26 USC 291 - Special rules relating to corporate preference items

U.S Code last checked for updates: Jan 18, 2025

§ 291.

Special rules relating to corporate preference items

(a)

Reduction in certain preference items, etc.

For purposes of this subtitle, in the case of a corporation—

(1)

Section 1250 capital gain treatment

In the case of section 1250 property which is disposed of during the taxable year, 20 percent of the excess (if any) of—

(A)

the amount which would be treated as ordinary income if such property was section 1245 property, over

(B)

the amount treated as ordinary income under section 1250 (determined without regard to this paragraph),

shall be treated as gain which is ordinary income under section 1250 and shall be recognized notwithstanding any other provision of this title. Under regulations prescribed by the Secretary, the provisions of this paragraph shall not apply to the disposition of any property to the extent section 1250(a) does not apply to such disposition by reason of section 1250(d).

(2)

Reduction in percentage depletion

In the case of iron ore and coal (including lignite), the amount allowable as a deduction under section 613 with respect to any property (as defined in section 614) shall be reduced by 20 percent of the amount of the excess (if any) of—

(A)

the amount of the deduction allowable under section 613 for the taxable year (determined without regard to this paragraph), over

(B)

the adjusted basis of the property at the close of the taxable year (determined without regard to the depletion deduction for the taxable year).

(3)

Certain financial institution preference items

(4)

Amortization of pollution control facilities

(b)

Special rules for treatment of intangible drilling costs and mineral exploration and development costs

For purposes of this subtitle, in the case of a corporation—

(1)

In general

The amount allowable as a deduction for any taxable year (determined without regard to this section)—

(A)

under section 263(c) in the case of an integrated oil company, or

(B)

under section 616(a) or 617(a),

shall be reduced by 30 percent.

(2)

Amortization of amounts not allowable as deductions under paragraph (1)

(3)

Dispositions

(4)

Integrated oil company defined

(5)

Coordination with cost depletion

(c)

Special rules relating to pollution control facilities

For purposes of this subtitle—

(1)

Accelerated cost recovery deduction

(2)

1250 Recapture

(d)

Special rule for real estate investment trusts

(e)

Definitions

For purposes of this section—

(1)

Financial institution preference item

The term “financial institution preference item” includes the following:

[(A)

Repealed. Pub. L. 101–508, title XI, § 11801(c)(12)(B), Nov. 5, 1990, 104 Stat. 1388–527]

(B)

Interest on debt to carry tax-exempt obligations acquired after December 31, 1982, and before August 8, 1986

(i)

In general

(ii)

Determination of interest allocable to indebtedness on tax-exempt obligations

Unless the taxpayer (under regulations prescribed by the Secretary) establishes otherwise, the amount determined under clause (i) shall be an amount which bears the same ratio to the aggregate amount allowable (determined without regard to this section and section 265(b)) to the taxpayer as a deduction for interest for the taxable year as—

(I)

the taxpayer’s average adjusted basis (within the meaning of section 1016) of obligations described in clause (i), bears to

(II)

such average adjusted basis for all assets of the taxpayer.

(iii)

Interest

(iv)

Application of subparagraph to certain obligations issued after August 7, 1986

For application of this subparagraph to certain obligations issued after August 7, 1986, see section 265(b)(3). That portion of any obligation not taken into account under paragraph (2)(A) of section 265(b) by reason of paragraph (7) of such section shall be treated for purposes of this section as having been acquired on August 7, 1986.

(2)

Section 1245 and 1250 property

(Added Pub. L. 97–248, title II, § 204(a), Sept. 3, 1982, 96 Stat. 423; amended Pub. L. 97–354, § 5(a)(27), Oct. 19, 1982, 96 Stat. 1694; Pub. L. 97–448, title III, § 306(a)(2), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98–369, div. A, title I, § 68(a), (b), title VII, § 712(a)(1)(A), (2)–(4), July 18, 1984, 98 Stat. 588, 946; Pub. L. 99–514, title II, § 201(d)(5), title IV, §§ 411(a), (b)(2)(C)(ii), 412(b)(1), title IX, §§ 901(b)(4), (d)(4)(C), 902(c), title XVIII, §§ 1804(k)(1), (3)(A), 1854(c)(1), 1876(b)(1), Oct. 22, 1986, 100 Stat. 2140, 2225, 2227, 2378, 2380, 2382, 2809, 2878, 2898; Pub. L. 100–418, title I, § 1941(b)(5), Aug. 23, 1988, 102 Stat. 1324; Pub. L. 100–647, title I, § 1009(b)(4), (5), Nov. 10, 1988, 102 Stat. 3449; Pub. L. 101–508, title XI, § 11801(c)(12)(B), Nov. 5, 1990, 104 Stat. 1388–527; Pub. L. 104–188, title I, §§ 1602(b)(1), 1616(b)(5), Aug. 20, 1996, 110 Stat. 1833, 1856; Pub. L. 110–172, § 11(g)(6), Dec. 29, 2007, 121 Stat. 2490; Pub. L. 111–5, div. B, title I, § 1501(b), Feb. 17, 2009, 123 Stat. 353.)

cite as: 26 USC 291