S corporation beginning after December 31, 1982, there has been a reduction in the bas
     4. (d) Time at which adjustments to basis of indebtedness are effective—
     5. (e) Examples. The following examples illustrate the principles of § 1.1367-2. In each example, the corporation is a calendar year S corporation. The lending tra
     6. (ii) Exception. Shareholder indebtedness that is open account debt at the beginning of the taxable year but meets the exception defined in paragraph (a)(2)(ii)
415. 1.1367-3 · -3 Effective/Applicability date.
416. 1.1368-0 · -0 Table of contents.
417. 1.1368-1 · -1 Distributions by S corporations.
     1. (a) In general. This section provides rules for distributions made by an S corporation with respect to its stock which, but for section 1368(a) and this section
     2. (b) Date distribution made. For purposes of section 1368, a distribution is taken into account on the date the corporation makes the distribution, regardless of
     3. (c) S corporation with no earnings and profits. A distribution made by an S corporation that has no accumulated earnings and profits as of the end of the taxabl
     4. (d) S corporation with earnings and profits—(1) General treatment of distribution. Except as provided in paragraph (d)(2) of this section, a distribution made w
     5. (e) Certain adjustments taken into account—(1) Taxable years beginning before January 1, 1997. For any taxable year of the corporation beginning before January
     6. (f) Elections relating to source of distributions—(1) In general. An S corporation may modify the application of paragraphs (c) and (d) of this section by elect
     7. (g) Special rule—(1) Election to terminate year under § 1.1368-1(g)(2). If an election is made under paragraph (g)(2) of this section to terminate the year when
     8. (i) To distribute earnings and profits first as described in paragraph (f)(2) of this section;
     9. (ii) Effect of the election. A corporation making an election under paragraph (g)(2)(i) of this section must treat the taxable year as separate taxable years fo
418. 1.1368-2 · -2 Accumulated adjustments account (AAA).
     1. (a) Accumulated adjustments account—(1) In general. The accumulated adjustments account is an account of the S corporation and is not apportioned among sharehol
     2. (b) Distributions in excess of the AAA—(1) In general. A portion of the AAA (determined under paragraph (b)(2) of this section) is allocated to each of the dist
     3. (e) Election to terminate year under section 1377(a)(2) or § 1.1368-1(g)(2). If an election is made under section 1377(a)(2) (to terminate the year in the case
     4. (i) An S corporation makes more than one distribution of property with respect to its stock during the taxable year of the corporation (including an S short yea
     5. (ii) The AAA has a positive balance at the close of the year; and
419. 1.1368-3 · -3 Examples.
420. 1.1368-4 · -4 Effective date and transition rule.
421. 1.1371-1 · -1 Distributions of money by an eligible terminated S corporation.
     1. (a) Scope and definitions—(1) Scope. This section provides rules relating to qualified distributions and distributions to which section 301 of the Internal Reve
     2. (b) Characterization of qualified distribution—(1) In general. Paragraph (b)(2) of this section provides rules regarding the determination of the amount of a qu
     3. (e) Applicability date. This section applies to taxable years beginning after October 20, 2020. However, a corporation may choose to apply the rules in §§ 1.481
     4. (ii) Reduction or elimination of ETSC's AAA. The ETSC's AAA is reduced by the amount of the distribution described in paragraph (b)(2)(i) of this section. If, w
422. 1.1371-2 · -2 Impact of Audit PTTP on ETSC Period.
     1. (a) Definitions. For purposes of this section, the definitions used in § 1.1371-1(a)(2) are applicable. Additionally, the following definitions apply for purpos
     2. (b) In general. If an intervening audit PTTP arises, the ETSC period immediately stops. Immediately following the end of the intervening audit PTTP, the ETSC pe
     3. (c) Examples. Paragraphs (c)(1) and (2) of this section (Examples 1 and 2) illustrate the rules of this section. For purposes of paragraphs (c)(1) and (2) of th
     4. (d) Applicability date. This section applies to taxable years beginning after October 20, 2020. However, a corporation may choose to apply the rules in §§ 1.481
     5. (ii) Analysis—(A) Analysis of March 13, 2019 distribution. The treatment of the March 13, 2019, distribution is the same as described in paragraph (c)(1)(ii)(A)
423. 1.1374-0 · -0 Table of contents.
424. 1.1374-1 · -1 General rules and definitions.
     1. (a) Computation of tax. The tax imposed on the income of an S corporation by section 1374(a) for any taxable year during the recognition period is computed as f
     2. (b) Anti-trafficking rules. If section 382, 383, or 384 would have applied to limit the use of a corporation's recognized built-in loss or section 1374 attribut
     3. (c) Section 1374 attributes. Section 1374 attributes are the loss carryforwards allowed under section 1374(b)(2) as a deduction against net recognized built-in
     4. (d) Recognition period. The recognition period is the 10-year (120-month) period beginning on the first day the corporation is an S corporation or the day an S
     5. (e) Predecessor corporation. For purposes of section 1374(c)(1), if the basis of an asset of the S corporation is determined (in whole or in part) by reference
425. 1.1374-10 · -10 Effective date and additional rules.
     1. (a) In general. Sections 1.1374-1 through 1.1374-9, other than § 1.1374-3(b) and (c) Examples 2 through 4, apply for taxable years ending on or after December 2
     2. (b) Additional rules. This paragraph (b) provides rules applicable to certain S corporations, assets, or transactions to which §§ 1.1374-1 through 1.1374-9 do n
     3. (c) Termination and re-election of S corporation status—(1) In general. For purposes of section 633(d)(8) of the Tax Reform Act of 1986, as amended, any referen
     4. (ii) Examples. The rules of this paragraph (b)(4) are illustrated by the following examples. Example 1.In year 1 of the recognition period under section 1374, a
426. 1.1374-1A · -1A Tax imposed on certain capital gains.
     1. (a) General rule. Except as otherwise provided in paragraph (c) of this section, if for a taxable year beginning after 1982 of an S corporation—
     2. (b) Amount of tax. The amount of tax shall be the lower of—
     3. (c) Exceptions to taxation—(1) New corporations and corporations with election in effect for 3 immediately preceding years—(i) In general. If an S corporation w
     4. (e) Reduction in pass-thru for tax imposed on capital gain. See section 1366(f)(2) for a special rule reducing the S corporation's long-term capital gains and t
     5. (f) Examples. The following examples illustrate the principles of this section and assume that a tax will not be imposed under section 1375: Example 1.Corporati
     6. (ii) Amount of tax on net capital gain attributable to property with a substituted basis. If for a taxable year of an S corporation either paragraph (c)(1)(i) (
427. 1.1374-2 · -2 Net recognized built-in gain.
     1. (a) In general. An S corporation's net recognized built-in gain for any taxable year is the least of—
     2. (b) Allocation rule. If an S corporation's pre-limitation amount for any taxable year exceeds its net recognized built-in gain for that year, the S corporation'
     3. (c) Recognized built-in gain carryover. If an S corporation's net recognized built-in gain for any taxable year is equal to its taxable income limitation, the a
     4. (d) Accounting methods. In determining its taxable income for pre-limitation amount and taxable income limitation purposes, a corporation must use the accountin
     5. (e) Example. The rules of this section are illustrated by the following example. Example: Net recognized built-in gain.X is a calendar year C corporation that e
428. 1.1374-3 · -3 Net unrealized built-in gain.
     1. (a) In general. An S corporation's net unrealized built-in gain is the total of the following—
     2. (b) Adjustment to net unrealized built-in gain—(1) In general. If section 1374(d)(8) applies to an S corporation's acquisition of assets, some or all of the sto
     3. (ii) Anti-duplication rule. Paragraph (b)(1) of this section shall not be applied to duplicate an adjustment to the net unrealized built-in gain for a pool of a
429. 1.1374-4 · -4 Recognized built-in gain or loss.
     1. (a) Sales and exchanges—(1) In general. Section 1374(d)(3) or 1374(d)(4) applies to any gain or loss recognized during the recognition period in a transaction t
     2. (b) Accrual method rule—(1) Income items. Except as otherwise provided in this section, any item of income properly taken into account during the recognition pe
     3. (c) Section 267(a)(2) and 404(a)(5) deductions—(1) Section 267(a)(2). Notwithstanding paragraph (b)(2) of this section, any amount properly deducted in the reco
     4. (d) Section 481(a) adjustments—(1) In general. Any section 481(a) adjustment taken into account in the recognition period is recognized built-in gain or loss to
     5. (e) Section 995(b)(2) deemed distributions. Any item of income properly taken into account during the recognition period under section 995(b)(2) is recognized b
     6. (f) Discharge of indebtedness and bad debts. Any item of income or deduction properly taken into account during the first year of the recognition period as disc
     7. (g) Completion of contract. Any item of income properly taken into account during the recognition period under the completed contract method (as described in §
     8. (h) Installment method—(1) In general. If a corporation sells an asset before or during the recognition period and reports the income from the sale using the in
     9. (i) Step One: Apply the rules of section 1374(d) to the S corporation's distributive share of partnership items of income, gain, loss, or deduction included in
     10. (ii) Step Two: Determine the S corporation's net recognized built-in gain without partnership 1374 items;
430. 1.1374-5 · -5 Loss carryforwards.
     1. (a) In general. The loss carryforwards allowed as deductions against net recognized built-in gain under section 1374(b)(2) are allowed only to the extent their
     2. (b) Example. The rules of this section are illustrated by the following example. Example: Section 382 limitation.X is a C corporation that has an ownership chan
431. 1.1374-6 · -6 Credits and credit carryforwards.
     1. (a) In general. The credits and credit carryforwards allowed as credits against the section 1374 tax under section 1374(b)(3) are allowed only to the extent the
     2. (b) Limitations. The amount of business credit carryforwards and minimum tax credit allowed against the section 1374 tax are subject to the limitations describe
     3. (c) Examples. The rules of this section are illustrated by the following examples. Example 1. Business credit carryforward.X is a C corporation that elects to b
432. 1.1374-7 · -7 Inventory.
     1. (a) Valuation. The fair market value of the inventory of an S corporation on the first day of the recognition period equals the amount that a willing buyer woul
     2. (b) Identity of dispositions. The inventory method used by an S corporation for tax purposes must be used to identify whether the inventory it disposes of durin
433. 1.1374-8 · -8 Section 1374(d)(8) transactions.
     1. (a) In general. If any S corporation acquires any asset in a transaction in which the S corporation's basis in the asset is determined (in whole or in part) by
     2. (b) Effective date of section 1374(d)(8). Section 1374(d)(8) applies to any section 1374(d)(8) transaction, as defined in paragraph (a)(1) of this section, that
     3. (c) Separate determination of tax. For purposes of the tax imposed under section 1374(d)(8), a separate determination of tax is made with respect to the assets
     4. (d) Taxable income limitation. For purposes of paragraph (a) of this section, an S corporation's taxable income limitation under § 1.1374-2(a)(2) for any taxabl
     5. (e) Examples. The rules of this section are illustrated by the following examples. Example 1. Separate determination of tax.(i) X is a C corporation that electe
434. 1.1374-9 · -9 Anti-stuffing rule.
435. 1.1375-1 · -1 Tax imposed when passive investment income of corporation having subchapter C earnings and profits exceed 25 percent of gross receipts.
     1. (a) General rule. For taxable years beginning after 1981, section 1375(a) imposes a tax on the income of certain S corporations that have passive investment inc
     2. (b) Definitions—(1) Excess net passive income—(i) In general. The term excess net passive income is defined in section 1375(b)(1), and can be expressed by the f
     3. (c) Special rules—(1) Disallowance of credits. No credit is allowed under part IV of subchapter A of chapter 1 of the Code (other than section 34) against the t
     4. (d) Waiver of tax in certain cases—(1) In general. If an S corporation establishes to the satisfaction of the Commissioner that—
     5. (e) Reduction in pass-thru for tax imposed on excess net passive income. See section 1366(f)(3) for a special rule reducing each item of the corporation's passi
     6. (f) Examples. The following examples illustrate the principles of this section: Example 1.Assume Corporation M, an S corporation, has for its taxable year total
     7. (i) It determined in good faith that it had no subchapter C earnings and profits at the close of the taxable year, and
     8. (ii) During a reasonable period of time after it was determined that it did have subchapter C earnings and profits at the close of such taxable year such earnin
436. 1.1377-0 · -0 Table of contents.
437. 1.1377-1 · -1 Pro rata share.
     1. (a) Computation of pro rata shares—(1) In general. For purposes of subchapter S of chapter 1 of the Internal Revenue Code and this section, each shareholder's p
     2. (b) Election to terminate year—(1) In general. If a shareholder's entire interest in an S corporation is terminated during the S corporation's taxable year and
     3. (ii) Section 163(j). If a terminating election is made to treat the S corporation's taxable year as consisting of separate taxable years, for purposes of sectio
438. 1.1377-2 · -2 Post-termination transition period.
     1. (a) In general. For purposes of subchapter S of chapter 1 of the Internal Revenue Code (Code) and this section, the term post-termination transition period mean
     2. (b) Special rules for post-termination transition period. Pursuant to section 1377(b)(1) and paragraph (a)(1) of this section, a post-termination transition per
     3. (c) Determination defined. For purposes of section 1377(b)(1) and paragraph (a) of this section, the term determination means—
     4. (d) Date a determination becomes effective—(1) Determination under section 1313(a). A determination under paragraph (c)(1) of this section becomes effective on
439. 1.1377-3 · -3 Applicability dates.
     1. (a) In general. Except as otherwise provided in this section, §§ 1.1377-1 and 1.1377-2 apply to taxable years of an S corporation beginning after December 31, 1
     2. (b) Certain conversions. Section 1.1377-1(a)(2)(iii) and (c)(3) (Example 3) are applicable for taxable years beginning on and after May 14, 2002.
     3. (c) Special treatment of distributions of money during post-termination transition period—(1) In general. Except as provided in paragraph (c)(2) of this section
440. 1.1378-1 · -1 Taxable year of S corporation.
     1. (a) In general. The taxable year of an S corporation must be a permitted year. A permitted year is the required taxable year (i.e., a taxable year ending on Dec
     2. (b) Adoption of taxable year. An electing S corporation may adopt, in accordance with § 1.441-1(c), its required taxable year, a taxable year elected under sect
     3. (c) Change in taxable year—(1) Approval required. An S corporation or electing S corporation that wants to change its taxable year must obtain the approval of t
     4. (d) Retention of taxable year. In certain cases, an S corporation or electing S corporation will be required to change its taxable year unless it obtains the ap
     5. (e) Procedures for obtaining approval or making a section 444 election—(1) In general. See § 1.442-1(b) for procedures to obtain the approval of the Commissione
     6. (f) Effective date. The rules of this section are applicable for taxable years ending on or after May 17, 2002.
441. 1.1381-1 · -1 Organizations to which part applies.
     1. (a) In general. Except as provided in paragraph (b) of this section, part I, subchapter T, chapter 1 of the Code, applies to any corporation operating on a coop
     2. (b) Exceptions. Part I of such subchapter T does not apply to:
442. 1.1381-2 · -2 Tax on certain farmers' cooperatives.
     1. (a) In general. (1) For taxable years beginning after December 31, 1962, farmers', fruit growers', or like associations, organized and operated in compliance wi
     2. (b) Cross references. For tax treatment of exempt cooperative associations for taxable years beginning before January 1, 1963, or for taxable years beginning af
443. 1.1382-1 · -1 Taxable income of cooperatives; gross income.
     1. (a) Introduction. Section 1382(b) provides that the amount of certain patronage dividends (and amounts paid in redemption of nonqualified written notices of all
     2. (b) Computation of gross income. Any cooperative organization to which part I, subchapter T, chapter 1 of the Code, applies shall not, for any purpose under the
444. 1.1382-2 · -2 Taxable income of cooperatives; treatment of patronage dividends.
     1. (a) In general. (1) In determining the taxable income of any cooperative organization to which part I, subchapter T, chapter 1 of the Code, applies, there shall
     2. (b) Deduction for patronage dividends—(1) In general. In the case of a taxable year beginning after December 31, 1962, there is allowed as a deduction from the
     3. (c) Deduction for amounts paid in redemption of certain nonqualified written notices of allocation. In the case of a taxable year beginning after December 31, 1
445. 1.1382-3 · -3 Taxable income of cooperatives; special deductions for exempt farmers' cooperatives.
     1. (a) In general. (1) Section 1382(c) provides that in determining the taxable income of a farmers', fruit growers', or like association, described in section 138
     2. (b) Deduction for dividends paid on capital stock. In the case of a taxable year beginning after December 31, 1962, there is allowed as a deduction from the gro
     3. (c) Deduction for amounts allocated from income not derived from patronage—(1) In general. In the case of a taxable year beginning after December 31, 1962, ther
     4. (d) Deduction for amounts paid in redemption of certain nonqualified written notices of allocation. In the case of a taxable year beginning after December 31, 1
     5. (e) Applicability date. Paragraph (c)(2) of this section applies to taxable years beginning after January 19, 2021. For taxable years beginning on or before Jan
446. 1.1382-4 · -4 Taxable income of cooperatives; payment period for each taxable year.
447. 1.1382-5 · -5 Taxable income of cooperatives; products marketed under pooling arrangements.
448. 1.1382-6 · -6 Taxable income of cooperatives; treatment of earnings received after patronage occurred.
449. 1.1382-7 · -7 Special rules applicable to cooperative associations exempt from tax before January 1, 1952.
     1. (a) Basis of property. The adjustments to the cost or other basis provided in sections 1011 and 1016 and the regulations thereunder, are applicable for the enti
     2. (b) Amortization of bond premium. In the case of tax exempt and partially taxable bonds purchased at a premium and subject to amortization under section 171, pr
     3. (c) Amortization of mortgage premium. In the case of a mortgage acquired at a premium where the principal of such mortgage is payable in installments, adjustmen
450. 1.1383-1 · -1 Computation of tax where cooperative redeems nonqualified written notices of allocation.
     1. (a) General rule. (1) If, during the taxable year, a cooperative organization is entitled to a deduction under section 1382 (b)(2) or (c)(2)(B) for amounts paid
     2. (b) Determination of decrease in tax for prior taxable years—(1) Prior taxable years. The prior taxable year (or years) referred to in paragraph (a) of this sec
     3. (c) Refunds. If the decrease in tax for the prior taxable year (or years) determined under section 1383(a)(2)(B) and paragraph (a)(1)(ii) of this section exceed
     4. (d) Example. The application of section 1383 may be illustrated by the following example: Example:The X Cooperative (which reports its income on a calendar year
     5. (i) The tax for the taxable year computed under section 1383(a)(1), that is, with such deduction taken into account, or
     6. (ii) The tax for the taxable year computed under section 1383(a)(2), that is, without taking such deduction into account, minus the decrease in tax (under chapt
451. 1.1385-1 · -1 Amounts includible in patron's gross income.
     1. (a) If such amount relates to a capital asset (as defined in section 1221) which was held by the recipient for more than 1 year (6 months for taxable years begi
     2. (b) If such amount relates to a capital asset (as defined in section 1221) with respect to which a loss was not or would not have been deductible under section
     3. (c) Treatment of patronage dividends received with respect to certain property—(1) Exclusions from gross income. Except as provided in subparagraph (2) of this
     4. (e) Effective date. This section shall not apply to any distribution or allocation received from a cooperative organization, or to any gain or loss on the redem
     5. (i) Any amount of a patronage dividend described in paragraph (a)(1) of this section which is received with respect to the purchase of supplies, equipment, or s
     6. (ii) If an amount described in subparagraph (1) of this paragraph relates to the marketing or purchasing of a capital asset (as defined in section 1221), or pro
452. 1.1388-1 · -1 Definitions and special rules.
     1. (a) Patronage dividend—(1) In general. The term patronage dividend means an amount paid to a patron by a cooperative organization subject to the provisions of p
     2. (b) The term qualified check means a check, or other instrument redeemable in money, which is paid as a part of a patronage dividend or payment described in sub
     3. (c) The provisions of this subdivision may be illustrated by the following example. Example:(1) The A Cooperative is a cooperative organization filing its incom
     4. (d) Nonqualified written notice of allocation. The term nonqualified written notice of allocation means a written notice of allocation which is not a qualified
     5. (e) Patron. The term patron includes any person with whom or for whom the cooperative association does business on a cooperative basis, whether a member or a no
     6. (f) Patronage and nonpatronage sourced items—(1) Directly related use test. Whether an item of income or deduction is patronage or nonpatronage sourced is deter
     7. (g) Applicability date. Paragraph (f) of this section applies to taxable years beginning after January 19, 2021. Taxpayers, however, may choose to apply the rul
     8. (i) Which meets the requirements of subparagraphs (2) or (3) of this paragraph, and
     9. (ii) Which is paid as part of a patronage dividend, or as part of a payment by a cooperative association organized and operated in compliance with the provision
453. 1.1394-0 · -0 Table of contents.
454. 1.1394-1 · -1 Enterprise zone facility bonds.
     1. (a) Scope. This section contains rules relating to tax-exempt bonds under section 1394 (enterprise zone facility bonds) to provide enterprise zone facilities in
     2. (b) Period of compliance—(1) In general. Except as provided in paragraphs (b)(2) and (c) of this section, the requirements under sections 1394 (a) and (b) appli
     3. (e) Resident employee requirements—(1) Determination of employee status. For purposes of the requirement of section 1397B (b)(6) or (c)(5) that at least 35 perc
     4. (f) Application to pooled financing bond and loan recycling programs. In the case of a pooled financing bond program described in paragraph (g)(2) of this secti
     5. (g) Limitation on amount of bonds—(1) Determination of outstanding amount. Whether an issue satisfies the requirements of section 1394(c) (relating to the $3 mi
     6. (h) Original use requirement for purposes of qualified zone property. In general, for purposes of section 1397C(a)(1)(B), the term original use means the first
     7. (i) Reloan the amount of the prepayment; or
     8. (ii) Use the prepayment to redeem an amount of outstanding enterprise zone facility bonds equal to the outstanding principal amount of the loan that no longer m
     9. (j) Principal user—(1) In general. Except as provided in paragraph (j)(2) of this section, the term principal user means the owner of financed property.
     10. (k) Treatment as separately incorporated business. For purposes of section 1394(b)(3)(B), a trade or business may be treated as separately incorporated if alloc
     11. (l) Substantially all. For purposes of sections 1397B and 1397C(a), the term substantially all means 85 percent.
     12. (m) Application of sections 142 and 146 through 150—(1) In general. Except as provided in this paragraph (m), enterprise zone facility bonds are treated as exem
     13. (n) Continuing compliance and change of use penalties—(1) In general. The penalty provisions of section 1394(e) apply throughout the period of compliance requir
     14. (o) Refunding bonds—(1) In general. An issue of bonds issued after the zone designation period to refund enterprise zone facility bonds (other than in an advanc
     15. (p) Examples. The following examples illustrate paragraphs (a) through (o) of this section: Example 1. Averaging of enterprise zone business requirements.City C
     16. (q) Effective dates—(1) In general. Except as otherwise provided in this section, the provisions of this section apply to all issues issued after July 30, 1996,
455. 1.1396-1 · -1 Qualified zone employees.
     1. (a) In general. A qualified zone employee of an employer is an employee who satisfies the location-of-services requirement and the abode requirement with respec
     2. (b) Period for applying location-of-services requirement. In applying the location-of-services requirement, an employer may use either the pay period method des
     3. (c) Effective date. This section applies with respect to wages paid or incurred on or after December 21, 1994.
     4. (ii) Application of method. Under this method, an employee does not satisfy the location-of-services requirement during any part of a calendar year unless subst
456. 1.1397E-1 · -1 Qualified zone academy bonds.
     1. (a) In general—(1) Overview. In general, a qualified zone academy bond (QZAB or QZABs) is a taxable bond issued by a state or local government the proceeds of w
     2. (b) Credit rate. The Secretary shall determine monthly (or more often as deemed necessary by the Secretary) the credit rate the Secretary estimates will general
     3. (c) Private business contribution requirement—(1) Reasonable discount rate. To determine the present value (as of the issue date) of qualified contributions fro
     4. (d) Maximum term. The maximum term for a QZAB is determined under section 1397E(d)(3) by using a discount rate equal to 110 percent of the long-term adjusted ap
     5. (e) Tax credit—(1) Eligible taxpayer. An eligible taxpayer (within the meaning of section 1397E(d)(6)) that holds a qualified zone academy bond on a credit allo
     6. (f) Treatment of the allowance of the credit as a payment of interest—(1) General rule. The holder of a qualified zone academy bond must treat the bond as if it
     7. (g) Not a tax-exempt obligation. A qualified zone academy bond is not an obligation the interest on which is excluded from gross income under section 103(a).
     8. (h) Use of proceeds—(1) In general. Section 1397E(d)(1) provides that a bond issued as part of an issue is a QZAB only if, among other requirements, at least 95
     9. (i) The issuer reasonably expects, as of the issue date of the issue, that—
     10. (ii) Permissive retroactive application—(A) In general. Except as otherwise provided in this paragraph (m), issuers and taxpayers may apply this section in whol
     11. (j) Information reporting requirement. Under section 1397E(h) and this paragraph (j), issuers of QZABs are required to submit information reporting returns to t
     12. (k) State or local government—(1) In general. For purposes of section 1397E(d)(1)(B), the term State or local government means a State or political subdivision
     13. (l) Cross-references. See section 171 and the regulations thereunder for rules relating to amortizable bond premium. See § 1.61-7(d) for the seller's treatment
     14. (m) Effective/applicability dates—(1) In general. Except as otherwise provided in this paragraph (m), this section applies to bonds issued under section 1397E t
457. 1.1398-1 · -1 Treatment of passive activity losses and passive activity credits in individuals' title 11 cases.
     1. (a) Scope. This section applies to cases under chapter 7 or chapter 11 of title 11 of the United States Code, but only if the debtor is an individual.
     2. (b) Definitions and rules of general application. For purposes of this section—
     3. (c) Estate succeeds to losses and credits upon commencement of case. The bankruptcy estate (estate) succeeds to and takes into account, beginning with its first
     4. (d) Transfers from estate to debtor—(1) Transfer not treated as taxable event. If, before the termination of the estate, the estate transfers an interest in a p
     5. (e) Debtor succeeds to loss and credit of the estate upon its termination. Upon termination of the estate, the debtor succeeds to and takes into account, beginn
     6. (f) Effective date—(1) Cases commencing on or after November 9, 1992. This section applies to cases commencing on or after November 9, 1992.
     7. (ii) Scope of election. This election applies to the passive and former passive activities and unused passive activity losses and passive activity credits of th
458. 1.1398-2 · -2 Treatment of section 465 losses in individuals' title 11 cases.
     1. (a) Scope. This section applies to cases under chapter 7 or chapter 11 of title 11 of the United States Code, but only if the debtor is an individual.
     2. (b) Definition and rules of general application. For purposes of this section—
     3. (c) Estate succeeds to losses upon commencement of case. The bankruptcy estate (the estate) succeeds to and takes into account, beginning with its first taxable
     4. (d) Transfers from estate to debtor—(1) Transfer not treated as taxable event. If, before the termination of the estate, the estate transfers an interest in a s
     5. (e) Debtor succeeds to losses of the estate upon its termination. Upon termination of the estate, the debtor succeeds to and takes into account, beginning with
     6. (f) Effective date—(1) Cases commencing on or after November 9, 1992. This section applies to cases commencing on or after November 9, 1992.
     7. (ii) Scope of election. This election applies to the section 465 activities and unused losses from section 465 activities of the taxpayers making the election.
459. 1.1398-3 · -3 Treatment of section 121 exclusion in individuals' title 11 cases.
     1. (a) Scope. This section applies to cases under chapter 7 or chapter 11 of title 11 of the United States Code, but only if the debtor is an individual.
     2. (b) Definition and rules of general application. For purposes of this section, section 121 exclusion means the exclusion of gain from the sale or exchange of a
     3. (c) Estate succeeds to exclusion upon commencement of case. The bankruptcy estate succeeds to and takes into account the section 121 exclusion with respect to t
     4. (d) Effective date. This section is applicable for sales or exchanges on or after December 24, 2002.
460. 1.139E-0 · -0 Table of contents.
461. 1.139E-1 · -1 Tribal general welfare benefits.
     1. (a) Overview. Under section 139E of the Code and this section, the gross income of a Tribal Program Participant for the taxable year does not include the value
     2. (b) Definitions. The following definitions apply for purposes of this section:
     3. (e) Cultural or ceremonial activities—(1) In general. For purposes of section 139E and paragraph (d)(5) of this section, a benefit is not compensation for servi
     4. (f) Section 2(c) of the Act. Section 2(c) of the Act provides that ambiguities in section 139E of the Internal Revenue Code, as added by the Act, shall be resol
     5. (g) Audit suspension. After December 16, 2025, the Department of the Treasury and the Internal Revenue Service will, in consultation with the Treasury Tribal Ad
     6. (h) Applicability date. This section applies to taxable years of Tribal Program Participants that begin on or after January 1, 2027. Indian Tribal Governments a
     7. (i) The benefit is provided to a Tribal Program Participant for the Tribal Program Participant's participation in cultural or ceremonial activities for the tran
     8. (ii) The benefit consists of an item of cultural significance as determined by the Indian Tribal Government, the reimbursement of costs, or a cash honorarium.
462. 1.139E-2 · -2 Alaska Native regional or village corporations.
463. 1.1400L(b)-1 · (b)-1 Additional first year depreciation deduction for qualified New York Liberty Zone property.
     1. (a) Scope. This section provides the rules for determining the 30-percent additional first year depreciation deduction allowable under section 1400L(b) for qual
     2. (b) Definitions. For purposes of section 1400L(b) and this section, the definitions of the terms in § 1.168(k)-1(a)(2) apply and the following definitions also
     3. (c) Qualified New York Liberty Zone property—(1) In general. Qualified New York Liberty Zone property is depreciable property that meets all the following requi
     4. (e) Election not to deduct additional first year depreciation—(1) In general. A taxpayer may make an election not to deduct the 30-percent additional first year
     5. (f) Special rules—(1) Property placed in service and disposed of in the same taxable year. Rules similar to those provided in § 1.168(k)-1(f)(1) apply for purpo
     6. (g) Effective date—(1) In general. Except as provided in paragraphs (g)(2), (3), and (5) of this section, this section applies to qualified New York Liberty Zon
     7. (i) The requirements in § 1.1400L(b)-1(c)(2) (description of property);
     8. (ii) Like-kind exchanges and involuntary conversions. If a taxpayer did not claim on a federal tax return for any taxable year ending on or before September 8,
464. 1.1400Z2(a)-1 · 2(a)-1 Deferring tax on capital gains by investing in opportunity zones.
     1. (a) Deferring tax on capital gains—(1) Overview. Under section 1400Z-2(a) of the Internal Revenue Code (Code) and the section 1400Z-2 regulations (as defined in
     2. (b) Definitions. The following definitions apply for purposes of section 1400Z-2 and the section 1400Z-2 regulations:
     3. (e) Interaction of section 1400Z-2 and § 1.897-6T. Section 1400Z-2 is not a nonrecognition provision, as defined in § 1.897-6T(a)(2), for purposes of § 1.897-6T
     4. (f) Treatment of mixed-funds investments—(1) Investments to which no election under section 1400Z-2(a) applies. If a taxpayer invests in a QOF and makes a defer
     5. (g) Applicability dates-(1) In general. The provisions of this section are applicable for taxable years beginning after March 13, 2020.
     6. (ii) Portion of eligible gain not already subject to a deferral election. In the case of an eligible taxpayer who has made an election under section 1400Z-2(a)
465. 1.1400Z2(b)-1 · 2(b)-1 Inclusion of gains that have been deferred under section 1400Z-2(a).
     1. (a) Scope. This section provides rules under section 1400Z-2(b) of the Internal Revenue Code and the section 1400Z-2 regulations (as defined in § 1.1400Z2(a)-1(
     2. (b) General inclusion rule. The gain to which a deferral election applies is included in gross income, to the extent provided in paragraph (e) of this section a
     3. (c) Inclusion events—(1) In general. Except as otherwise provided in this paragraph (c), an event is an inclusion event, if, and to the extent that—
     4. (e) Amount includible. Except as provided in §§ 1.1400Z2(a)-1(b)(7) and 1.1400Z2(f)-1(b), the amount of gain included in gross income under section 1400Z-2(a)(1
     5. (f) Examples. The following examples illustrate the rules of paragraphs (c), (d) and (e) of this section. For purposes of the following examples: A, B, C, W, X,
     6. (g) Basis adjustments—(1) Basis adjustments under section 1400Z-2(b)(2)(B)(ii) resulting from the inclusion of deferred gain—(i) In general. Except as provided
     7. (h) Notifications by partners and partnerships, and shareholders and S corporations—(1) Notification of deferral election. A partnership that makes a deferral e
     8. (i) [Reserved]
     9. (ii) Until the date on which an inclusion event with respect to the S corporation's qualifying investment occurs, adjust the shareholders' stock bases under sec
     10. (j) Applicability dates—(1) In general. The provisions of this section are applicable for taxable years beginning after March 13, 2020.
466. 1.1400Z2(c)-1 · 2(c)-1 Investments held for at least 10 years.
     1. (a) Scope. This section provides rules under section 1400Z-2(c) of the Internal Revenue Code regarding the election to adjust the basis in a qualifying investme
     2. (b) Investment for which an election can be made—(1) In general—(i) Election by taxpayer. An eligible taxpayer who makes a deferral election with respect to, or
     3. (c) Extension of availability of the election described in section 1400Z-2(c). The ability to make an election under section 1400Z-2(c) for investments held for
     4. (d) Examples. The following examples illustrate the principles of paragraphs (a) through (c) of this section. (1) Example 1—(i) Facts. In 2020, taxpayer A inves
     5. (e) Capital gain dividends paid by a QOF RIC or QOF REIT that some shareholders may be able to elect to receive tax free under section 1400Z-2(c)—(1) Eligibilit
     6. (f) Applicability dates. The provisions of this section are applicable for taxable years beginning after March 13, 2020.
     7. (i) The shareholder may treat the capital gain dividend, or part thereof, as gain from the sale or exchange of a qualifying investment on the date that the QOF
     8. (ii) Proportionality. Reportings and designations of capital gain dividends identified with a date must be proportional for all capital gain dividends paid with
467. 1.1400Z2(d)-1 · 2(d)-1 Qualified opportunity funds and qualified opportunity zone businesses.
     1. (a) Overview. This section provides rules that an eligible entity (as defined in paragraph (a)(1) of this section) must satisfy to be a qualified opportunity fu
     2. (b) Valuation of property for purposes of the 90-percent investment standard and the 70-percent tangible property standard—(1) In general. An eligible entity ma
     3. (e) Applicability dates—(1) In general. The provisions of this section are applicable for taxable years beginning after March 13, 2020.
     4. (i) In the case of an eligible entity that has self-certified as a QOF, the assets owned or leased by the QOF satisfy the 90-percent investment standard in sect
     5. (ii) Property owned by an eligible entity—(A) Property purchased or constructed. The value of each property owned by an eligible entity that is acquired by purc
468. 1.1400Z2(d)-2 · 2(d)-2 Qualified opportunity zone business property.
     1. (a) Qualified opportunity zone business property—(1) In general. This section provides rules for determining whether owned or leased tangible property held by a
     2. (b) Tangible property owned by an eligible entity—(1) Purchase requirement—(i) In general. In the case of tangible property that is owned by an eligible entity,
     3. (e) Applicability dates—(1) In general. The provisions of this section are applicable for taxable years beginning after March 13, 2020.
     4. (ii) Plan, intent, or expectation for seller to repurchase acquired property. In the case of real property that is purchased by an eligible entity, if, at the t
469. 1.1400Z2(e)-1 · 2(e)-1 [Reserved]
470. 1.1400Z2(f)-1 · 2(f)-1 Administrative rules- penalties, anti-abuse, etc.
     1. (a) In general. Except as provided by § 1.1400Z2(d)-1(a)(2)(iv)(B) with respect to a taxpayer's first taxable year as a QOF, if a QOF fails to satisfy the 90-pe
     2. (b) Time period for a QOF to reinvest certain proceeds—(1) In general. If a QOF receives proceeds from the return of capital or the sale or disposition of some
     3. (c) Anti-abuse rules—(1) General anti-abuse rule. Pursuant to section 1400Z-2(e)(4)(C), the rules of section 1400Z-2 and §§ 1.1400Z2(a)-1 through 1.1400Z2(d)-(2
     4. (ii) Special partnership anti-abuse rule. If a partnership is formed or availed of with a significant purpose of avoiding the requirements of § 1.1400Z2(a)-1(b)
471. 1.1400Z2-0 · 2-0 Table of Contents.
472. 1.1401-1 · -1 Tax on self-employment income.
     1. (a) There is imposed, in addition to other taxes, a tax upon the self-employment income of every individual at the rates prescribed in section 1401(a) (old-age,
     2. (b) The rates of tax on self-employment income are as follows (these regulations do not reflect off-Code revisions to the following rates):
     3. (c) In general, self-employment income consists of the net earnings derived by an individual (other than a nonresident alien) from a trade or business carried o
     4. (d) Special rules regarding Additional Medicare Tax. (1) General rule. An individual is liable for Additional Medicare Tax to the extent that his or her self-em
     5. (e) Effective/applicability date. Paragraphs (b) and (d) of this section apply to quarters beginning on or after November 29, 2013.
     6. (ii) Examples. The rules provided in paragraph (d)(2)(i) of this section are illustrated by the following examples: Example 1.A, a single filer, has $130,000 in