26 USC 59 - Other definitions and special rules

U.S Code last checked for updates: Nov 22, 2024

§ 59.

Other definitions and special rules

(a)

Alternative minimum tax foreign tax credit

For purposes of this part—

(1)

In general

The alternative minimum tax foreign tax credit for any taxable year shall be the credit which would be determined under section 27 for such taxable year if—

(A)

the pre-credit tentative minimum tax were the tax against which such credit was taken for purposes of section 904 for the taxable year and all prior taxable years beginning after December 31, 1986,

(B)

section 904 were applied on the basis of alternative minimum taxable income instead of taxable income, and

(C)

the determination of whether any income is high-taxed income for purposes of section 904(d)(2) were made on the basis of the applicable rate specified in section 55(b)(1) in lieu of the highest rate of tax specified in section 1.

(2)

Pre-credit tentative minimum tax

(3)

Election to use simplified section 904 limitation

(A)

In general

In determining the alternative minimum tax foreign tax credit for any taxable year to which an election under this paragraph applies—

(i)

subparagraph (B) of paragraph (1) shall not apply, and

(ii)

the limitation of section 904 shall be based on the proportion which—

(I)

the taxpayer’s taxable income (as determined for purposes of the regular tax) from sources without the United States (but not in excess of the taxpayer’s entire alternative minimum taxable income), bears to

(II)

the taxpayer’s entire alternative minimum taxable income for the taxable year.

(B)

Election

(i)

In general

(ii)

Election revocable only with consent

[(b)

Repealed. Pub. L. 115–97, title I, § 12001(b)(10), Dec. 22, 2017, 131 Stat. 2093]

(c)

Treatment of estates and trusts

(d)

Apportionment of differently treated items in case of certain entities

(1)

In general

The differently treated items for the taxable year shall be apportioned (in accordance with regulations prescribed by the Secretary)—

(A)

Regulated investment companies and real estate investment trusts

(B)

Common trust funds

(2)

Differently treated items

(e)

Optional 10-year writeoff of certain tax preferences

(1)

In general

(2)

Qualified expenditure

For purposes of this subsection, the term “qualified expenditure” means any amount which, but for an election under this subsection, would have been allowable as a deduction (determined without regard to section 291) for the taxable year in which paid or incurred under—

(A)

section 173 (relating to circulation expenditures),

(B)

section 174(a) (relating to research and experimental expenditures),

(C)

section 263(c) (relating to intangible drilling and development expenditures),

(D)

section 616(a) (relating to development expenditures), or

(E)

section 617(a) (relating to mining exploration expenditures).

(3)

Other sections not applicable

(4)

Election

(A)

In general

(B)

Revocable only with consent

(C)

Partners and shareholders of S corporations

(5)

Dispositions

(A)

Application of section 1254

(B)

Application of section 617(d)

(6)

Amounts to which election apply not treated as tax preference

[(f)

Repealed. Pub. L. 115–97, title I, § 12001(b)(10), Dec. 22, 2017, 131 Stat. 2093]

(g)

Tax benefit rule

(h)

Coordination with certain limitations

(i)

Special rule for amounts treated as tax preference

(j)

Treatment of unearned income of minor children

(1)

In general

In the case of a child to whom section 1(g) applies, the exemption amount for purposes of section 55 shall not exceed the sum of—

(A)

such child’s earned income (as defined in section 911(d)(2)) for the taxable year, plus

(B)

$5,000.

(2)

Inflation adjustment

In the case of any taxable year beginning in a calendar year after 1998, the dollar amount in paragraph (1)(B) shall be increased by an amount equal to the product of—

(A)

such dollar amount, and

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “1997” for “2016” in subparagraph (A)(ii) thereof.

If any increase determined under the preceding sentence is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.

(k)

Applicable corporation

For purposes of this part—

(1)

Applicable corporation defined

(A)

In general

The term “applicable corporation” means, with respect to any taxable year, any corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) which meets the average annual adjusted financial statement income test of subparagraph (B) for one or more taxable years which—

(i)

are prior to such taxable year, and

(ii)

end after December 31, 2021.

(B)

Average annual adjusted financial statement income test

For purposes of this subsection—

(i)

a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and

(ii)

in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if—

(I)

the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and

(II)

the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.

(C)

Exception

Notwithstanding subparagraph (A), the term “applicable corporation” shall not include any corporation which otherwise meets the requirements of subparagraph (A) if—

(i)

such corporation—

(I)

has a change in ownership, or

(II)

has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and

(ii)

the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation.

The preceding sentence shall not apply to any corporation if, after the Secretary makes the determination described in clause (ii), such corporation meets the average annual adjusted financial statement income test of subparagraph (B) for any taxable year beginning after the first taxable year for which such determination applies.

(D)

Special rules for determining applicable corporation status

(E)

Other special rules

(i)

Corporations in existence for less than 3 years

(ii)

Short taxable years

(iii)

Treatment of predecessors

(2)

Special rule for foreign-parented multinational groups

(A)

In general

(B)

Foreign-parented multinational group

For purposes of subparagraph (A), the term “foreign-parented multinational group” means, with respect to any taxable year, two or more entities if—

(i)

at least one entity is a domestic corporation and another entity is a foreign corporation,

(ii)

such entities are included in the same applicable financial statement with respect to such year, and

(iii)

either—

(I)

the common parent of such entities is a foreign corporation, or

(II)

if there is no common parent, the entities are treated as having a common parent which is a foreign corporation under subparagraph (D).

(C)

Foreign corporations engaged in a trade or business within the United States

(D)

Other rules

The Secretary shall, applying the principles of this section, prescribe rules for the application of this paragraph, including rules for the determination of—

(i)

the entities (if any) which are to be to be treated under subparagraph (B)(iii)(II) as having a common parent which is a foreign corporation,

(ii)

the entities to be included in a foreign-parented multinational group, and

(iii)

the common parent of a foreign-parented multinational group.

(3)

Regulations or other guidance

The Secretary shall provide regulations or other guidance for the purposes of carrying out this subsection, including regulations or other guidance—

(A)

providing a simplified method for determining whether a corporation meets the requirements of paragraph (1), and

’(B) 1

 So in original.

addressing the application of this subsection to a corporation that experiences a change in ownership.

(l)

Corporate AMT foreign tax credit

(1)

In general

For purposes of this part, if an applicable corporation chooses to have the benefits of subpart A of part III of subchapter N for any taxable year, the corporate AMT foreign tax credit for the taxable year of the applicable corporation is an amount equal to sum of—

(A)

the lesser of—

(i)

the aggregate of the applicable corporation’s pro rata share (as determined under section 56A(c)(3)) of the amount of income, war profits, and excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States which are—

(I)

taken into account on the applicable financial statement of each controlled foreign corporation with respect to which the applicable corporation is a United States shareholder, and

(II)

paid or accrued (for Federal income tax purposes) by each such controlled foreign corporation, or

(ii)

the product of the amount of the adjustment under section 56A(c)(3) and the percentage specified in section 55(b)(2)(A)(i), and

(B)

in the case of an applicable corporation that is a domestic corporation, the amount of income, war profits, and excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States to the extent such taxes are—

(i)

taken into account on the applicable corporation’s applicable financial statement, and

(ii)

paid or accrued (for Federal income tax purposes) by the applicable corporation.

(2)

Carryover of excess tax paid

(3)

Regulations or other guidance

(Added Pub. L. 99–514, title VII, § 701(a), Oct. 22, 1986, 100 Stat. 2336; amended Pub. L. 100–647, title I, §§ 1007(e), 1014(e)(5)(A), Nov. 10, 1988, 102 Stat. 3432, 3561; Pub. L. 101–239, title VII, §§ 7611(f)(5)(B), (6), 7612(e)(1), 7811(d)(1)(A), (j)(7), Dec. 19, 1989, 103 Stat. 2373, 2374, 2408, 2412; Pub. L. 101–508, title XI, §§ 11101(d)(3), 11531(b)(2), 11702(d), 11801(c)(2)(D), Nov. 5, 1990, 104 Stat. 1388–405, 1388–490, 1388–514, 1388–523; Pub. L. 102–486, title XIX, § 1915(c)(3), Oct. 24, 1992, 106 Stat. 3024; Pub. L. 104–188, title I, §§ 1601(b)(2)(D), 1702(a)(1), 1703(e), 1704(m)(3), Aug. 20, 1996, 110 Stat. 1833, 1868, 1875, 1883; Pub. L. 105–34, title X, § 1057(a), title XI, § 1103(a), title XII, § 1201(b)(1), Aug. 5, 1997, 111 Stat. 945, 966, 994; Pub. L. 105–206, title VI, §§ 6011(a), 6023(2), July 22, 1998, 112 Stat. 817, 824; Pub. L. 108–357, title IV, § 421(a)(1), Oct. 22, 2004, 118 Stat. 1514; Pub. L. 115–97, title I, §§ 11002(d)(4), 12001(b)(3)(C), (10), Dec. 22, 2017, 131 Stat. 2061, 2093; Pub. L. 115–141, div. U, title IV, § 401(d)(1)(D)(ii), Mar. 23, 2018, 132 Stat. 1206; Pub. L. 117–169, title I, §§ 10101(a)(2), (c), 13904(a), Aug. 16, 2022, 136 Stat. 1818, 1827, 2014.)

cite as: 26 USC 59

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