Subchapter E—Accounting Periods and Methods of Accounting
PART I—ACCOUNTING PERIODS
Amendments
1987—
§441. Period for computation of taxable income
(a) Computation of taxable income
Taxable income shall be computed on the basis of the taxpayer's taxable year.
(b) Taxable year
For purposes of this subtitle, the term "taxable year" means—
(1) the taxpayer's annual accounting period, if it is a calendar year or a fiscal year;
(2) the calendar year, if subsection (g) applies;
(3) the period for which the return is made, if a return is made for a period of less than 12 months; or
(4) in the case of a DISC filing a return for a period of at least 12 months, the period determined under subsection (h).
(c) Annual accounting period
For purposes of this subtitle, the term "annual accounting period" means the annual period on the basis of which the taxpayer regularly computes his income in keeping his books.
(d) Calendar year
For purposes of this subtitle, the term "calendar year" means a period of 12 months ending on December 31.
(e) Fiscal year
For purposes of this subtitle, the term "fiscal year" means a period of 12 months ending on the last day of any month other than December. In the case of any taxpayer who has made the election provided by subsection (f) the term means the annual period (varying from 52 to 53 weeks) so elected.
(f) Election of year consisting of 52–53 weeks
(1) General rule
A taxpayer who, in keeping his books, regularly computes his income on the basis of an annual period which varies from 52 to 53 weeks and ends always on the same day of the week and ends always—
(A) on whatever date such same day of the week last occurs in a calendar month, or
(B) on whatever date such same day of the week falls which is nearest to the last day of a calendar month,
may (in accordance with the regulations prescribed under paragraph (3)) elect to compute his taxable income for purposes of this subtitle on the basis of such annual period. This paragraph shall apply to taxable years ending after the date of the enactment of this title.
(2) Special rules for 52–53-week year
(A) Effective dates
In any case in which the effective date or the applicability of any provision of this title is expressed in terms of taxable years beginning, including, or ending with reference to a specified date which is the first or last day of a month, a taxable year described in paragraph (1) shall (except for purposes of the computation under section 15) be treated—
(i) as beginning with the first day of the calendar month beginning nearest to the first day of such taxable year, or
(ii) as ending with the last day of the calendar month ending nearest to the last day of such taxable year,
as the case may be.
(B) Change in accounting period
In the case of a change from or to a taxable year described in paragraph (1)—
(i) if such change results in a short period (within the meaning of section 443) of 359 days or more, or of less than 7 days, section 443(b) (relating to alternative tax computation) shall not apply;
(ii) if such change results in a short period of less than 7 days, such short period shall, for purposes of this subtitle, be added to and deemed a part of the following taxable year; and
(iii) if such change results in a short period to which subsection (b) of section 443 applies, the taxable income for such short period shall be placed on an annual basis for purposes of such subsection by multiplying the gross income for such short period (minus the deductions allowed by this chapter for the short period, but only the adjusted amount of the deductions for personal exemptions as described in section 443(c)) by 365, by dividing the result by the number of days in the short period, and the tax shall be the same part of the tax computed on the annual basis as the number of days in the short period is of 365 days.
(3) Special rule for partnerships, S corporations, and personal service corporations
The Secretary may by regulation provide terms and conditions for the application of this subsection to a partnership, S corporation, or personal service corporation (within the meaning of section 441(i)(2)).
(4) Regulations
The Secretary shall prescribe such regulations as he deems necessary for the application of this subsection.
(g) No books kept; no accounting period
Except as provided in section 443 (relating to returns for periods of less than 12 months), the taxpayer's taxable year shall be the calendar year if—
(1) the taxpayer keeps no books;
(2) the taxpayer does not have an annual accounting period; or
(3) the taxpayer has an annual accounting period, but such period does not qualify as a fiscal year.
(h) Taxable year of DISC's
(1) In general
For purposes of this subtitle, the taxable year of any DISC shall be the taxable year of that shareholder (or group of shareholders with the same 12-month taxable year) who has the highest percentage of voting power.
(2) Special rule where more than one shareholder (or group) has highest percentage
If 2 or more shareholders (or groups) have the highest percentage of voting power under paragraph (1), the taxable year of the DISC shall be the same 12-month period as that of any such shareholder (or group).
(3) Subsequent changes of ownership
The Secretary shall prescribe regulations under which paragraphs (1) and (2) shall apply to a change of ownership of a corporation after the taxable year of the corporation has been determined under paragraph (1) or (2) only if such change is a substantial change of ownership.
(4) Voting power determined
For purposes of this subsection, voting power shall be determined on the basis of total combined voting power of all classes of stock of the corporation entitled to vote.
(i) Taxable year of personal service corporations
(1) In general
For purposes of this subtitle, the taxable year of any personal service corporation shall be the calendar year unless the corporation establishes, to the satisfaction of the Secretary, a business purpose for having a different period for its taxable year. For purposes of this paragraph, any deferral of income to shareholders shall not be treated as a business purpose.
(2) Personal service corporation
For purposes of this subsection, the term "personal service corporation" has the meaning given such term by section 269A(b)(1), except that section 269A(b)(2) shall be applied—
(A) by substituting "any" for "more than 10 percent", and
(B) by substituting "any" for "50 percent or more in value" in section 318(a)(2)(C).
A corporation shall not be treated as a personal service corporation unless more than 10 percent of the stock (by value) in such corporation is held by employee-owners (within the meaning of section 269A(b)(2), as modified by the preceding sentence). If a corporation is a member of an affiliated group filing a consolidated return, all members of such group shall be taken into account in determining whether such corporation is a personal service corporation.
(Aug. 16, 1954, ch. 736,
Amendments
2007—Subsec. (b)(4).
Subsec. (h).
1988—Subsec. (i)(2).
1986—Subsec. (f)(2)(B)(iii).
Subsec. (f)(3), (4).
Subsec. (i).
1984—Subsec. (b)(4).
Subsec. (f)(2)(A).
Subsec. (h).
1977—Subsec. (f)(2)(B)(iii).
1976—Subsec. (f)(3).
1964—Subsec. (f)(2)(A).
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 104(b)(6) of
Amendment by section 806(c)(1), (d) of
Effective Date of 1984 Amendment
Amendment by section 474(b)(2) of
Amendment by section 803 of
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1964 Amendment
Amendment by
Construction of Section 806 of Pub. L. 99–514
Nothing in section 806 of
§442. Change of annual accounting period
If a taxpayer changes his annual accounting period, the new accounting period shall become the taxpayer's taxable year only if the change is approved by the Secretary. For purposes of this subtitle, if a taxpayer to whom section 441(g) applies adopts an annual accounting period (as defined in section 441(c)) other than a calendar year, the taxpayer shall be treated as having changed his annual accounting period.
(Aug. 16, 1954, ch. 736,
Amendments
1976—
§443. Returns for a period of less than 12 months
(a) Returns for short period
A return for a period of less than 12 months (referred to in this section as "short period") shall be made under any of the following circumstances:
(1) Change of annual accounting period
When the taxpayer, with the approval of the Secretary, changes his annual accounting period. In such a case, the return shall be made for the short period beginning on the day after the close of the former taxable year and ending at the close of the day before the day designated as the first day of the new taxable year.
(2) Taxpayer not in existence for entire taxable year
When the taxpayer is in existence during only part of what would otherwise be his taxable year.
(b) Computation of tax on change of annual accounting period
(1) General rule
If a return is made under paragraph (1) of subsection (a), the taxable income for the short period shall be placed on an annual basis by multiplying the modified taxable income for such short period by 12, dividing the result by the number of months in the short period. The tax shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months.
(2) Exception
(A) Computation based on 12-month period
If the taxpayer applies for the benefits of this paragraph and establishes the amount of this taxable income for the 12-month period described in subparagraph (B), computed as if that period were a taxable year and under the law applicable to that year, then the tax for the short period, computed under paragraph (1), shall be reduced to the greater of the following:
(i) an amount which bears the same ratio to the tax computed on the taxable income for the 12-month period as the modified taxable income computed on the basis of the short period bears to the modified taxable income for the 12-month period; or
(ii) the tax computed on the modified taxable income for the short period.
The taxpayer (other than a taxpayer to whom subparagraph (B)(ii) applies) shall compute the tax and file his return without the application of this paragraph.
(B) 12-month period
The 12-month period referred to in subparagraph (A) shall be—
(i) the period of 12 months beginning on the first day of the short period, or
(ii) the period of 12 months ending at the close of the last day of the short period, if at the end of the 12 months referred to in clause (i) the taxpayer is not in existence or (if a corporation) has theretofore disposed of substantially all of its assets.
(C) Application for benefits
Application for the benefits of this paragraph shall be made in such manner and at such time as the regulations prescribed under subparagraph (D) may require; except that the time so prescribed shall not be later than the time (including extensions) for filing the return for the first taxable year which ends on or after the day which is 12 months after the first day of the short period. Such application, in case the return was filed without regard to this paragraph, shall be considered a claim for credit or refund with respect to the amount by which the tax is reduced under this paragraph.
(D) Regulations
The Secretary shall prescribe such regulations as he deems necessary for the application of this paragraph.
(3) Modified taxable income defined
For purposes of this subsection the term "modified taxable income" means, with respect to any period, the gross income for such period minus the deductions allowed by this chapter for such period (but, in the case of a short period, only the adjusted amount of the deductions for personal exemptions).
(c) Adjustment in deduction for personal exemption
In the case of a taxpayer other than a corporation, if a return is made for a short period by reason of subsection (a)(1) and if the tax is not computed under subsection (b)(2), then the exemptions allowed as a deduction under section 151 (and any deduction in lieu thereof) shall be reduced to amounts which bear the same ratio to the full exemptions as the number of months in the short period bears to 12.
(d) Adjustment in computing minimum tax and tax preferences
If a return is made for a short period by reason of subsection (a)—
(1) the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying such amount by 12 and dividing the result by the number of months in the short period, and
(2) the amount computed under paragraph (1) of section 55(a) shall bear the same relation to the tax computed on the annual basis as the number of months in the short period bears to 12.
(e) Cross references
For inapplicability of subsection (b) in computing—
(1) Accumulated earnings tax, see section 536.
(2) Personal holding company tax, see section 546.
(3) The taxable income of a regulated investment company, see section 852(b)(2)(E).
(4) The taxable income of a real estate investment trust, see section 857(b)(2)(C).
For returns for a period of less than 12 months in the case of a debtor's election to terminate a taxable year, see section 1398(d)(2)(E).
(Aug. 16, 1954, ch. 736,
Amendments
2004—Subsec. (e)(3) to (5).
1986—Subsec. (b)(1).
Subsec. (b)(2)(A)(ii).
Subsec. (d).
"(1) in the case of a taxpayer other than a corporation, the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying that amount by 12 and dividing the result by the number of months in the short period, and the amount computed under paragraph (1) of section 55(a) shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months; and
"(2) the $10,000 amount specified in section 56 (relating to minimum tax for tax preferences), modified as provided by section 58, shall be reduced to the amount which bears the same ratio to such specified amount as the number of days in the short period bears to 365."
1983—Subsec. (e).
1980—Subsec. (d)(2).
Subsec. (e).
1978—Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (d).
1977—Subsec. (b)(1).
1976—Subsec. (a)(1).
Subsec. (a)(3).
Subsec. (b)(2)(D).
Subsec. (d).
Subsec. (e)(5).
1969—Subsecs. (d), (e).
1960—Subsec. (d)(5).
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 104(b)(7) of
Amendment by section 701(e)(3) of
Effective Date of 1983 Amendment
Effective Date of 1980 Amendment
Amendment by
Amendment by
Effective Date of 1978 Amendment
Amendment by section 421(e)(2) of
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 1204(c)(2) of
For effective date of amendment by section 1607(b)(1)(C) of
Effective Date of 1969 Amendment
Amendment by
Effective Date of 1960 Amendment
Amendment by
Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For applicability of amendment by section 701(e)(3) of
§444. Election of taxable year other than required taxable year
(a) General rule
Except as otherwise provided in this section, a partnership, S corporation, or personal service corporation may elect to have a taxable year other than the required taxable year.
(b) Limitations on taxable years which may be elected
(1) In general
Except as provided in paragraphs (2) and (3), an election may be made under subsection (a) only if the deferral period of the taxable year elected is not longer than 3 months.
(2) Changes in taxable year
Except as provided in paragraph (3), in the case of an entity changing a taxable year, an election may be made under subsection (a) only if the deferral period of the taxable year elected is not longer than the shorter of—
(A) 3 months, or
(B) the deferral period of the taxable year which is being changed.
(3) Special rule for entities retaining 1986 taxable years
In the case of an entity's 1st taxable year beginning after December 31, 1986, an entity may elect a taxable year under subsection (a) which is the same as the entity's last taxable year beginning in 1986.
(4) Deferral period
For purposes of this subsection, except as provided in regulations, the term "deferral period" means, with respect to any taxable year of the entity, the months between—
(A) the beginning of such year, and
(B) the close of the 1st required taxable year ending within such year.
(c) Effect of election
If an entity makes an election under subsection (a), then—
(1) in the case of a partnership or S corporation, such entity shall make the payments required by section 7519, and
(2) in the case of a personal service corporation, such corporation shall be subject to the deduction limitations of section 280H.
(d) Elections
(1) Person making election
An election under subsection (a) shall be made by the partnership, S corporation, or personal service corporation.
(2) Period of election
(A) In general
Any election under subsection (a) shall remain in effect until the partnership, S corporation, or personal service corporation changes its taxable year or otherwise terminates such election. Any change to a required taxable year may be made without the consent of the Secretary.
(B) No further election
If an election is terminated under subparagraph (A) or paragraph (3)(A), the partnership, S corporation, or personal service corporation may not make another election under subsection (a).
(3) Tiered structures, etc.
(A) In general
Except as otherwise provided in this paragraph—
(i) no election may be under subsection (a) with respect to any entity which is part of a tiered structure, and
(ii) an election under subsection (a) with respect to any entity shall be terminated if such entity becomes part of a tiered structure.
(B) Exceptions for structures consisting of certain entities with same taxable year
Subparagraph (A) shall not apply to any tiered structure which consists only of partnerships or S corporations (or both) all of which have the same taxable year.
(e) Required taxable year
For purposes of this section, the term "required taxable year" means the taxable year determined under section 706(b), 1378, or 441(i) without taking into account any taxable year which is allowable by reason of business purposes. Solely for purposes of the preceding sentence, sections 706(b), 1378, and 441(i) shall be treated as in effect for taxable years beginning before January 1, 1987.
(f) Personal service corporation
For purposes of this section, the term "personal service corporation" has the meaning given to such term by section 441(i)(2).
(g) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section, including regulations to prevent the avoidance of subsection (b)(2)(B) or (d)(2)(B) through the change in form of an entity.
(Added
Amendments
1988—Subsec. (a).
Subsec. (b)(4).
Subsec. (d)(2)(A).
Subsec. (d)(2)(B).
Subsec. (d)(3).
Subsecs. (f), (g).
Effective Date of 1988 Amendment
Amendment by
Effective Date
"(1)
"(2)
"(3)
"(4)
"(A) made an election after September 18, 1986, and before January 1, 1988, under section 1362 of such Code to be treated as an S corporation, and
"(B) elected to have the calendar year as the taxable year of the S corporation,
then section 444(b)(2)(B) of such Code shall be applied by taking into account the deferral period of the last taxable year of the C corporation rather than the deferral period of the taxable year being changed. The preceding sentence shall apply only in the case of an election under section 444 of such Code made for a taxable year beginning before 1989."
PART II—METHODS OF ACCOUNTING
Subpart A—Methods of Accounting in General
Amendments
1986—
1976—
§446. General rule for methods of accounting
(a) General rule
Taxable income shall be computed under the method of accounting on the basis of which the taxpayer regularly computes his income in keeping his books.
(b) Exceptions
If no method of accounting has been regularly used by the taxpayer, or if the method used does not clearly reflect income, the computation of taxable income shall be made under such method as, in the opinion of the Secretary, does clearly reflect income.
(c) Permissible methods
Subject to the provisions of subsections (a) and (b), a taxpayer may compute taxable income under any of the following methods of accounting—
(1) the cash receipts and disbursements method;
(2) an accrual method;
(3) any other method permitted by this chapter; or
(4) any combination of the foregoing methods permitted under regulations prescribed by the Secretary.
(d) Taxpayer engaged in more than one business
A taxpayer engaged in more than one trade or business may, in computing taxable income, use a different method of accounting for each trade or business.
(e) Requirement respecting change of accounting method
Except as otherwise expressly provided in this chapter, a taxpayer who changes the method of accounting on the basis of which he regularly computes his income in keeping his books shall, before computing his taxable income under the new method, secure the consent of the Secretary.
(f) Failure to request change of method of accounting
If the taxpayer does not file with the Secretary a request to change the method of accounting, the absence of the consent of the Secretary to a change in the method of accounting shall not be taken into account—
(1) to prevent the imposition of any penalty, or the addition of any amount to tax, under this title, or
(2) to diminish the amount of such penalty or addition to tax.
(Aug. 16, 1954, ch. 736,
Amendments
1984—Subsec. (f).
1976—Subsecs. (b), (c), (e).
Effective Date of 1984 Amendment
§447. Method of accounting for corporations engaged in farming
(a) General rule
Except as otherwise provided by law, the taxable income from farming of—
(1) a corporation engaged in the trade or business of farming, or
(2) a partnership engaged in the trade or business of farming, if a corporation is a partner in such partnership,
shall be computed on an accrual method of accounting. This section shall not apply to the trade or business of operating a nursery or sod farm or to the raising or harvesting of trees (other than fruit and nut trees).
(b) Preproductive period expenses
For rules requiring capitalization of certain preproductive period expenses, see section 263A.
(c) Exception for certain corporations
For purposes of subsection (a), a corporation shall be treated as not being a corporation for any taxable year if it is—
(1) an S corporation, or
(2) a corporation which meets the gross receipts test of section 448(c) for such taxable year.
(d) Coordination with section 481
Any change in method of accounting made pursuant to this section shall be treated for purposes of section 481 as initiated by the taxpayer and made with the consent of the Secretary.
(e) Certain annual accrual accounting methods
(1) In general
Notwithstanding subsection (a) or section 263A, if—
(A) for its 10 taxable years ending with its first taxable year beginning after December 31, 1975, a corporation or qualified partnership used an annual accrual method of accounting with respect to its trade or business of farming,
(B) such corporation or qualified partnership raises crops which are harvested not less than 12 months after planting, and
(C) such corporation or qualified partnership has used such method of accounting for all taxable years intervening between its first taxable year beginning after December 31, 1975, and the taxable year,
such corporation or qualified partnership may continue to employ such method of accounting for the taxable year with respect to its qualified farming trade or business.
(2) Annual accrual method of accounting defined
For purposes of paragraph (1), the term "annual accrual method of accounting" means a method under which revenues, costs, and expenses are computed on an accrual method of accounting and the preproductive period expenses incurred during the taxable year are charged to harvested crops or deducted in determining the taxable income for such years.
(3) Certain nonrecognition transfers
For purposes of this subsection, if—
(A) a corporation acquired substantially all the assets of a qualified farming trade or business from another corporation in a transaction in which no gain or loss was recognized to the transferor or transferee corporation, or
(B) a qualified partnership acquired substantially all the assets of a qualified farming trade or business from one of its partners in a transaction to which section 721 applies,
the transferee corporation or qualified partnership shall be deemed to have computed its taxable income on an annual accrual method of accounting during the period for which the transferor corporation or partnership computed its taxable income from such trade or business on an annual accrual method.
(4) Qualified partnership defined
For purposes of this subsection—
(A) Qualified partnership
The term "qualified partnership" means a partnership which is engaged in a qualified farming trade or business and each of the partners of which is a corporation other than—
(i) an S corporation, or
(ii) a personal holding company (within the meaning of section 542(a)).
(B) Qualified farming trade or business
(i) In general
The term "qualified farming trade or business" means the trade or business of farming—
(I) sugar cane,
(II) any plant with a preproductive period (as defined in section 263A(e)(3)) of 2 years or less, and
(III) any other plant (other than any citrus or almond tree) if an election by the corporation under this subparagraph is in effect.
In the case of a partnership and for purposes of paragraph (3)(A), subclauses (II) and (III) shall not apply.
(ii) Effect of election
For purposes of paragraphs (1) and (2) of section 263A(e), any election under this subparagraph shall be treated as if it were an election under subsection (d)(3) of section 263A.
(iii) Election
Unless the Secretary otherwise consents, an election under this subparagraph may be made only for the corporation's 1st taxable year which begins after December 31, 1986, and during which the corporation engages in a farming business. Any such election, once made, may be revoked only with the consent of the Secretary.
(Added
Amendments
2017—Subsec. (c).
Subsec. (c)(2).
Subsec. (d).
Subsec. (e).
Subsec. (f).
Subsec. (g).
Subsecs. (h), (i).
1997—Subsec. (i)(3).
"(A) the gross receipts of the corporation from the trade or business of farming for the year of the change or any subsequent taxable year, is less than
"(B) such gross receipts for the taxpayer's last taxable year beginning before the year of the change (or for the most recent taxable year for which a reduction in the suspense account was made under this paragraph),
the amount in the suspense account (after taking into account prior reductions) shall be reduced by the percentage by which the amount described in subparagraph (A) is less than the amount described in subparagraph (B)."
Subsec. (i)(4).
Subsec. (i)(5), (6).
1990—Subsec. (g)(1)(A).
Subsec. (g)(4)(B).
1988—Subsec. (b).
Subsec. (g)(1).
1987—Subsec. (c).
"(1) an S corporation,
"(2) a corporation of which at least 50 percent of the total combined voting power of all classes of stock entitled to vote, and at least 50 percent of the total number of shares of all other classes of stock of the corporation, are owned by members of the same family, or
"(3) a corporation the gross receipts of which meet the requirements of subsection (e)."
Subsec. (d).
Subsec. (e).
Subsec. (h)(1).
Subsec. (h)(1)(A), (B).
Subsec. (i).
1986—Subsec. (a).
Subsec. (b).
Subsec. (g)(1).
1982—Subsec. (c)(1).
Subsec. (g)(1).
Subsec. (g)(3).
Subsec. (g)(4).
1978—Subsec. (a).
Subsec. (f)(3).
Subsec. (g)(2).
Subsec. (h).
Effective Date of 2017 Amendment
Amendment by
Effective Date of 1997 Amendment
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1987 Amendment
Effective Date of 1986 Amendment
If any interest costs incurred after Dec. 31, 1986, are attributable to costs incurred before Jan. 1, 1987, the amendment by
Amendment by
Effective Date of 1982 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by section 703(d) of
Effective Date
"(A)
"(B)
"(i) members of two families (within the meaning of paragraph (1) of [former] section 447(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as added by paragraph (1)) owned, on October 4, 1976 (directly or through the application of such [former] section 447(d)), at least 65 percent of the total combined voting power of all classes of stock of such corporation entitled to vote, and at least 65 percent of the total number of shares of all other classes of stock of such corporation; or
"(ii) members of three families (within the meaning of paragraph (1) of such [former] section 447(d)) owned, on October 4, 1976 (directly or through the application of such [former] section 447(d)), at least 50 percent of the total combined voting power of all classes of stock of such corporation entitled to vote, and at least 50 percent of the total number of shares of all other classes of stock of such corporation; and substantially all of the stock of such corporation which was not so owned (directly or through the application of such [former] section 447(d)), by members of such three families was owned, on October 4, 1976, directly—
"(I) by employees of the corporation or members of the families (within the meaning of section 267(c)(4) of such Code) of such employees, or
"(II) by a trust for the benefit of the employees of such corporation which is described in section 401(a) of such Code and which is exempt from taxation under section 501(a) of such Code,
the amendments made by paragraph (1) shall apply to taxable years beginning after December 31, 1977."
Accounting for Growing Crops
"(a)
"(1) is a farmer, nurseryman, or florist,
"(2) is on an accrual method of accounting, and
"(3) is not required by section 447 of the Internal Revenue Code of 1954 to capitalize preproductive period expenses.
"(b)
"(c)
"(d)
"(1) shall not require the consent of the Secretary of the Treasury or his delegate, and
"(2) shall be treated, for purposes of section 481 of the Internal Revenue Code of 1954 as a change in the method of accounting initiated by the taxpayer.
"(e)
Automatic Ten-Year Adjustment for Farming Syndicates Changing to Accrual Accounting
"(A) a farming syndicate (within the meaning of [former] section 464(c) of the Internal Revenue Code of 1954 [now
"(B) such syndicate elects an accrual method of accounting (including the capitalization of preproductive period expenses described in section 447(b) of such Code) for a taxable year beginning before January 1, 1979,
then such election shall be treated as having been made with the consent of the Secretary of the Treasury or his delegate and, under regulations prescribed by the Secretary of the Treasury or his delegate, the net amount of the adjustments required by section 481(a) of such Code to be taken into account by the taxpayer in computing taxable income shall be taken into account in each of the 10 taxable years (or the remaining taxable years where there is a stated future life of less than 10 taxable years) beginning with the year of change."
Election To Change From Static Value Method to Accrual Method of Accounting
"(A)
"(i) a corporation has computed its taxable income on an annual accrual method of accounting together with a static value method of accounting for deferred costs of growing crops for the 10 taxable years ending with its first taxable year beginning after December 31, 1975,
"(ii) such corporation raises crops which are harvested not less than 12 months after planting, and
"(iii) such corporation elects, within one year after the date of the enactment of this Act [Oct. 4, 1976] and in such manner as the Secretary of the Treasury or his delegate prescribes, to change to the annual accrual method of accounting (within the meaning of section 447(g)(2) [now section 447(e)(2)] of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) for taxable years beginning after December 31, 1976,
such change shall be treated as having been made with the consent of the Secretary of the Treasury, and, under regulations prescribed by the Secretary of the Treasury or his delegate, the net amount of the adjustments required by section 481(a) of the Internal Revenue Code of 1986 to be taken into account by the taxpayer in computing taxable income shall (except as otherwise provided in such regulations) be taken into account in each of the 10 taxable years beginning with the year of change.
"(B)
"(C)
§448. Limitation on use of cash method of accounting
(a) General rule
Except as otherwise provided in this section, in the case of a—
(1) C corporation,
(2) partnership which has a C corporation as a partner, or
(3) tax shelter,
taxable income shall not be computed under the cash receipts and disbursements method of accounting.
(b) Exceptions
(1) Farming business
Paragraphs (1) and (2) of subsection (a) shall not apply to any farming business.
(2) Qualified personal service corporations
Paragraphs (1) and (2) of subsection (a) shall not apply to a qualified personal service corporation, and such a corporation shall be treated as an individual for purposes of determining whether paragraph (2) of subsection (a) applies to any partnership.
(3) Entities which meet gross receipts test
Paragraphs (1) and (2) of subsection (a) shall not apply to any corporation or partnership for any taxable year if such entity (or any predecessor) meets the gross receipts test of subsection (c) for such taxable year.
(c) Gross receipts test
For purposes of this section—
(1) In general
A corporation or partnership meets the gross receipts test of this subsection for any taxable year if the average annual gross receipts of such entity for the 3-taxable-year period ending with the taxable year which precedes such taxable year does not exceed $25,000,000.
(2) Aggregation rules
All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as one person for purposes of paragraph (1).
(3) Special rules
For purposes of this subsection—
(A) Not in existence for entire 3-year period
If the entity was not in existence for the entire 3-year period referred to in paragraph (1), such paragraph shall be applied on the basis of the period during which such entity (or trade or business) was in existence.
(B) Short taxable years
Gross receipts for any taxable year of less than 12 months shall be annualized by multiplying the gross receipts for the short period by 12 and dividing the result by the number of months in the short period.
(C) Gross receipts
Gross receipts for any taxable year shall be reduced by returns and allowances made during such year.
(D) Treatment of predecessors
Any reference in this subsection to an entity shall include a reference to any predecessor of such entity.
(4) Adjustment for inflation
In the case of any taxable year beginning after December 31, 2018, the dollar amount in paragraph (1) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting "calendar year 2017" for "calendar year 2016" in subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is not a multiple of $1,000,000, such amount shall be rounded to the nearest multiple of $1,000,000.
(d) Definitions and special rules
For purposes of this section—
(1) Farming business
(A) In general
The term "farming business" means the trade or business of farming (within the meaning of section 263A(e)(4)).
(B) Timber and ornamental trees
The term "farming business" includes the raising, harvesting, or growing of trees to which section 263A(c)(5) applies.
(2) Qualified personal service corporation
The term "qualified personal service corporation" means any corporation—
(A) substantially all of the activities of which involve the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting, and
(B) substantially all of the stock of which (by value) is held directly (or indirectly through 1 or more partnerships, S corporations, or qualified personal service corporations not described in paragraph (2) or (3) of subsection (a)) by—
(i) employees performing services for such corporation in connection with the activities involving a field referred to in subparagraph (A),
(ii) retired employees who had performed such services for such corporation,
(iii) the estate of any individual described in clause (i) or (ii), or
(iv) any other person who acquired such stock by reason of the death of an individual described in clause (i) or (ii) (but only for the 2-year period beginning on the date of the death of such individual).
To the extent provided in regulations which shall be prescribed by the Secretary, indirect holdings through a trust shall be taken into account under subparagraph (B).
(3) Tax shelter defined
The term "tax shelter" has the meaning given such term by section 461(i)(3) (determined after application of paragraph (4) thereof). An S corporation shall not be treated as a tax shelter for purposes of this section merely by reason of being required to file a notice of exemption from registration with a State agency described in section 461(i)(3)(A), but only if there is a requirement applicable to all corporations offering securities for sale in the State that to be exempt from such registration the corporation must file such a notice.
(4) Special rules for application of paragraph (2)
For purposes of paragraph (2)—
(A) community property laws shall be disregarded,
(B) stock held by a plan described in section 401(a) which is exempt from tax under section 501(a) shall be treated as held by an employee described in paragraph (2)(B)(i), and
(C) at the election of the common parent of an affiliated group (within the meaning of section 1504(a)), all members of such group may be treated as 1 taxpayer for purposes of paragraph (2)(B) if 90 percent or more of the activities of such group involve the performance of services in the same field described in paragraph (2)(A).
(5) Special rule for certain services
(A) In general
In the case of any person using an accrual method of accounting with respect to amounts to be received for the performance of services by such person, such person shall not be required to accrue any portion of such amounts which (on the basis of such person's experience) will not be collected if—
(i) such services are in fields referred to in paragraph (2)(A), or
(ii) such person meets the gross receipts test of subsection (c) for all prior taxable years.
(B) Exception
This paragraph shall not apply to any amount if interest is required to be paid on such amount or there is any penalty for failure to timely pay such amount.
(C) Regulations
The Secretary shall prescribe regulations to permit taxpayers to determine amounts referred to in subparagraph (A) using computations or formulas which, based on experience, accurately reflect the amount of income that will not be collected by such person. A taxpayer may adopt, or request consent of the Secretary to change to, a computation or formula that clearly reflects the taxpayer's experience. A request under the preceding sentence shall be approved if such computation or formula clearly reflects the taxpayer's experience.
(6) Treatment of certain trusts subject to tax on unrelated business income
For purposes of this section, a trust subject to tax under section 511(b) shall be treated as a C corporation with respect to its activities constituting an unrelated trade or business.
(7) Coordination with section 481
Any change in method of accounting made pursuant to this section shall be treated for purposes of section 481 as initiated by the taxpayer and made with the consent of the Secretary.
(8) Use of related parties, etc.
The Secretary shall prescribe such regulations as may be necessary to prevent the use of related parties, pass-thru entities, or intermediaries to avoid the application of this section.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Amendments
2017—Subsec. (b)(3).
Subsec. (c).
"(1)
Subsec. (c)(4).
Subsec. (d)(7).
2002—Subsec. (d)(5).
1988—Subsec. (c)(3)(D).
Subsec. (d)(2).
Subsec. (d)(2)(B).
Subsec. (d)(3).
Subsec. (d)(4)(C).
Subsec. (d)(8).
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2002 Amendment
"(1)
"(2)
"(A) such change shall be treated as initiated by the taxpayer,
"(B) such change shall be treated as made with the consent of the Secretary of the Treasury, and
"(C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account over a period of 4 years (or if less, the number of taxable years that the taxpayer used the method permitted under section 448(d)(5) of such Code as in effect before the date of the enactment of this Act) beginning with such first taxable year."
Effective Date of 1988 Amendment
Amendment by section 1008(a)(1), (2), (7)–(9) of
Effective Date
"(1)
"(2)
"(3)
"(A) contracts for the acquisition or transfer of real property, and
"(B) contracts for services related to the acquisition or development of real property,
but only if such contracts were entered into before September 25, 1985, and the sole element of the contract which has not been performed as of September 25, 1985, is payment for such property or services.
"(4)
"(A) was incorporated in the State of Delaware in 1970,
"(B) was the successor to a corporation that was incorporated in the State of Illinois in 1949, and
"(C) used a method of accounting for long-term contracts of accounting [sic] for a substantial part of its income from the performance of engineering services.
"(5)
Subpart B—Taxable Year for Which Items of Gross Income Included
Amendments
1988—
1987—
1986—
1980—
1978—
1961—
1958—
1955—Act June 15, 1955, ch. 143, §2(2),
§451. General rule for taxable year of inclusion
(a) General rule
The amount of any item of gross income shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under the method of accounting used in computing taxable income, such amount is to be properly accounted for as of a different period.
(b) Inclusion not later than for financial accounting purposes
(1) Income taken into account in financial statement
(A) In general
In the case of a taxpayer the taxable income of which is computed under an accrual method of accounting, the all events test with respect to any item of gross income (or portion thereof) shall not be treated as met any later than when such item (or portion thereof) is taken into account as revenue in—
(i) an applicable financial statement of the taxpayer, or
(ii) such other financial statement as the Secretary may specify for purposes of this subsection.
(B) Exception
This paragraph shall not apply to—
(i) a taxpayer which does not have a financial statement described in clause (i) or (ii) of subparagraph (A) for a taxable year, or
(ii) any item of gross income in connection with a mortgage servicing contract.
(C) All events test
For purposes of this section, the all events test is met with respect to any item of gross income if all the events have occurred which fix the right to receive such income and the amount of such income can be determined with reasonable accuracy.
(2) Coordination with special methods of accounting
Paragraph (1) shall not apply with respect to any item of gross income for which the taxpayer uses a special method of accounting provided under any other provision of this chapter, other than any provision of part V of subchapter P (except as provided in clause (ii) of paragraph (1)(B)).
(3) Applicable financial statement
For purposes of this subsection, the term "applicable financial statement" means—
(A) a financial statement which is certified as being prepared in accordance with generally accepted accounting principles and which is—
(i) a 10–K (or successor form), or annual statement to shareholders, required to be filed by the taxpayer with the United States Securities and Exchange Commission,
(ii) an audited financial statement of the taxpayer which is used for—
(I) credit purposes,
(II) reporting to shareholders, partners, or other proprietors, or to beneficiaries, or
(III) any other substantial nontax purpose,
but only if there is no statement of the taxpayer described in clause (i), or
(iii) filed by the taxpayer with any other Federal agency for purposes other than Federal tax purposes, but only if there is no statement of the taxpayer described in clause (i) or (ii),
(B) a financial statement which is made on the basis of international financial reporting standards and is filed by the taxpayer with an agency of a foreign government which is equivalent to the United States Securities and Exchange Commission and which has reporting standards not less stringent than the standards required by such Commission, but only if there is no statement of the taxpayer described in subparagraph (A), or
(C) a financial statement filed by the taxpayer with any other regulatory or governmental body specified by the Secretary, but only if there is no statement of the taxpayer described in subparagraph (A) or (B).
(4) Allocation of transaction price
For purposes of this subsection, in the case of a contract which contains multiple performance obligations, the allocation of the transaction price to each performance obligation shall be equal to the amount allocated to each performance obligation for purposes of including such item in revenue in the applicable financial statement of the taxpayer.
(5) Group of entities
For purposes of paragraph (1), if the financial results of a taxpayer are reported on the applicable financial statement (as defined in paragraph (3)) for a group of entities, such statement shall be treated as the applicable financial statement of the taxpayer.
(c) Treatment of advance payments
(1) In general
A taxpayer which computes taxable income under the accrual method of accounting, and receives any advance payment during the taxable year, shall—
(A) except as provided in subparagraph (B), include such advance payment in gross income for such taxable year, or
(B) if the taxpayer elects the application of this subparagraph with respect to the category of advance payments to which such advance payment belongs, the taxpayer shall—
(i) to the extent that any portion of such advance payment is required under subsection (b) to be included in gross income in the taxable year in which such payment is received, so include such portion, and
(ii) include the remaining portion of such advance payment in gross income in the taxable year following the taxable year in which such payment is received.
(2) Election
(A) In general
Except as otherwise provided in this paragraph, the election under paragraph (1)(B) shall be made at such time, in such form and manner, and with respect to such categories of advance payments, as the Secretary may provide.
(B) Period to which election applies
An election under paragraph (1)(B) shall be effective for the taxable year with respect to which it is first made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to revoke such election. For purposes of this title, the computation of taxable income under an election made under paragraph (1)(B) shall be treated as a method of accounting.
(3) Taxpayers ceasing to exist
Except as otherwise provided by the Secretary, the election under paragraph (1)(B) shall not apply with respect to advance payments received by the taxpayer during a taxable year if such taxpayer ceases to exist during (or with the close of) such taxable year.
(4) Advance payment
For purposes of this subsection—
(A) In general
The term "advance payment" means any payment—
(i) the full inclusion of which in the gross income of the taxpayer for the taxable year of receipt is a permissible method of accounting under this section (determined without regard to this subsection),
(ii) any portion of which is included in revenue by the taxpayer in a financial statement described in clause (i) or (ii) of subsection (b)(1)(A) for a subsequent taxable year, and
(iii) which is for goods, services, or such other items as may be identified by the Secretary for purposes of this clause.
(B) Exclusions
Except as otherwise provided by the Secretary, such term shall not include—
(i) rent,
(ii) insurance premiums governed by subchapter L,
(iii) payments with respect to financial instruments,
(iv) payments with respect to warranty or guarantee contracts under which a third party is the primary obligor,
(v) payments subject to section 871(a), 881, 1441, or 1442,
(vi) payments in property to which section 83 applies, and
(vii) any other payment identified by the Secretary for purposes of this subparagraph.
(C) Receipt
For purposes of this subsection, an item of gross income is received by the taxpayer if it is actually or constructively received, or if it is due and payable to the taxpayer.
(D) Allocation of transaction price
For purposes of this subsection, rules similar to subsection (b)(4) shall apply.
(d) Special rule in case of death
In the case of the death of a taxpayer whose taxable income is computed under an accrual method of accounting, any amount accrued only by reason of the death of the taxpayer shall not be included in computing taxable income for the period in which falls the date of the taxpayer's death.
(e) Special rule for employee tips
For purposes of subsection (a), tips included in a written statement furnished an employer by an employee pursuant to section 6053(a) shall be deemed to be received at the time the written statement including such tips is furnished to the employer.
(f) Special rule for crop insurance proceeds or disaster payments
In the case of insurance proceeds received as a result of destruction or damage to crops, a taxpayer reporting on the cash receipts and disbursements method of accounting may elect to include such proceeds in income for the taxable year following the taxable year of destruction or damage, if he establishes that, under his practice, income from such crops would have been reported in a following taxable year. For purposes of the preceding sentence, payments received under the Agricultural Act of 1949, as amended, or title II of the Disaster Assistance Act of 1988, as a result of (1) destruction or damage to crops caused by drought, flood, or any other natural disaster, or (2) the inability to plant crops because of such a natural disaster shall be treated as insurance proceeds received as a result of destruction or damage to crops. An election under this subsection for any taxable year shall be made at such time and in such manner as the Secretary prescribes.
(g) Special rule for proceeds from livestock sold on account of drought, flood, or other weather-related conditions
(1) In general
In the case of income derived from the sale or exchange of livestock in excess of the number the taxpayer would sell if he followed his usual business practices, a taxpayer reporting on the cash receipts and disbursements method of accounting may elect to include such income for the taxable year following the taxable year in which such sale or exchange occurs if he establishes that, under his usual business practices, the sale or exchange would not have occurred in the taxable year in which it occurred if it were not for drought, flood, or other weather-related conditions, and that such conditions had resulted in the area being designated as eligible for assistance by the Federal Government.
(2) Limitation
Paragraph (1) shall apply only to a taxpayer whose principal trade or business is farming (within the meaning of section 6420(c)(3)).
(3) Special election rules
If section 1033(e)(2) applies to a sale or exchange of livestock described in paragraph (1), the election under paragraph (1) shall be deemed valid if made during the replacement period described in such section.
(h) Special rule for utility services
(1) In general
In the case of a taxpayer the taxable income of which is computed under an accrual method of accounting, any income attributable to the sale or furnishing of utility services to customers shall be included in gross income not later than the taxable year in which such services are provided to such customers.
(2) Definition and special rule
For purposes of this subsection—
(A) Utility services
The term "utility services" includes—
(i) the providing of electrical energy, water, or sewage disposal,
(ii) the furnishing of gas or steam through a local distribution system,
(iii) telephone or other communication services, and
(iv) the transporting of gas or steam by pipeline.
(B) Year in which services provided
The taxable year in which services are treated as provided to customers shall not, in any manner, be determined by reference to—
(i) the period in which the customers' meters are read, or
(ii) the period in which the taxpayer bills (or may bill) the customers for such service.
(i) Treatment of interest on frozen deposits in certain financial institutions
(1) In general
In the case of interest credited during any calendar year on a frozen deposit in a qualified financial institution, the amount of such interest includible in the gross income of a qualified individual shall not exceed the sum of—
(A) the net amount withdrawn by such individual from such deposit during such calendar year, and
(B) the amount of such deposit which is withdrawable as of the close of the taxable year (determined without regard to any penalty for premature withdrawals of a time deposit).
(2) Interest tested each year
Any interest not included in gross income by reason of paragraph (1) shall be treated as credited in the next calendar year.
(3) Deferral of interest deduction
No deduction shall be allowed to any qualified financial institution for interest not includible in gross income under paragraph (1) until such interest is includible in gross income.
(4) Frozen deposit
For purposes of this subsection, the term "frozen deposit" means any deposit if, as of the close of the calendar year, any portion of such deposit may not be withdrawn because of—
(A) the bankruptcy or insolvency of the qualified financial institution (or threat thereof), or
(B) any requirement imposed by the State in which such institution is located by reason of the bankruptcy or insolvency (or threat thereof) of 1 or more financial institutions in the State.
(5) Other definitions
For purposes of this subsection, the terms "qualified individual", "qualified financial institution", and "deposit" have the same respective meanings as when used in section 165(l).
(j) Special rule for cash options for receipt of qualified prizes
(1) In general
For purposes of this title, in the case of an individual on the cash receipts and disbursements method of accounting, a qualified prize option shall be disregarded in determining the taxable year for which any portion of the qualified prize is properly includible in gross income of the taxpayer.
(2) Qualified prize option; qualified prize
For purposes of this subsection—
(A) In general
The term "qualified prize option" means an option which—
(i) entitles an individual to receive a single cash payment in lieu of receiving a qualified prize (or remaining portion thereof), and
(ii) is exercisable not later than 60 days after such individual becomes entitled to the qualified prize.
(B) Qualified prize
The term "qualified prize" means any prize or award which—
(i) is awarded as a part of a contest, lottery, jackpot, game, or other similar arrangement,
(ii) does not relate to any past services performed by the recipient and does not require the recipient to perform any substantial future service, and
(iii) is payable over a period of at least 10 years.
(3) Partnership, etc.
The Secretary shall provide for the application of this subsection in the case of a partnership or other pass-through entity consisting entirely of individuals described in paragraph (1).
(k) Special rule for sales or dispositions to implement Federal Energy Regulatory Commission or State electric restructuring policy
(1) In general
In the case of any qualifying electric transmission transaction for which the taxpayer elects the application of this section, qualified gain from such transaction shall be recognized—
(A) in the taxable year which includes the date of such transaction to the extent the amount realized from such transaction exceeds—
(i) the cost of exempt utility property which is purchased by the taxpayer during the 4-year period beginning on such date, reduced (but not below zero) by
(ii) any portion of such cost previously taken into account under this subsection, and
(B) ratably over the 8-taxable year period beginning with the taxable year which includes the date of such transaction, in the case of any such gain not recognized under subparagraph (A).
(2) Qualified gain
For purposes of this subsection, the term "qualified gain" means, with respect to any qualifying electric transmission transaction in any taxable year—
(A) any ordinary income derived from such transaction which would be required to be recognized under section 1245 or 1250 for such taxable year (determined without regard to this subsection), and
(B) any income derived from such transaction in excess of the amount described in subparagraph (A) which is required to be included in gross income for such taxable year (determined without regard to this subsection).
(3) Qualifying electric transmission transaction
For purposes of this subsection, the term "qualifying electric transmission transaction" means any sale or other disposition before January 1, 2008 (before January 1, 2021, in the case of a qualified electric utility), of—
(A) property used in the trade or business of providing electric transmission services, or
(B) any stock or partnership interest in a corporation or partnership, as the case may be, whose principal trade or business consists of providing electric transmission services,
but only if such sale or disposition is to an independent transmission company.
(4) Independent transmission company
For purposes of this subsection, the term "independent transmission company" means—
(A) an independent transmission provider approved by the Federal Energy Regulatory Commission,
(B) a person—
(i) who the Federal Energy Regulatory Commission determines in its authorization of the transaction under section 203 of the Federal Power Act (
(ii) whose transmission facilities to which the election under this subsection applies are under the operational control of a Federal Energy Regulatory Commission-approved independent transmission provider before the close of the period specified in such authorization, but not later than the date which is 4 years after the close of the taxable year in which the transaction occurs, or
(C) in the case of facilities subject to the jurisdiction of the Public Utility Commission of Texas—
(i) a person which is approved by that Commission as consistent with Texas State law regarding an independent transmission provider, or
(ii) a political subdivision or affiliate thereof whose transmission facilities are under the operational control of a person described in clause (i).
(5) Exempt utility property
For purposes of this subsection:
(A) In general
The term "exempt utility property" means property used in the trade or business of—
(i) generating, transmitting, distributing, or selling electricity, or
(ii) producing, transmitting, distributing, or selling natural gas.
(B) Nonrecognition of gain by reason of acquisition of stock
Acquisition of control of a corporation shall be taken into account under this subsection with respect to a qualifying electric transmission transaction only if the principal trade or business of such corporation is a trade or business referred to in subparagraph (A).
(C) Exception for property located outside the United States
The term "exempt utility property" shall not include any property which is located outside the United States.
(6) Qualified electric utility
For purposes of this subsection, the term "qualified electric utility" means a person that, as of the date of the qualifying electric transmission transaction, is vertically integrated, in that it is both—
(A) a transmitting utility (as defined in section 3(23) of the Federal Power Act (
(B) an electric utility (as defined in section 3(22) of the Federal Power Act (
(7) Special rule for consolidated groups
In the case of a corporation which is a member of an affiliated group filing a consolidated return, any exempt utility property purchased by another member of such group shall be treated as purchased by such corporation for purposes of applying paragraph (1)(A).
(8) Time for assessment of deficiencies
If the taxpayer has made the election under paragraph (1) and any gain is recognized by such taxpayer as provided in paragraph (1)(B), then—
(A) the statutory period for the assessment of any deficiency, for any taxable year in which any part of the gain on the transaction is realized, attributable to such gain shall not expire prior to the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may by regulations prescribe) of the purchase of exempt utility property or of an intention not to purchase such property, and
(B) such deficiency may be assessed before the expiration of such 3-year period notwithstanding any law or rule of law which would otherwise prevent such assessment.
(9) Purchase
For purposes of this subsection, the taxpayer shall be considered to have purchased any property if the unadjusted basis of such property is its cost within the meaning of section 1012.
(10) Election
An election under paragraph (1) shall be made at such time and in such manner as the Secretary may require and, once made, shall be irrevocable.
(11) Nonapplication of installment sales treatment
Section 453 shall not apply to any qualifying electric transmission transaction with respect to which an election to apply this subsection is made.
(Aug. 16, 1954, ch. 736,
References in Text
The Agricultural Act of 1949, as amended, referred to in subsec. (f), is act Oct. 31, 1949, ch. 792,
The Disaster Assistance Act of 1988, referred to in subsec. (f), is
Amendments
2019—Subsec. (k)(3).
2018—Subsec. (k)(3).
2017—Subsecs. (b) to (k).
2015—Subsec. (i)(3).
2014—Subsec. (i)(3).
2013—Subsec. (i)(3).
2010—Subsec. (i)(3).
2008—Subsec. (i)(3).
Subsec. (i)(4)(B)(ii).
Subsec. (i)(5)(C).
Subsec. (i)(6) to (11).
2005—Subsec. (i)(3).
Subsec. (i)(4)(B)(ii).
2004—Subsec. (e)(3).
Subsec. (i).
1998—Subsec. (h).
1997—Subsec. (e).
1988—Subsec. (d).
Subsec. (e)(1).
Subsecs. (f), (g).
1986—Subsec. (f).
1976—Subsec. (d).
Subsec. (e).
1969—Subsec. (d).
1965—Subsec. (c).
Effective Date of 2019 Amendment
Effective Date of 2018 Amendment
Effective Date of 2017 Amendment
"(c)
"(d)
"(1)
"(A) such change shall be treated as initiated by the taxpayer, and
"(B) such change shall be treated as made with the consent of the Secretary of the Treasury.
"(2)
"(A) is required by the amendments made by this section, or
"(B) was prohibited under the Internal Revenue Code of 1986 prior to such amendments and is permitted under such Code after such amendments.
"(e)
"(1) the amendments made by this section shall apply to taxable years beginning after December 31, 2018, and
"(2) the period for taking into account any adjustments under section 481 by reason of a qualified change in method of accounting (as defined in subsection (d)) shall be 6 years."
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Effective Date of 2013 Amendment
Effective Date of 2005 Amendment
"(1)
"(2)
Effective Date of 2010 Amendment
Effective Date of 2008 Amendment
"(1)
"(2)
"(3)
Effective Date of 2004 Amendment
Effective Date of 1998 Amendment
"(1)
"(2)
"(A) clause (ii) of such section 451(h)(2)(A) [now 451(j)(2)(A)] shall not apply, and
"(B) such option shall be treated as a qualified prize option if it is exercisable only during all or part of the 18-month period beginning on July 1, 1999."
Effective Date of 1997 Amendment
Effective Date of 1988 Amendment
Amendment by section 1009(d)(3) of
Effective Date of 1986 Amendment
"(1)
"(2)
"(A) such change shall be treated as initiated by the taxpayer,
"(B) such change shall be treated as having been made with the consent of the Secretary, and
"(C) the adjustments under section 481 of the Internal Revenue Code of 1954 [now 1986] by reason of such change shall be taken into account ratably over a period no longer than the first 4 taxable years beginning after December 31, 1986.
"(3)
"(1)
"(2)
"(A) The amendment made by subsection (b) [amending this section] shall apply to taxable years beginning after December 31, 1982, and before January 1, 1987, only if the qualified individual elects to have such amendment apply for all such taxable years.
"(B) In the case of interest attributable to the period beginning January 1, 1983, and ending December 31, 1987, the interest deduction of financial institutions shall be determined without regard to paragraph (3) of section 451(f) [now 451(h)] of the Internal Revenue Code of 1986 (as added by subsection (b))."
Effective Date of 1976 Amendment
Effective Date of 1969 Amendment
Effective Date of 1965 Amendment
Amendment by
Tax Treatment of Incentive Payment
Voluntary separation incentives paid to members of Armed Forces under
Overpayments or Underpayments of Tax Attributable to Certain Amendments by Pub. L. 99–514 or Pub. L. 100–647
For provisions relating to credit or refund of overpayments of tax, and assessment of underpayments of tax, due to amendments by section 905 of
Modification of Regulations on the Completed Contract Method of Accounting
"(a)
"(1) clarify the time at which a contract is to be considered completed,
"(2) clarify when—
"(A) one agreement will be treated as more than one contract, and
"(B) two or more agreements will be treated as one contract, and
"(3) properly allocate all costs which directly benefit, or are incurred by reason of, the extended period long-term contract activities of the taxpayer.
"(b)
"(1)
"(2)
"(A)
"(i) who estimates (at the time such contract is entered into) that such contract will be completed within the 3-year period beginning on the contract commencement date of such contract, or
"(ii) whose average annual gross receipts over the 3 taxable years preceding the taxable year in which such contract is entered into do not exceed $25,000,000.
"(B)
"(i) all trades or businesses (whether or not incorporated) which are under common control with the taxpayer (within the meaning of section 52(b)), and
"(ii) all members of any controlled group of corporations of which the taxpayer is a member,
for the 3 taxable years of such persons preceding the taxable year in which the contract described in subparagraph (A) is entered into shall be included in the gross receipts of the taxpayer for the period described in subparagraph (A). The Secretary shall prescribe regulations which provide attribution rules that take into account, in addition to the persons and entities described in the preceding sentence, taxpayers who engage in construction contracts through partnerships, joint ventures, and corporations.
"(C)
"(i) 'more than 50 percent' shall be substituted for 'at least 80 percent' each place it appears in section 1563(a)(1), and
"(ii) the determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of section 1563.
"(3)
"(4)
"(c)
"(1)
"(2)
"(A)
"(B)
| "If the taxable year begins in calendar year: | The applicable percentage is: |
|---|---|
| 1983 | 331/3 |
| 1984 | 662/3 |
| 1985 or thereafter | 100. |
"(3)
"(A)
"(B)
"(i) solely by reason of any modification to regulations made under subsection (a)(2), or
"(ii) solely by reason of any modifications to regulations made under both paragraphs (1) and (2) of subsection (a),
shall be treated as having been completed on the first day after December 31, 1982, on which any contract which was severed from such contract (by reason of the modifications made by subsection (a)(2)) is completed (determined after the application of any modifications to regulations made under subsection (a)(1)).
"(4)
Private Deferred Compensation Plans; Taxable Years Ending on or after February 1, 1978
"(a)
"(b)
"(1)
"(A) where the person for whom the service is performed is not a State (within the meaning of paragraph (1) of section 457(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) and not an organization which is exempt from tax under section 501 of such Code, and
"(B) under which the payment or otherwise making available of compensation is deferred.
"(2)
"(A) a plan described in section 401(a) of the Internal Revenue Code of 1986 which includes a trust, exempt from tax under section 501(a) of such Code,
"(B) an annuity plan or contract described in section 403 of such Code,
"(C) a qualified bond purchase plan described in section 405(a) of such Code,
"(D) that portion of any plan which consists of a transfer of property described in section 83 (determined without regard to subsection (e) thereof of such Code, and
"(E) that portion of any plan which consists of a trust to which section 402(b) of such Code applies.
"(c)
Year of Inclusion for Disaster or Deficiency Payments Received in 1978; Election
"(a)
"(1)(A) the taxpayer receives in his first taxable year beginning in 1978 payments under the Agricultural Act of 1949, as amended, [see Short Title note set out under
"(i) the destruction or damage to crops caused by drought, flood, or any other natural disaster, or
"(ii) the inability to plant crops because of such a natural disaster, and
"(B) the taxpayer establishes that, under his practice, income from such crops could have been reported for his last taxable year beginning in 1977, or
"(2)(A) the taxpayer receives in his first taxable year beginning in 1978 deficiency (or 'target price') payments under the Agricultural Act of 1949, as amended, for any 1977 crop, and
"(B) the fifth month of such crop's marketing year ends before December 1, 1977,
then the taxpayer may elect to include such proceeds in income for his last taxable year beginning in 1977.
"(b)
[§452. Repealed. June 15, 1955, ch. 143, §1(a), 69 Stat. 134 ]
Section, act Aug. 16, 1954, ch. 736,
Effective Date of Repeal
Repeal effective with respect to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 3 of act June 15, 1955, set out as an Effective Date of 1955 Amendment note under
Savings Provision
For provisions concerning increase in tax in any taxable year ending on or before June 15, 1955 by reason of enactment of act June 15, 1955, see section 4 of act June 15, 1955, set out as a note under
§453. Installment method
(a) General rule
Except as otherwise provided in this section, income from an installment sale shall be taken into account for purposes of this title under the installment method.
(b) Installment sale defined
For purposes of this section—
(1) In general
The term "installment sale" means a disposition of property where at least 1 payment is to be received after the close of the taxable year in which the disposition occurs.
(2) Exceptions
The term "installment sale" does not include—
(A) Dealer dispositions
Any dealer disposition (as defined in subsection (l)).
(B) Inventories of personal property
A disposition of personal property of a kind which is required to be included in the inventory of the taxpayer if on hand at the close of the taxable year.
(c) Installment method defined
For purposes of this section, the term "installment method" means a method under which the income recognized for any taxable year from a disposition is that proportion of the payments received in that year which the gross profit (realized or to be realized when payment is completed) bears to the total contract price.
(d) Election out
(1) In general
Subsection (a) shall not apply to any disposition if the taxpayer elects to have subsection (a) not apply to such disposition.
(2) Time and manner for making election
Except as otherwise provided by regulations, an election under paragraph (1) with respect to a disposition may be made only on or before the due date prescribed by law (including extensions) for filing the taxpayer's return of the tax imposed by this chapter for the taxable year in which the disposition occurs. Such an election shall be made in the manner prescribed by regulations.
(3) Election revocable only with consent
An election under paragraph (1) with respect to any disposition may be revoked only with the consent of the Secretary.
(e) Second dispositions by related persons
(1) In general
If—
(A) any person disposes of property to a related person (hereinafter in this subsection referred to as the "first disposition"), and
(B) before the person making the first disposition receives all payments with respect to such disposition, the related person disposes of the property (hereinafter in this subsection referred to as the "second disposition"),
then, for purposes of this section, the amount realized with respect to such second disposition shall be treated as received at the time of the second disposition by the person making the first disposition.
(2) 2-year cutoff for property other than marketable securities
(A) In general
Except in the case of marketable securities, paragraph (1) shall apply only if the date of the second disposition is not more than 2 years after the date of the first disposition.
(B) Substantial diminishing of risk of ownership
The running of the 2-year period set forth in subparagraph (A) shall be suspended with respect to any property for any period during which the related person's risk of loss with respect to the property is substantially diminished by—
(i) the holding of a put with respect to such property (or similar property),
(ii) the holding by another person of a right to acquire the property, or
(iii) a short sale or any other transaction.
(3) Limitation on amount treated as received
The amount treated for any taxable year as received by the person making the first disposition by reason of paragraph (1) shall not exceed the excess of—
(A) the lesser of—
(i) the total amount realized with respect to any second disposition of the property occurring before the close of the taxable year, or
(ii) the total contract price for the first disposition, over
(B) the sum of—
(i) the aggregate amount of payments received with respect to the first disposition before the close of such year, plus
(ii) the aggregate amount treated as received with respect to the first disposition for prior taxable years by reason of this subsection.
(4) Fair market value where disposition is not sale or exchange
For purposes of this subsection, if the second disposition is not a sale or exchange, an amount equal to the fair market value of the property disposed of shall be substituted for the amount realized.
(5) Later payments treated as receipt of tax paid amounts
If paragraph (1) applies for any taxable year, payments received in subsequent taxable years by the person making the first disposition shall not be treated as the receipt of payments with respect to the first disposition to the extent that the aggregate of such payments does not exceed the amount treated as received by reason of paragraph (1).
(6) Exception for certain dispositions
For purposes of this subsection—
(A) Reacquisitions of stock by issuing corporation not treated as first dispositions
Any sale or exchange of stock to the issuing corporation shall not be treated as a first disposition.
(B) Involuntary conversions not treated as second dispositions
A compulsory or involuntary conversion (within the meaning of section 1033) and any transfer thereafter shall not be treated as a second disposition if the first disposition occurred before the threat or imminence of the conversion.
(C) Dispositions after death
Any transfer after the earlier of—
(i) the death of the person making the first disposition, or
(ii) the death of the person acquiring the property in the first disposition,
and any transfer thereafter shall not be treated as a second disposition.
(7) Exception where tax avoidance not a principal purpose
This subsection shall not apply to a second disposition (and any transfer thereafter) if it is established to the satisfaction of the Secretary that neither the first disposition nor the second disposition had as one of its principal purposes the avoidance of Federal income tax.
(8) Extension of statute of limitations
The period for assessing a deficiency with respect to a first disposition (to the extent such deficiency is attributable to the application of this subsection) shall not expire before the day which is 2 years after the date on which the person making the first disposition furnishes (in such manner as the Secretary may by regulations prescribe) a notice that there was a second disposition of the property to which this subsection may have applied. Such deficiency may be assessed notwithstanding the provisions of any law or rule of law which would otherwise prevent such assessment.
(f) Definitions and special rules
For purposes of this section—
(1) Related person
Except for purposes of subsections (g) and (h), the term "related person" means—
(A) a person whose stock would be attributed under section 318(a) (other than paragraph (4) thereof) to the person first disposing of the property, or
(B) a person who bears a relationship described in section 267(b) to the person first disposing of the property.
(2) Marketable securities
The term "marketable securities" means any security for which, as of the date of the disposition, there was a market on an established securities market or otherwise.
(3) Payment
Except as provided in paragraph (4), the term "payment" does not include the receipt of evidences of indebtedness of the person acquiring the property (whether or not payment of such indebtedness is guaranteed by another person).
(4) Purchaser evidences of indebtedness payable on demand or readily tradable
Receipt of a bond or other evidence of indebtedness which—
(A) is payable on demand, or
(B) is readily tradable,
shall be treated as receipt of payment.
(5) Readily tradable defined
For purposes of paragraph (4), the term "readily tradable" means a bond or other evidence of indebtedness which is issued—
(A) with interest coupons attached or in registered form (other than one in registered form which the taxpayer establishes will not be readily tradable in an established securities market), or
(B) in any other form designed to render such bond or other evidence of indebtedness readily tradable in an established securities market.
(6) Like-kind exchanges
In the case of any exchange described in section 1031(b)—
(A) the total contract price shall be reduced to take into account the amount of any property permitted to be received in such exchange without recognition of gain,
(B) the gross profit from such exchange shall be reduced to take into account any amount not recognized by reason of section 1031(b), and
(C) the term "payment", when used in any provision of this section other than subsection (b)(1), shall not include any property permitted to be received in such exchange without recognition of gain.
Similar rules shall apply in the case of an exchange which is described in section 356(a) and is not treated as a dividend.
(7) Depreciable property
The term "depreciable property" means property of a character which (in the hands of the transferee) is subject to the allowance for depreciation provided in section 167.
(8) Payments to be received defined
The term "payments to be received" includes—
(A) the aggregate amount of all payments which are not contingent as to amount, and
(B) the fair market value of any payments which are contingent as to amount.
(g) Sale of depreciable property to controlled entity
(1) In general
In the case of an installment sale of depreciable property between related persons—
(A) subsection (a) shall not apply,
(B) for purposes of this title—
(i) except as provided in clause (ii), all payments to be received shall be treated as received in the year of the disposition, and
(ii) in the case of any payments which are contingent as to the amount but with respect to which the fair market value may not be reasonably ascertained, the basis shall be recovered ratably, and
(C) the purchaser may not increase the basis of any property acquired in such sale by any amount before the time such amount is includible in the gross income of the seller.
(2) Exception where tax avoidance not a principal purpose
Paragraph (1) shall not apply if it is established to the satisfaction of the Secretary that the disposition did not have as one of its principal purposes the avoidance of Federal income tax.
(3) Related persons
For purposes of this subsection, the term "related persons" has the meaning given to such term by section 1239(b), except that such term shall include 2 or more partnerships having a relationship to each other described in section 707(b)(1)(B).
(h) Use of installment method by shareholders in certain liquidations
(1) Receipt of obligations not treated as receipt of payment
(A) In general
If, in a liquidation to which section 331 applies, the shareholder receives (in exchange for the shareholder's stock) an installment obligation acquired in respect of a sale or exchange by the corporation during the 12-month period beginning on the date a plan of complete liquidation is adopted and the liquidation is completed during such 12-month period, then, for purposes of this section, the receipt of payments under such obligation (but not the receipt of such obligation) by the shareholder shall be treated as the receipt of payment for the stock.
(B) Obligations attributable to sale of inventory must result from bulk sale
Subparagraph (A) shall not apply to an installment obligation acquired in respect of a sale or exchange of—
(i) stock in trade of the corporation,
(ii) other property of a kind which would properly be included in the inventory of the corporation if on hand at the close of the taxable year, and
(iii) property held by the corporation primarily for sale to customers in the ordinary course of its trade or business,
unless such sale or exchange is to 1 person in 1 transaction and involves substantially all of such property attributable to a trade or business of the corporation.
(C) Special rule where obligor and shareholder are related persons
If the obligor of any installment obligation and the shareholder are married to each other or are related persons (within the meaning of section 1239(b)), to the extent such installment obligation is attributable to the disposition by the corporation of depreciable property—
(i) subparagraph (A) shall not apply to such obligation, and
(ii) for purposes of this title, all payments to be received by the shareholder shall be deemed received in the year the shareholder receives the obligation.
(D) Coordination with subsection (e)(1)(A)
For purposes of subsection (e)(1)(A), disposition of property by the corporation shall be treated also as disposition of such property by the shareholder.
(E) Sales by liquidating subsidiaries
For purposes of subparagraph (A), in the case of a controlling corporate shareholder (within the meaning of section 368(c)) of a selling corporation, an obligation acquired in respect of a sale or exchange by the selling corporation shall be treated as so acquired by such controlling corporate shareholder. The preceding sentence shall be applied successively to each controlling corporate shareholder above such controlling corporate shareholder.
(2) Distributions received in more than 1 taxable year of shareholder
If—
(A) paragraph (1) applies with respect to any installment obligation received by a shareholder from a corporation, and
(B) by reason of the liquidation such shareholder receives property in more than 1 taxable year,
then, on completion of the liquidation, basis previously allocated to property so received shall be reallocated for all such taxable years so that the shareholder's basis in the stock of the corporation is properly allocated among all property received by such shareholder in such liquidation.
(i) Recognition of recapture income in year of disposition
(1) In general
In the case of any installment sale of property to which subsection (a) applies—
(A) notwithstanding subsection (a), any recapture income shall be recognized in the year of the disposition, and
(B) any gain in excess of the recapture income shall be taken into account under the installment method.
(2) Recapture income
For purposes of paragraph (1), the term "recapture income" means, with respect to any installment sale, the aggregate amount which would be treated as ordinary income under section 1245 or 1250 (or so much of section 751 as relates to section 1245 or 1250) for the taxable year of the disposition if all payments to be received were received in the taxable year of disposition.
(j) Regulations
(1) In general
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this section.
(2) Selling price not readily ascertainable
The regulations prescribed under paragraph (1) shall include regulations providing for ratable basis recovery in transactions where the gross profit or the total contract price (or both) cannot be readily ascertained.
(k) Current inclusion in case of revolving credit plans, etc.
In the case of—
(1) any disposition of personal property under a revolving credit plan, or
(2) any installment obligation arising out of a sale of—
(A) stock or securities which are traded on an established securities market, or
(B) to the extent provided in regulations, property (other than stock or securities) of a kind regularly traded on an established market,
subsection (a) shall not apply, and, for purposes of this title, all payments to be received shall be treated as received in the year of disposition. The Secretary may provide for the application of this subsection in whole or in part for transactions in which the rules of this subsection otherwise would be avoided through the use of related parties, pass-thru entities, or intermediaries.
(l) Dealer dispositions
For purposes of subsection (b)(2)(A)—
(1) In general
The term "dealer disposition" means any of the following dispositions:
(A) Personal property
Any disposition of personal property by a person who regularly sells or otherwise disposes of personal property of the same type on the installment plan.
(B) Real property
Any disposition of real property which is held by the taxpayer for sale to customers in the ordinary course of the taxpayer's trade or business.
(2) Exceptions
The term "dealer disposition" does not include—
(A) Farm property
The disposition on the installment plan of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5)).
(B) Timeshares and residential lots
(i) In general
Any dispositions described in clause (ii) on the installment plan if the taxpayer elects to have paragraph (3) apply to any installment obligations which arise from such dispositions. An election under this paragraph shall not apply with respect to an installment obligation which is guaranteed by any person other than an individual.
(ii) Dispositions to which subparagraph applies
A disposition is described in this clause if it is a disposition in the ordinary course of the taxpayer's trade or business to an individual of—
(I) a timeshare right to use or a timeshare ownership interest in residential real property for not more than 6 weeks per year, or a right to use specified campgrounds for recreational purposes, or
(II) any residential lot, but only if the taxpayer (or any related person) is not to make any improvements with respect to such lot.
For purposes of subclause (I), a timeshare right to use (or timeshare ownership interest in) property held by the spouse, children, grandchildren, or parents of an individual shall be treated as held by such individual.
(C) Carrying charges or interest
Any carrying charges or interest with respect to a disposition described in subparagraph (A) or (B) which are added on the books of account of the seller to the established cash selling price of the property shall be included in the total contract price of the property and, if such charges or interest are not so included, any payments received shall be treated as applying first against such carrying charges or interest.
(3) Payment of interest on timeshares and residential lots
(A) In general
In the case of any installment obligation to which paragraph (2)(B) applies, the tax imposed by this chapter for any taxable year for which payment is received on such obligation shall be increased by the amount of interest determined in the manner provided under subparagraph (B).
(B) Computation of interest
(i) In general
The amount of interest referred to in subparagraph (A) for any taxable year shall be determined—
(I) on the amount of the tax for such taxable year which is attributable to the payments received during such taxable year on installment obligations to which this subsection applies,
(II) for the period beginning on the date of sale, and ending on the date such payment is received, and
(III) by using the applicable Federal rate under section 1274 (without regard to subsection (d)(2) thereof) in effect at the time of the sale compounded semiannually.
(ii) Interest not taken into account
For purposes of clause (i), the portion of any tax attributable to the receipt of any payment shall be determined without regard to any interest imposed under subparagraph (A).
(iii) Taxable year of sale
No interest shall be determined for any payment received in the taxable year of the disposition from which the installment obligation arises.
(C) Treatment as interest
Any amount payable under this paragraph shall be taken into account in computing the amount of any deduction allowable to the taxpayer for interest paid or accrued during such taxable year.
(Added
Prior Provisions
A prior section 453, acts Aug. 16, 1954, ch. 736,
Amendments
2004—Subsec. (f)(4)(B).
2000—Subsecs. (a), (d)(1), (i)(1), (k).
1999—Subsec. (a).
Subsecs. (d)(1), (i)(1), (k).
1988—Subsec. (f)(1).
Subsec. (f)(8).
Subsec. (g)(1).
"(A) subsection (a) shall not apply, and
"(B) for purposes of this title—
"(i) except as provided in clause (ii), all payments to be received shall be treated as received in the year of the disposition, and
"(ii) in the case of any payments which are contingent as to amount but with respect to which the fair market value may not be reasonably ascertained—
"(I) the basis shall be recovered ratably, and
"(II) the purchaser may not increase the basis of any property acquired in such sale by any amount before such time as the seller includes such amount in income."
Subsec. (g)(3).
Subsec. (h)(1)(B).
Subsec. (h)(1)(E).
Subsec. (j).
Subsec. (k).
Subsec. (l)(1)(A).
1987—Subsec. (b)(2)(A).
Subsec. (l).
1986—Subsec. (f)(1).
Subsec. (f)(8).
Subsec. (g).
Subsec. (g)(1).
Subsec. (h).
Subsec. (h)(1)(A).
Subsec. (h)(1)(B).
Subsec. (h)(1)(E).
Subsec. (i)(2).
Subsec. (j).
1984—Subsec. (g).
Subsec. (h)(1)(C).
Subsec. (i).
1983—Subsec. (f)(6)(C).
1981—Subsecs. (i), (j).
Effective Date of 2004 Amendment
Effective Date and Construction of 2000 Amendment
"(a)
"(b)
Effective Date of 1999 Amendment
Effective Date of 1988 Amendment
Amendment by sections 1006(e)(7), (i)(1), (2), 1008(g)(1), and 1018(u)(25), (26) of
Amendment by section 2004(d)(1), (5) of
Effective Date of 1987 Amendment
"(1)
"(2)
"(A)
"(B)
"(i)
"(ii)
"(I) such change shall be treated as initiated by the taxpayer,
"(II) such change shall be treated as made with the consent of the Secretary of the Treasury or his delegate, and
"(III) the net amount of adjustments required by section 481 of the Internal Revenue Code of 1986 shall be taken into account over a period not longer than 4 taxable years.
"(C)
"(3)
"(A)
"(B)
"(i)
"(ii)
"(C)
"(i) dispositions after August 16, 1986, and before the 1st day of such taxable year shall be treated as made on such 1st day, and
"(ii) subsections (b)(2)(B) and (c)(4) of section 453A of such Code shall be applied separately with respect to such dispositions by substituting for '$5,000,000' the amount which bears the same ratio to $5,000,000 as the number of days after August 16, 1986, and before such 1st day bears to 365.
"(4)
"(5)
Effective Date of 1986 Amendment
Amendment by section 631(e)(8) of
Amendment by section 642(a)(1)(D), (3), (b) of
"(1)
"(2)
"(3)
"(A) such change shall be treated as initiated by the taxpayer,
"(B) such change shall be treated as having been made with the consent of the Secretary,
"(C) the period for taking into account adjustments under section 481 of such Code by reason of such change shall be equal to 4 years, and
"(D) except as provided in paragraph (4), the amount taken into account in each of such 4 years shall be the applicable percentage (determined in accordance with the following table) of the net adjustment:
| "In the case of the: | The applicable percentage is: |
|---|---|
| 1st taxable year | 15 |
| 2nd taxable year | 25 |
| 3rd taxable year | 30 |
| 4th taxable year | 30. |
If the taxpayer's last taxable year beginning before January 1, 1987, was the taxpayer's 1st taxable year in which sales were made under a revolving credit plan, all adjustments under section 481 of such Code shall be taken into account in the taxpayer's 1st taxable year beginning after December 31, 1986.
"(4)
"(A)
"(i) the percentage determined under subparagraph (B) shall be substituted for the applicable percentage which would otherwise apply under paragraph (3)(D), and
"(ii) any increase in the applicable percentage by reason of clause (i) shall be applied to reduce the applicable percentage determined under paragraph (3)(D) for subsequent taxable years in the adjustment period (beginning with the 1st of such subsequent taxable years).
"(B)
"(i) the percentage determined by dividing the aggregate contraction in revolving installment obligations by the aggregate face amount of such obligations outstanding as of the close of the taxpayer's last taxable year beginning before January 1, 1987, over
"(ii) the sum of the applicable percentages under paragraph (3)(D) (as modified by this paragraph) for prior taxable years in the adjustment period.
"(C)
"(i) the aggregate face amount of the revolving installment obligations outstanding as of the close of the taxpayer's last taxable year beginning before January 1, 1987, exceeds
"(ii) the aggregate face amount of the revolving installment obligations outstanding as of the close of the taxable year involved.
"(D)
"(E)
"(i) which was disposed of to an unrelated person on or before October 26, 1987, or
"(ii) was disposed of to an unrelated person on or after such date pursuant to a binding written contract in effect on October 26, 1987, and at all times thereafter before such disposition.
For purposes of the preceding sentence, the term 'unrelated person' means any person who is not a related person (as defined in section 453(g) of the Internal Revenue Code of 1986).
"(5)
"(A) no losses from such dispositions shall be recognized, and
"(B) the aggregate amount of the adjustment for taxable years in the adjustment period (in reverse order of time) shall be reduced by the amount of such losses.
"(6)
Amendment by section 1809(c) of
Effective Date of 1984 Amendment
"(1)
"(2)
"(3)
Amendment by section 421(b)(6)(B), (C) of
Effective Date of 1983 Amendment
Effective Date of 1981 Amendment
Amendment by
Effective Date; Application of Former Section 453(b) to Certain Dispositions
"(1)
"(2)
"(3)
"(4)
"(5)
"(6)
"(7)
"(A) paragraph (2) of such section 453(b), and
"(B) any requirement that more than 1 payment be received."
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
§453A. Special rules for nondealers
(a) General rule
In the case of an installment obligation to which this section applies—
(1) interest shall be paid on the deferred tax liability with respect to such obligation in the manner provided under subsection (c), and
(2) the pledging rules under subsection (d) shall apply.
(b) Installment obligations to which section applies
(1) In general
This section shall apply to any obligation which arises from the disposition of any property under the installment method, but only if the sales price of such property exceeds $150,000.
(2) Special rule for interest payments
For purposes of subsection (a)(1), this section shall apply to an obligation described in paragraph (1) arising during a taxable year only if—
(A) such obligation is outstanding as of the close of such taxable year, and
(B) the face amount of all such obligations held by the taxpayer which arose during, and are outstanding as of the close of, such taxable year exceeds $5,000,000.
Except as provided in regulations, all persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as one person for purposes of this paragraph and subsection (c)(4).
(3) Exception for personal use and farm property
An installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition—
(A) by an individual of personal use property (within the meaning of section 1275(b)(3)), or
(B) of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5)).
(4) Special rule for timeshares and residential lots
An installment obligation shall not be treated as described in paragraph (1) if it arises from a disposition described in section 453(l)(2)(B), but the provisions of section 453(l)(3) (relating to interest payments on timeshares and residential lots) shall apply to such obligation.
(5) Sales price
For purposes of paragraph (1), all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as 1 sale or exchange.
(c) Interest on deferred tax liability
(1) In general
If an obligation to which this section applies is outstanding as of the close of any taxable year, the tax imposed by this chapter for such taxable year shall be increased by the amount of interest determined in the manner provided under paragraph (2).
(2) Computation of interest
For purposes of paragraph (1), the interest for any taxable year shall be an amount equal to the product of—
(A) the applicable percentage of the deferred tax liability with respect to such obligation, multiplied by
(B) the underpayment rate in effect under section 6621(a)(2) for the month with or within which the taxable year ends.
(3) Deferred tax liability
For purposes of this section, the term "deferred tax liability" means, with respect to any taxable year, the product of—
(A) the amount of gain with respect to an obligation which has not been recognized as of the close of such taxable year, multiplied by
(B) the maximum rate of tax in effect under section 1 or 11, whichever is appropriate, for such taxable year.
For purposes of applying the preceding sentence with respect to so much of the gain which, when recognized, will be treated as long-term capital gain, the maximum rate on net capital gain under section 1(h) shall be taken into account.
(4) Applicable percentage
For purposes of this subsection, the term "applicable percentage" means, with respect to obligations arising in any taxable year, the percentage determined by dividing—
(A) the portion of the aggregate face amount of such obligations outstanding as of the close of such taxable year in excess of $5,000,000, by
(B) the aggregate face amount of such obligations outstanding as of the close of such taxable year.
(5) Treatment as interest
Any amount payable under this subsection shall be taken into account in computing the amount of any deduction allowable to the taxpayer for interest paid or accrued during the taxable year.
(6) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subsection including regulations providing for the application of this subsection in the case of contingent payments, short taxable years, and pass-thru entities.
(d) Pledges, etc., of installment obligations
(1) In general
For purposes of section 453, if any indebtedness (hereinafter in this subsection referred to as "secured indebtedness") is secured by an installment obligation to which this section applies, the net proceeds of the secured indebtedness shall be treated as a payment received on such installment obligation as of the later of—
(A) the time the indebtedness becomes secured indebtedness, or
(B) the time the proceeds of such indebtedness are received by the taxpayer.
(2) Limitation based on total contract price
The amount treated as received under paragraph (1) by reason of any secured indebtedness shall not exceed the excess (if any) of—
(A) the total contract price, over
(B) any portion of the total contract price received under the contract before the later of the times referred to in subparagraph (A) or (B) of paragraph (1) (including amounts previously treated as received under paragraph (1) but not including amounts not taken into account by reason of paragraph (3)).
(3) Later payments treated as receipt of tax paid amounts
If any amount is treated as received under paragraph (1) with respect to any installment obligation, subsequent payments received on such obligation shall not be taken into account for purposes of section 453 to the extent that the aggregate of such subsequent payments does not exceed the aggregate amount treated as received under paragraph (1).
(4) Secured indebtedness
For purposes of this subsection indebtedness is secured by an installment obligation to the extent that payment of principal or interest on such indebtedness is directly secured (under the terms of the indebtedness or any underlying arrangements) by any interest in such installment obligation. A payment shall be treated as directly secured by an interest in an installment obligation to the extent an arrangement allows the taxpayer to satisfy all or a portion of the indebtedness with the installment obligation.
(e) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations—
(1) disallowing the use of the installment method in whole or in part for transactions in which the rules of this section otherwise would be avoided through the use of related persons, pass-thru entities, or intermediaries, and
(2) providing that the sale of an interest in a partnership or other pass-thru entity will be treated as a sale of the proportionate share of the assets of the partnership or other entity.
(Added
Prior Provisions
Provisions similar to those comprising this section were contained in former
Amendments
2017—Subsec. (c)(3).
1999—Subsec. (d)(4).
1993—Subsec. (c)(3).
1989—Subsec. (b)(2)(B).
Subsec. (b)(3).
Subsec. (c)(5), (6).
Subsec. (d)(1)(B).
Subsec. (d)(2)(B).
1988—
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (b)(3).
"(A) by an individual of personal use property (within the meaning of section 1275(b)(3)), or
"(B) of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5))."
Subsec. (c).
Subsec. (e).
1987—
1986—Subsec. (a)(2).
Subsec. (c).
Effective Date of 2017 Amendment
Amendment by
Effective Date of 1999 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1989 Amendment
Amendment by sections 7812(c)(2) and 7815(g) of
Amendment by section 7821(a)(1)–(3), (4)(B) of
Effective Date of 1988 Amendment
Amendment by section 1008(g)(2) of
Amendment by section 2004(d)(2), (7), (8) of
"(1)
"(2)
"(A) such sale is pursuant to a written binding contract in effect on October 21, 1988, and at all times thereafter before such sale,
"(B) such sale is pursuant to a letter of intent in effect on October 21, 1988, or
"(C) there is a board of directors or shareholder approval for such sale on or before October 21, 1988."
Effective Date of 1987 Amendment
Amendment by
Effective Date
For effective date, see section 6(a)(4) of
Certain Repledges Permitted
"(a)
"(b)
"(c)
"(1) a refinancing is attributable to the calling of indebtedness by the creditor, and
"(2) such refinancing is not with the creditor under the refinanced indebtedness or a person related to such creditor,
such refinancing shall, to the extent the refinanced indebtedness qualifies under subsections (a) and (b), be treated as a continuation of such refinanced indebtedness."
Amendment by Pub. L. 99–514 Treated as Change in Method of Accounting
For provisions requiring change in accounting method in the case of any taxpayer who made sales under revolving credit plan and was on installment method under this section for such taxpayer's last taxable year beginning before Jan. 1, 1987, see section 812(c)(2) of
§453B. Gain or loss on disposition of installment obligations
(a) General rule
If an installment obligation is satisfied at other than its face value or distributed, transmitted, sold, or otherwise disposed of, gain or loss shall result to the extent of the difference between the basis of the obligation and—
(1) the amount realized, in the case of satisfaction at other than face value or a sale or exchange, or
(2) the fair market value of the obligation at the time of distribution, transmission, or disposition, in the case of the distribution, transmission, or disposition otherwise than by sale or exchange.
any gain or loss so resulting shall be considered as resulting from the sale or exchange of the property in respect of which the installment obligation was received.
(b) Basis of obligation
The basis of an installment obligation shall be the excess of the face value of the obligation over an amount equal to the income which would be returnable were the obligation satisfied in full.
(c) Special rule for transmission at death
Except as provided in section 691 (relating to recipients of income in respect of decedents), this section shall not apply to the transmission of installment obligations at death.
(d) Exception for distributions to which section 337(a) applies
Subsection (a) shall not apply to any distribution to which section 337(a) applies.
(e) Life insurance companies
(1) In general
In the case of a disposition of an installment obligation by any person other than a life insurance company (as defined in section 816(a)) to such an insurance company or to a partnership of which such an insurance company is a partner, no provision of this subtitle providing for the nonrecognition of gain shall apply with respect to any gain resulting under subsection (a). If a corporation which is a life insurance company for the taxable year was (for the preceding taxable year) a corporation which was not a life insurance company, such corporation shall, for purposes of this subsection and subsection (a), be treated as having transferred to a life insurance company, on the last day of the preceding taxable year, all installment obligations which it held on such last day. A partnership of which a life insurance company becomes a partner shall, for purposes of this subsection and subsection (a), be treated as having transferred to a life insurance company, on the last day of the preceding taxable year of such partnership, all installment obligations which it holds at the time such insurance company becomes a partner.
(2) Special rule where life insurance company elects to treat income as not related to insurance business
Paragraph (1) shall not apply to any transfer or deemed transfer of an installment obligation if the life insurance company elects (at such time and in such manner as the Secretary may by regulations prescribe) to determine its life insurance company taxable income—
(A) by returning the income on such installment obligation under the installment method prescribed in section 453, and
(B) as if such income were an item attributable to a noninsurance business.
(3) Noninsurance business
(A) In general
For purposes of this subsection, the term "noninsurance business" means any activity which is not an insurance business.
(B) Certain activities treated as insurance businesses
For purposes of subparagraph (A), any activity which is not an insurance business shall be treated as an insurance business if—
(i) it is of a type traditionally carried on by life insurance companies for investment purposes, but only if the carrying on of such activity (other than in the case of real estate) does not constitute the active conduct of a trade or business, or
(ii) it involves the performance of administrative services in connection with plans providing life insurance, pension, or accident and health benefits.
(f) Obligation becomes unenforceable
For purposes of this section, if any installment obligation is canceled or otherwise becomes unenforceable—
(1) the obligation shall be treated as if it were disposed of in a transaction other than a sale or exchange, and
(2) if the obligor and obligee are related persons (within the meaning of section 453(f)(1)), the fair market value of the obligation shall be treated as not less than its face amount.
(g) Transfers between spouses or incident to divorce
In the case of any transfer described in subsection (a) of section 1041 (other than a transfer in trust)—
(1) subsection (a) of this section shall not apply, and
(2) the same tax treatment with respect to the transferred installment obligation shall apply to the transferee as would have applied to the transferor.
(h) Certain liquidating distributions by S corporations
If—
(1) an installment obligation is distributed by an S corporation in a complete liquidation, and
(2) receipt of the obligation is not treated as payment for the stock by reason of section 453(h)(1),
then, except for purposes of any tax imposed by subchapter S, no gain or loss with respect to the distribution of the obligation shall be recognized by the distributing corporation. Under regulations prescribed by the Secretary, the character of the gain or loss to the shareholder shall be determined in accordance with the principles of section 1366(b).
(Added
Prior Provisions
Provisions similar to those comprising this section were contained in former
Amendments
2018—
2017—Subsec. (e)(2)(B).
Subsec. (e)(3).
1990—Subsec. (d).
"(1) an installment obligation is distributed in a liquidation to which section 332 (relating to complete liquidations of subsidiaries) applies, and
"(2) the basis of such obligation in the hands of the distributee is determined under section 334(b)(1),
then no gain or loss with respect to the distribution of such obligation shall be recognized by the distributing corporation."
1988—Subsec. (h).
1986—Subsec. (d).
Subsec. (e)(2)(B).
Subsec. (g).
1984—Subsec. (d)(2).
Subsec. (e)(1).
Subsec. (e)(2).
Subsec. (g).
1983—Subsec. (d)(2).
1980—Subsec. (d).
Effective Date of 2017 Amendment
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 631(e)(9) of
Amendment by section 1842(c) of
Effective Date of 1984 Amendment
Amendment by section 43(c)(2) of
Amendment by section 211(b)(6) of
Amendment by section 421(b)(3) of
Amendment by section 492(b)(3) of
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1980 Amendment
For effective date of amendment by
Effective Date
For effective date, see section 6(a)(1), (5) of
Repeal of Modification of Installment Method
"(a)
"(b)
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Treatment of Elections Under Section 453B(e)(2)
[§453C. Repealed. Pub. L. 100–203, title X, §10202(a)(1), Dec. 22, 1987, 101 Stat. 1330–388 ]
Section, added
Effective Date of Repeal
Repeal applicable to dispositions in taxable years beginning after Dec. 31, 1987, with special rules for dealers and non-dealers, and coordination with Tax Reform Act of 1986, see section 10202(e)(1)–(3), (5) of
Applicability of Amendments by Pub. L. 100–203 and Pub. L. 100–647
Effective Date; Allocation of Indebtedness as Payment on Installment Obligation
"(1)
"[(2) Repealed.
"(3)
"(A) 125/8 percent subordinated debentures with a total face amount of $175,000,000 issued pursuant to a trust indenture dated as of September 1, 1985.
"(B) A revolving credit term loan in the maximum amount of $130,000,000 made pursuant to a revolving credit and security agreement dated as of September 6, 1985, payable in various stages with final payment due on August 31, 1992.
This paragraph shall also apply to indebtedness which replaces indebtedness described in this paragraph if such indebtedness does not exceed the amount and maturity of the indebtedness it replaces.
"(4)
"(A) for which a contract to purchase land for the project was entered into at least 5 years before the date of the enactment of this Act,
"(B) with respect to which land for the project was purchased before September 26, 1985,
"(C) with respect to which building permits for the project were obtained, and construction commenced, before September 26, 1985,
"(D) in conjunction with which not less than 80 units of low-income housing are deeded to a tax-exempt organization designated by a local government, and
"(E) with respect to which at least $1,000,000 of expenses were incurred before September 26, 1985.
"(5)
"(A) such corporation was incorporated on May 25, 1984, for the purpose of acquiring all of the stock of another corporation,
"(B) such acquisition took place on October 23, 1984,
"(C) in connection with such acquisition, the corporation incurred indebtedness of approximately $151,000,000, and
"(D) substantially all of the stock of the corporation is owned directly or indirectly by employees of the corporation the stock of which was acquired on October 23, 1984.
"(6)
"(A) in the 1st taxable year of the taxpayer ending after December 31, 1986, shall be taken into account ratably over the 3 taxable years beginning with such 1st taxable year, and
"(B) in the 2nd taxable year of the taxpayer ending after December 31, 1986, shall be taken into account ratably over the 2 taxable years beginning with such 2nd taxable year.
"(7)
"(A) any increase in tax imposed by
"(B) any increase in tax imposed by such
"(8)
"(A) such note agreement was executed pursuant to an agreement of purchase and sale dated April 25, 1980,
"(B) more than ½ of the installment payments of the aggregate principal of such notes have been received by August 29, 1986, and
"(C) the last installment payment of the principal of such notes is due August 29, 1989,
shall be taxed at a rate of 28 percent.
"(9)
"(A)
"(B)
[
["(1)
["(2)
["(A) such changes shall be treated as initiated by the taxpayer,
["(B) such changes shall be treated as made with the consent of the Secretary of the Treasury, and
["(C) the net amount of the adjustments required to be taken into account under section 481(a) of the Internal Revenue Code of 1986 shall be taken into account ratably over the 4 taxable year period beginning with the first taxable year beginning more than 1 year after the date of the enactment of this Act."]
§454. Obligations issued at discount
(a) Non-interest-bearing obligations issued at a discount
If, in the case of a taxpayer owning any non-interest-bearing obligation issued at a discount and redeemable for fixed amounts increasing at stated intervals or owning an obligation described in paragraph (2) of subsection (c), the increase in the redemption price of such obligation occurring in the taxable year does not (under the method of accounting used in computing his taxable income) constitute income to him in such year, such taxpayer may, at his election made in his return for any taxable year, treat such increase as income received in such taxable year. If any such election is made with respect to any such obligation, it shall apply also to all such obligations owned by the taxpayer at the beginning of the first taxable year to which it applies and to all such obligations thereafter acquired by him and shall be binding for all subsequent taxable years, unless on application by the taxpayer the Secretary permits him, subject to such conditions as the Secretary deems necessary, to change to a different method. In the case of any such obligations owned by the taxpayer at the beginning of the first taxable year to which his election applies, the increase in the redemption price of such obligations occurring between the date of acquisition (or, in the case of an obligation described in paragraph (2) of subsection (c), the date of acquisition of the series E bond involved) and the first day of such taxable year shall also be treated as income received in such taxable year.
(b) Short-term obligations issued on discount basis
In the case of any obligation—
(1) of the United States; or
(2) of a State or a possession of the United States, or any political subdivision of any of the foregoing, or of the District of Columbia,
which is issued on a discount basis and payable without interest at a fixed maturity date not exceeding 1 year from the date of issue, the amount of discount at which such obligation is originally sold shall not be considered to accrue until the date on which such obligation is paid at maturity, sold, or otherwise disposed of.
(c) Matured United States savings bonds
In the case of a taxpayer who—
(1) holds a series E United States savings bond at the date of maturity, and
(2) pursuant to regulations prescribed under
the increase in redemption value (to the extent not previously includible in gross income) in excess of the amount paid for such series E bond shall be includible in gross income in the taxable year in which the obligation is finally redeemed or in the taxable year of final maturity, whichever is earlier. This subsection shall not apply to a corporation, and shall not apply in the case of any taxable year for which the taxpayer's taxable income is computed under an accrual method of accounting or for which an election made by the taxpayer under subsection (a) applies.
(Aug. 16, 1954, ch. 736,
Amendments
1983—Subsec. (c)(2).
1976—Subsec. (a).
Subsec. (b)(2).
1959—Subsec. (c)(2).
§455. Prepaid subscription income
(a) Year in which included
Prepaid subscription income to which this section applies shall be included in gross income for the taxable years during which the liability described in subsection (d)(2) exists.
(b) Where taxpayer's liability ceases
In the case of any prepaid subscription income to which this section applies—
(1) If the liability described in subsection (d)(2) ends, then so much of such income as was not includible in gross income under subsection (a) for preceding taxable years shall be included in gross income for the taxable year in which the liability ends.
(2) If the taxpayer dies or ceases to exist, then so much of such income as was not includible in gross income under subsection (a) for preceding taxable years shall be included in gross income for the taxable year in which such death, or such cessation of existence, occurs.
(c) Prepaid subscription income to which this section applies
(1) Election of benefits
This section shall apply to prepaid subscription income if and only if the taxpayer makes an election under this section with respect to the trade or business in connection with which such income is received. The election shall be made in such manner as the Secretary may by regulations prescribe. No election may be made with respect to a trade or business if in computing taxable income the cash receipts and disbursements method of accounting is used with respect to such trade or business.
(2) Scope of election
An election made under this section shall apply to all prepaid subscription income received in connection with the trade or business with respect to which the taxpayer has made the election; except that the taxpayer may, to the extent permitted under regulations prescribed by the Secretary, include in gross income for the taxable year of receipt the entire amount of any prepaid subscription income if the liability from which it arose is to end within 12 months after the date of receipt. An election made under this section shall not apply to any prepaid subscription income received before the first taxable year for which the election is made.
(3) When election may be made
(A) With consent
A taxpayer may, with the consent of the Secretary, make an election under this section at any time.
(B) Without consent
A taxpayer may, without the consent of the Secretary, make an election under this section for his first taxable year in which he receives prepaid subscription income in the trade or business. Such election shall be made not later than the time prescribed by law for filing the return for the taxable year (including extensions thereof) with respect to which such election is made.
(4) Period to which election applies
An election under this section shall be effective for the taxable year with respect to which it is first made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to the revocation of such election. For purposes of this title, the computation of taxable income under an election made under this section shall be treated as a method of accounting.
(d) Definitions
For purposes of this section—
(1) Prepaid subscription income
The term "prepaid subscription income" means any amount (includible in gross income) which is received in connection with, and is directly attributable to, a liability which extends beyond the close of the taxable year in which such amount is received, and which is income from a subscription to a newspaper, magazine, or other periodical.
(2) Liability
The term "liability" means a liability to furnish or deliver a newspaper, magazine, or other periodical.
(3) Receipt of prepaid subscription income
Prepaid subscription income shall be treated as received during the taxable year for which it is includible in gross income under section 451 (without regard to this section).
(e) Deferral of income under established accounting procedures
Notwithstanding the provisions of this section, any taxpayer who has, for taxable years prior to the first taxable year to which this section applies, reported his income under an established and consistent method or practice of accounting for prepaid subscription income (to which this section would apply if an election were made) may continue to report his income for taxable years to which this title applies in accordance with such method or practice.
(Added
Amendments
1976—Subsec. (c).
Subsec. (c)(3)(B).
Effective Date of 1976 Amendment
Amendment by section 1901(a)(67) of
Effective Date
§456. Prepaid dues income of certain membership organizations
(a) Year in which included
Prepaid dues income to which this section applies shall be included in gross income for the taxable years during which the liability described in subsection (e)(2) exists.
(b) Where taxpayer's liability ceases
In the case of any prepaid dues income to which this section applies—
(1) If the liability described in subsection (e)(2) ends, then so much of such income as was not includible in gross income under subsection (a) for preceding taxable years shall be included in gross income for the taxable year in which the liability ends.
(2) If the taxpayer ceases to exist, then so much of such income as was not includible in gross income under subsection (a) for preceding taxable years shall be included in gross income for the taxable year in which such cessation of existence occurs.
(c) Prepaid dues income to which this section applies
(1) Election of benefits
This section shall apply to prepaid dues income if and only if the taxpayer makes an election under this section with respect to the trade or business in connection with which such income is received. The election shall be made in such manner as the Secretary may by regulations prescribe. No election may be made with respect to a trade or business if in computing taxable income the cash receipts and disbursements method of accounting is used with respect to such trade or business.
(2) Scope of election
An election made under this section shall apply to all prepaid dues income received in connection with the trade or business with respect to which the taxpayer has made the election; except that the taxpayer may, to the extent permitted under regulations prescribed by the Secretary, include in gross income for the taxable year of receipt the entire amount of any prepaid dues income if the liability from which it arose is to end within 12 months after the date of receipt. Except as provided in subsection (d), and election made under this section shall not apply to any prepaid dues income received before the first taxable year for which the election is made.
(3) When election may be made
(A) With consent
A taxpayer may, with the consent of the Secretary, make an election under this section at any time.
(B) Without consent
A taxpayer may, without the consent of the Secretary, make an election under this section for its first taxable year in which it receives prepaid dues income in the trade or business. Such election shall be made not later than the time prescribed by law for filing the return for the taxable year (including extensions thereof) with respect to which such election is made.
(4) Period to which election applies
An election under this section shall be effective for the taxable year with respect to which it is first made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to the revocation of such election. For purposes of this title, the computation of taxable income under an election made under this section shall be treated as a method of accounting.
(d) Transitional rule
(1) Amount includible in gross income for election years
If a taxpayer makes an election under this section with respect to prepaid dues income, such taxpayer shall include in gross income, for each taxable year to which such election applies, not only that portion of prepaid dues income received in such year otherwise includible in gross income for such year under this section, but shall also include in gross income for such year an additional amount equal to the amount of prepaid dues income received in the 3 taxable years preceding the first taxable year to which such election applies which would have been included in gross income in the taxable year had the election been effective 3 years earlier.
(2) Deductions of amounts included in income more than once
A taxpayer who makes an election with respect to prepaid dues income, and who includes in gross income for any taxable year to which the election applies an additional amount computed under paragraph (1), shall be permitted to deduct, for such taxable year and for each of the 4 succeeding taxable years, an amount equal to one-fifth of such additional amount, but only to the extent that such additional amount was also included in the taxpayer's gross income during any of the 3 taxable years preceding the first taxable year to which such election applies.
(e) Definitions
For purposes of this section—
(1) Prepaid dues income
The term "prepaid dues income" means any amount (includible in gross income) which is received by a membership organization in connection with, and is directly attributable to, a liability to render services or make available membership privileges over a period of time which extends beyond the close of the taxable year in which such amount is received.
(2) Liability
The term "liability" means a liability to render services or make available membership privileges over a period of time which does not exceed 36 months, which liability shall be deemed to exist ratably over the period of time that such services are required to be rendered, or that such membership privileges are required to be made available.
(3) Membership organization
The term "membership organization" means a corporation, association, federation, or other organization—
(A) organized without capital stock of any kind, and
(B) no part of the net earnings of which is distributable to any member.
(4) Receipt of prepaid dues income
Prepaid dues income shall be treated as received during the taxable year for which it is includible in gross income under section 451 (without regard to this section).
(Added
Amendments
1976—Subsec. (c).
Subsec. (c)(3)(B).
Effective Date of 1976 Amendment
Amendment by section 1901(a)(68) of
Effective Date
§457. Deferred compensation plans of State and local governments and tax-exempt organizations
(a) Year of inclusion in gross income
(1) In general
Any amount of compensation deferred under an eligible deferred compensation plan, and any income attributable to the amounts so deferred, shall be includible in gross income only for the taxable year in which such compensation or other income—
(A) is paid to the participant or other beneficiary, in the case of a plan of an eligible employer described in subsection (e)(1)(A), and
(B) is paid or otherwise made available to the participant or other beneficiary, in the case of a plan of an eligible employer described in subsection (e)(1)(B).
(2) Special rule for rollover amounts
To the extent provided in section 72(t)(9), section 72(t) shall apply to any amount includible in gross income under this subsection.
(3) Special rule for health and long-term care insurance
In the case of a plan of an eligible employer described in subsection (e)(1)(A), to the extent provided in section 402(l), paragraph (1) shall not apply to amounts otherwise includible in gross income under this subsection.
(b) Eligible deferred compensation plan defined
For purposes of this section, the term "eligible deferred compensation plan" means a plan established and maintained by an eligible employer—
(1) in which only individuals who perform service for the employer may be participants,
(2) which provides that (except as provided in paragraph (3)) the maximum amount which may be deferred under the plan for the taxable year (other than rollover amounts) shall not exceed the lesser of—
(A) the applicable dollar amount, or
(B) 100 percent of the participant's includible compensation,
(3) which may provide that, for 1 or more of the participant's last 3 taxable years ending before he attains normal retirement age under the plan, the ceiling set forth in paragraph (2) shall be the lesser of—
(A) twice the dollar amount in effect under subsection (b)(2)(A), or
(B) the sum of—
(i) the plan ceiling established for purposes of paragraph (2) for the taxable year (determined without regard to this paragraph), plus
(ii) so much of the plan ceiling established for purposes of paragraph (2) for taxable years before the taxable year as has not previously been used under paragraph (2) or this paragraph,
(4) which provides that compensation will be deferred for any calendar month only if an agreement providing for such deferral has been entered into before the beginning of such month,
(5) which meets the distribution requirements of subsection (d), and
(6) except as provided in subsection (g), which provides that—
(A) all amounts of compensation deferred under the plan,
(B) all property and rights purchased with such amounts, and
(C) all income attributable to such amounts, property, or rights,
shall remain (until made available to the participant or other beneficiary) solely the property and rights of the employer (without being restricted to the provision of benefits under the plan), subject only to the claims of the employer's general creditors.
A plan which is established and maintained by an employer which is described in subsection (e)(1)(A) and which is administered in a manner which is inconsistent with the requirements of any of the preceding paragraphs shall be treated as not meeting the requirements of such paragraph as of the 1st plan year beginning more than 180 days after the date of notification by the Secretary of the inconsistency unless the employer corrects the inconsistency before the 1st day of such plan year.
(c) Limitation
The maximum amount of the compensation of any one individual which may be deferred under subsection (a) during any taxable year shall not exceed the amount in effect under subsection (b)(2)(A) (as modified by any adjustment provided under subsection (b)(3)).
(d) Distribution requirements
(1) In general
For purposes of subsection (b)(5), a plan meets the distribution requirements of this subsection if—
(A) under the plan amounts will not be made available to participants or beneficiaries earlier than—
(i) the calendar year in which the participant attains age 70½ (in the case of a plan maintained by an employer described in subsection (e)(1)(A), age 59½),
(ii) when the participant has a severance from employment with the employer,
(iii) when the participant is faced with an unforeseeable emergency (determined in the manner prescribed by the Secretary in regulations), or
(iv) except as may be otherwise provided by regulations, in the case of a plan maintained by an employer described in subsection (e)(1)(A), with respect to amounts invested in a lifetime income investment (as defined in section 401(a)(38)(B)(ii)), the date that is 90 days prior to the date that such lifetime income investment may no longer be held as an investment option under the plan,
(B) the plan meets the minimum distribution requirements of paragraph (2),
(C) in the case of a plan maintained by an employer described in subsection (e)(1)(A), the plan meets requirements similar to the requirements of section 401(a)(31), and
(D) except as may be otherwise provided by regulations, in the case of amounts described in subparagraph (A)(iv), such amounts will be distributed only in the form of a qualified distribution (as defined in section 401(a)(38)(B)(i)) or a qualified plan distribution annuity contract (as defined in section 401(a)(38)(B)(iv)).
Any amount transferred in a direct trustee-to-trustee transfer in accordance with section 401(a)(31) shall not be includible in gross income for the taxable year of transfer.
(2) Minimum distribution requirements
A plan meets the minimum distribution requirements of this paragraph if such plan meets the requirements of section 401(a)(9).
(3) Special rule for government plan
An eligible deferred compensation plan of an employer described in subsection (e)(1)(A) shall not be treated as failing to meet the requirements of this subsection solely by reason of making a distribution described in subsection (e)(9)(A).
(e) Other definitions and special rules
For purposes of this section—
(1) Eligible employer
The term "eligible employer" means—
(A) a State, political subdivision of a State, and any agency or instrumentality of a State or political subdivision of a State, and
(B) any other organization (other than a governmental unit) exempt from tax under this subtitle.
(2) Performance of service
The performance of service includes performance of service as an independent contractor and the person (or governmental unit) for whom such services are performed shall be treated as the employer.
(3) Participant
The term "participant" means an individual who is eligible to defer compensation under the plan.
(4) Beneficiary
The term "beneficiary" means a beneficiary of the participant, his estate, or any other person whose interest in the plan is derived from the participant.
(5) Includible compensation
The term "includible compensation" has the meaning given to the term "participant's compensation" by section 415(c)(3).
(6) Compensation taken into account at present value
Compensation shall be taken into account at its present value.
(7) Community property laws
The amount of includible compensation shall be determined without regard to any community property laws.
(8) Income attributable
Gains from the disposition of property shall be treated as income attributable to such property.
(9) Benefits of tax exempt organization plans not treated as made available by reason of certain elections, etc.
In the case of an eligible deferred compensation plan of an employer described in subsection (e)(1)(B)—
(A) Total amount payable is dollar limit or less
The total amount payable to a participant under the plan shall not be treated as made available merely because the participant may elect to receive such amount (or the plan may distribute such amount without the participant's consent) if—
(i) the portion of such amount which is not attributable to rollover contributions (as defined in section 411(a)(11)(D)) does not exceed the dollar limit under section 411(a)(11)(A), and
(ii) such amount may be distributed only if—
(I) no amount has been deferred under the plan with respect to such participant during the 2-year period ending on the date of the distribution, and
(II) there has been no prior distribution under the plan to such participant to which this subparagraph applied.
A plan shall not be treated as failing to meet the distribution requirements of subsection (d) by reason of a distribution to which this subparagraph applies.
(B) Election to defer commencement of distributions
The total amount payable to a participant under the plan shall not be treated as made available merely because the participant may elect to defer commencement of distributions under the plan if—
(i) such election is made after amounts may be available under the plan in accordance with subsection (d)(1)(A) and before commencement of such distributions, and
(ii) the participant may make only 1 such election.
(10) Transfers between plans
A participant shall not be required to include in gross income any portion of the entire amount payable to such participant solely by reason of the transfer of such portion from 1 eligible deferred compensation plan to another eligible deferred compensation plan.
(11) Certain plans excluded
(A) In general
The following plans shall be treated as not providing for the deferral of compensation:
(i) Any bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plan.
(ii) Any plan paying solely length of service awards to bona fide volunteers (or their beneficiaries) on account of qualified services performed by such volunteers.
(B) Special rules applicable to length of service award plans
(i) Bona fide volunteer
An individual shall be treated as a bona fide volunteer for purposes of subparagraph (A)(ii) if the only compensation received by such individual for performing qualified services is in the form of—
(I) reimbursement for (or a reasonable allowance for) reasonable expenses incurred in the performance of such services, or
(II) reasonable benefits (including length of service awards), and nominal fees for such services, customarily paid by eligible employers in connection with the performance of such services by volunteers.
(ii) Limitation on accruals
A plan shall not be treated as described in subparagraph (A)(ii) if the aggregate amount of length of service awards accruing with respect to any year of service for any bona fide volunteer exceeds $6,000.
(iii) Cost of living adjustment
In the case of taxable years beginning after December 31, 2017, the Secretary shall adjust the $6,000 amount under clause (ii) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2016, and any increase under this paragraph that is not a multiple of $500 shall be rounded to the next lowest multiple of $500.
(iv) Special rule for application of limitation on accruals for certain plans
In the case of a plan described in subparagraph (A)(ii) which is a defined benefit plan (as defined in section 414(j)), the limitation under clause (ii) shall apply to the actuarial present value of the aggregate amount of length of service awards accruing with respect to any year of service. Such actuarial present value with respect to any year shall be calculated using reasonable actuarial assumptions and methods, assuming payment will be made under the most valuable form of payment under the plan with payment commencing at the later of the earliest age at which unreduced benefits are payable under the plan or the participant's age at the time of the calculation.
(C) Qualified services
For purposes of this paragraph, the term "qualified services" means fire fighting and prevention services, emergency medical services, and ambulance services.
(D) Certain voluntary early retirement incentive plans
(i) In general
If an applicable voluntary early retirement incentive plan—
(I) makes payments or supplements as an early retirement benefit, a retirement-type subsidy, or a benefit described in the last sentence of section 411(a)(9), and
(II) such payments or supplements are made in coordination with a defined benefit plan which is described in section 401(a) and includes a trust exempt from tax under section 501(a) and which is maintained by an eligible employer described in paragraph (1)(A) or by an education association described in clause (ii)(II),
such applicable plan shall be treated for purposes of subparagraph (A)(i) as a bona fide severance pay plan with respect to such payments or supplements to the extent such payments or supplements could otherwise have been provided under such defined benefit plan (determined as if section 411 applied to such defined benefit plan).
(ii) Applicable voluntary early retirement incentive plan
For purposes of this subparagraph, the term "applicable voluntary early retirement incentive plan" means a voluntary early retirement incentive plan maintained by—
(I) a local educational agency (as defined in section 8101 of the Elementary and Secondary Education Act of 1965), or
(II) an education association which principally represents employees of 1 or more agencies described in subclause (I) and which is described in section 501(c)(5) or (6) and exempt from tax under section 501(a).
(12) Exception for nonelective deferred compensation of nonemployees
(A) In general
This section shall not apply to nonelective deferred compensation attributable to services not performed as an employee.
(B) Nonelective deferred compensation
For purposes of subparagraph (A), deferred compensation shall be treated as nonelective only if all individuals (other than those who have not satisfied any applicable initial service requirement) with the same relationship to the payor are covered under the same plan with no individual variations or options under the plan.
(13) Special rule for churches
The term "eligible employer" shall not include a church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)).
(14) Treatment of qualified governmental excess benefit arrangements
Subsections (b)(2) and (c)(1) shall not apply to any qualified governmental excess benefit arrangement (as defined in section 415(m)(3)), and benefits provided under such an arrangement shall not be taken into account in determining whether any other plan is an eligible deferred compensation plan.
(15) Applicable dollar amount
(A) In general
The applicable dollar amount is $15,000.
(B) Cost-of-living adjustments
In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under subparagraph (A) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.
(16) Rollover amounts
(A) General rule
In the case of an eligible deferred compensation plan established and maintained by an employer described in subsection (e)(1)(A), if—
(i) any portion of the balance to the credit of an employee in such plan is paid to such employee in an eligible rollover distribution (within the meaning of section 402(c)(4)),
(ii) the employee transfers any portion of the property such employee receives in such distribution to an eligible retirement plan described in section 402(c)(8)(B), and
(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,
then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.
(B) Certain rules made applicable
The rules of paragraphs (2) through (7), (9), and (11) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A).
(C) Reporting
Rollovers under this paragraph shall be reported to the Secretary in the same manner as rollovers from qualified retirement plans (as defined in section 4974(c)).
(17) Trustee-to-trustee transfers to purchase permissive service credit
No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is—
(A) for the purchase of permissive service credit (as defined in section 415(n)(3)(A)) under such plan, or
(B) a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.
(18) Coordination with catch-up contributions for individuals age 50 or older
In the case of an individual who is an eligible participant (as defined by section 414(v)) and who is a participant in an eligible deferred compensation plan of an employer described in paragraph (1)(A), subsections (b)(3) and (c) shall be applied by substituting for the amount otherwise determined under the applicable subsection the greater of—
(A) the sum of—
(i) the plan ceiling established for purposes of subsection (b)(2) (without regard to subsection (b)(3)), plus
(ii) the applicable dollar amount for the taxable year determined under section 414(v)(2)(B)(i), or
(B) the amount determined under the applicable subsection (without regard to this paragraph).
(f) Tax treatment of participants where plan or arrangement of employer is not eligible
(1) In general
In the case of a plan of an eligible employer providing for a deferral of compensation, if such plan is not an eligible deferred compensation plan, then—
(A) the compensation shall be included in the gross income of the participant or beneficiary for the 1st taxable year in which there is no substantial risk of forfeiture of the rights to such compensation, and
(B) the tax treatment of any amount made available under the plan to a participant or beneficiary shall be determined under section 72 (relating to annuities, etc.).
(2) Exceptions
Paragraph (1) shall not apply to—
(A) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
(B) an annuity plan or contract described in section 403,
(C) that portion of any plan which consists of a transfer of property described in section 83,
(D) that portion of any plan which consists of a trust to which section 402(b) applies,
(E) a qualified governmental excess benefit arrangement described in section 415(m), and
(F) that portion of any applicable employment retention plan described in paragraph (4) with respect to any participant.
(3) Definitions
For purposes of this subsection—
(A) Plan includes arrangements, etc.
The term "plan" includes any agreement or arrangement.
(B) Substantial risk of forfeiture
The rights of a person to compensation are subject to a substantial risk of forfeiture if such person's rights to such compensation are conditioned upon the future performance of substantial services by any individual.
(4) Employment retention plans
For purposes of paragraph (2)(F)—
(A) In general
The portion of an applicable employment retention plan described in this paragraph with respect to any participant is that portion of the plan which provides benefits payable to the participant not in excess of twice the applicable dollar limit determined under subsection (e)(15).
(B) Other rules
(i) Limitation
Paragraph (2)(F) shall only apply to the portion of the plan described in subparagraph (A) for years preceding the year in which such portion is paid or otherwise made available to the participant.
(ii) Treatment
A plan shall not be treated for purposes of this title as providing for the deferral of compensation for any year with respect to the portion of the plan described in subparagraph (A).
(C) Applicable employment retention plan
The term "applicable employment retention plan" means an employment retention plan maintained by—
(i) a local educational agency (as defined in section 8101 of the Elementary and Secondary Education Act of 1965 (
(ii) an education association which principally represents employees of 1 or more agencies described in clause (i) and which is described in section 501(c)(5) or (6) and exempt from taxation under section 501(a).
(D) Employment retention plan
The term "employment retention plan" means a plan to pay, upon termination of employment, compensation to an employee of a local educational agency or education association described in subparagraph (C) for purposes of—
(i) retaining the services of the employee, or
(ii) rewarding such employee for the employee's service with 1 or more such agencies or associations.
(g) Governmental plans must maintain set-asides for exclusive benefit of participants
(1) In general
A plan maintained by an eligible employer described in subsection (e)(1)(A) shall not be treated as an eligible deferred compensation plan unless all assets and income of the plan described in subsection (b)(6) are held in trust for the exclusive benefit of participants and their beneficiaries.
(2) Taxability of trusts and participants
For purposes of this title—
(A) a trust described in paragraph (1) shall be treated as an organization exempt from taxation under section 501(a), and
(B) notwithstanding any other provision of this title, amounts in the trust shall be includible in the gross income of participants and beneficiaries only to the extent, and at the time, provided in this section.
(3) Custodial accounts and contracts
For purposes of this subsection, custodial accounts and contracts described in section 401(f) shall be treated as trusts under rules similar to the rules under section 401(f).
(4) Death benefits under USERRA-qualified active military service
A plan described in paragraph (1) shall not be treated as an eligible deferred compensation plan unless such plan meets the requirements of section 401(a)(37).
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table under
References in Text
Section 8101 of the Elementary and Secondary Education Act of 1965, referred to in subsec. (e)(11)(D)(ii)(I), is classified to
Amendments
2019—Subsec. (d)(1)(A)(i).
Subsec. (d)(1)(A)(iv).
Subsec. (d)(1)(D).
2018—Subsec. (f)(4)(C)(i).
2017—Subsec. (e)(11)(B)(ii).
Subsec. (e)(11)(B)(iii).
Subsec. (e)(11)(B)(iv).
2015—Subsec. (e)(11)(D)(ii)(I).
2014—Subsec. (e)(15)(A).
2008—Subsec. (g)(4).
2006—Subsec. (a)(3).
Subsec. (e)(11)(D).
Subsec. (e)(16)(B).
Subsec. (f)(2)(F).
Subsec. (f)(4).
2002—Subsec. (e)(5).
Subsec. (e)(18).
2001—Subsec. (a).
Subsec. (b)(2).
Subsec. (b)(2)(A).
Subsec. (b)(2)(B).
Subsec. (b)(3)(A).
Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (d)(1).
Subsec. (d)(1)(A)(ii).
Subsec. (d)(2).
Subsec. (d)(3).
Subsec. (e)(9).
Subsec. (e)(9)(A)(i).
Subsec. (e)(15).
Subsec. (e)(16).
Subsec. (e)(17).
1997—Subsec. (e)(9)(A).
1996—Subsec. (b)(6).
Subsec. (c)(2)(B)(i).
Subsec. (e)(9).
"(A) the total amount payable to a participant under the plan does not exceed $3,500, and
"(B) no additional amounts may be deferred under the plan with respect to the participant,
the amount payable to the participant under the plan shall not be treated as made available merely because such participant may elect to receive a lump sum payable after separation from service and within 60 days of the election."
Subsec. (e)(11).
Subsec. (e)(14).
Subsec. (e)(15).
Subsec. (f)(2)(E).
Subsec. (g).
1992—Subsec. (c)(2)(B)(i).
1989—Subsec. (d)(1)(A)(iii).
Subsec. (d)(2)(B)(i)(I).
Subsec. (e)(13).
1988—Subsec. (c)(2).
Subsec. (d)(1)(A).
Subsec. (d)(2)(B)(i)(I).
Subsec. (d)(10).
Subsec. (d)(11).
"(A)
"(B)
Subsec. (e)(9).
Subsec. (e)(11).
Subsec. (e)(12).
Subsec. (e)(13).
1986—
1984—Subsec. (e)(2).
1980—Subsec. (d)(9)(B).
Effective Date of 2019 Amendment
Amendment by section 104(b) of
Amendment by section 109(d) of
Effective Date of 2017 Amendment
Effective Date of 2015 Amendment
Amendment by
Effective Date of 2014 Amendment
Amendment by