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26-51-436. Deductions — Limitations.
Arkansas Code — all titles (historical 2020) · legal_authorities
26-51-436. Deductions — Limitations.
Notwithstanding any other provision of the Income Tax Act of 1929, § 26-51-101 et seq., with regard to deductions allowed in computing net income:
(1) Title 26 U.S.C. § 465, as in effect on January 1, 1987, is adopted to limit deductions claimed under the Income Tax Act of 1929, § 26-51-101 et seq., to the amount the taxpayer has at risk, as that term is used in the federal income tax law;
(2) Title 26 U.S.C. § 469, as in effect on January 1, 1997, regarding the limitations on deductibility of passive activity losses and credits, is adopted for the purpose of computing Arkansas income tax liability;
(3) Title 26 U.S.C. § 280F(a)-(d), as in effect on January 1, 2019, regarding investment tax credit and depreciation for luxury automobiles and other property, is adopted for purposes of computing Arkansas income tax liability;
(4) Title 26 U.S.C. § 68, as in effect on January 1, 2011, is adopted to limit itemized deductions;
(5) Title 26 U.S.C. § 220, as in effect on January 1, 2011, regarding the deductibility from income of contributions made to a medical savings account by the taxpayer or the taxpayer's employer, is adopted for the purpose of computing Arkansas income tax liability;
(6) Title 26 U.S.C. § 264, as in effect on January 1, 1999, regarding premium and interest deductions on life insurance of officers and employees, is adopted for the purpose of computing Arkansas income tax liability; and
(7) Title 26 U.S.C. § 470, as in effect on January 1, 2009, regarding leasing transactions between taxpayers, is adopted for the purpose of computing Arkansas income tax liability.
Source: Arkansas Code — historical release 78 (November 6, 2020) · 26-51-436
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Stable record: arkansas_code:legal_authorities:26-51-436
Source file: gov.ar.code.title.26.odt
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Passage SHA-256: 5c88e1e4b0240042ffc4b6a551359c49f2fd6c60c7da6c0ef0fca91132e309b0
Source location: content.xml paragraph 12944
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26-51-436. Deductions — Limitations.
Notwithstanding any other provision of the Income Tax Act of 1929, § 26-51-101 et seq., with regard to deductions allowed in computing net income:
(1) Title 26 U.S.C. § 465, as in effect on January 1, 1987, is adopted to limit deductions claimed under the Income Tax Act of 1929, § 26-51-101 et seq., to the amount the taxpayer has at risk, as that term is used in the federal income tax law;
(2) Title 26 U.S.C. § 469, as in effect on January 1, 1997, regarding the limitations on deductibility of passive activity losses and credits, is adopted for the purpose of computing Arkansas income tax liability;
(3) Title 26 U.S.C. § 280F(a)-(d), as in effect on January 1, 2019, regarding investment tax credit and depreciation for luxury automobiles and other property, is adopted for purposes of computing Arkansas income tax liability;
(4) Title 26 U.S.C. § 68, as in effect on January 1, 2011, is adopted to limit itemized deductions;
(5) Title 26 U.S.C. § 220, as in effect on January 1, 2011, regarding the deductibility from income of contributions made to a medical savings account by the taxpayer or the taxpayer's employer, is adopted for the purpose of computing Arkansas income tax liability;
(6) Title 26 U.S.C. § 264, as in effect on January 1, 1999, regarding premium and interest deductions on life insurance of officers and employees, is adopted for the purpose of computing Arkansas income tax liability; and
(7) Title 26 U.S.C. § 470, as in effect on January 1, 2009, regarding leasing transactions between taxpayers, is adopted for the purpose of computing Arkansas income tax liability.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Deduction allowed** In the case of an individual who is an eligible individual for any month during the taxable year, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by such individual to an Archer MSA of such individual.
**(b) Limitations**
(1) **In general** — The amount allowable as a deduction under subsection (a) to an individual for the taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual.
(2) **Monthly limitation** — The monthly limitation for any month is the amount equal to 1⁄12 of—
(A) in the case of an individual who has self-only coverage under the high deductible health plan as of the first day of such month, 65 percent of the annual deductible under such coverage, and
(B) in the case of an individual who has family coverage under the high deductible health plan as of the first day of such month, 75 percent of the annual deductible under such coverage.
(3) **Special rule for married individuals** — In the case of individuals who are married to each other, if either spouse has family coverage—
(A) both spouses shall be treated as having only such family coverage (and if such spouses each have family coverage under different plans, as having the family coverage with the lowest annual deductible), and
(B) the limitation under paragraph (1) (after the application of subparagraph (A) of this paragraph) shall be divided equally between them unless they agree on a different division.
(4) **Deduction not to exceed compensation**
(A) *Employees* — The deduction allowed under subsection (a) for contributions as an eligible individual described in subclause (I) o
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 220
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Federal law — U.S. Code and appendices · legal_authorities
Page 958
TITLE 26—INTERNAL REVENUE CODE
§ 220
‘‘(1) shall be treated as an active participant in a
plan established for its employees by the United
States for purposes of section 219(g) of the Internal
Revenue Code of 1986, and
‘‘(2) shall be treated as an employee for purposes of
chapter 1 of such Code.
‘‘(b) EFFECTIVE DATE.—The provisions of subsection
(a) shall apply to taxable years beginning after Decem-
ber 31, 1987.’’
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1998
For provisions directing that if any amendments
made by subtitle D [§§ 1401–1465] of title I of Pub. L.
104–188 require an amendment to any plan or annuity
contract, such amendment shall not be required to be
made before the first day of the first plan year begin-
ning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104–188, set out as a note under section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1994
For provisions directing that if any amendments
made by subtitle B [§§ 521–523] of title V of Pub. L.
102–318 require an amendment to any plan, such plan
amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1994, see
section 523 of Pub. L. 102–318, set out as a note under
section 401 of this title.
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 Pub. L.
99–514 require an amendment to any plan, such plan
amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99–514, as amended, set out as a
note under section 401 of this title.
TRANSITIONAL RULES FOR ALLOWABLE DED
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 220
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** No deduction shall be allowed for—
(1) Premiums on any life insurance policy, or endowment or annuity contract, if the taxpayer is directly or indirectly a beneficiary under the policy or contract.
(2) Any amount paid or accrued on indebtedness incurred or continued to purchase or carry a single premium life insurance, endowment, or annuity contract.
(3) Except as provided in subsection (d), any amount paid or accrued on indebtedness incurred or continued to purchase or carry a life insurance, endowment, or annuity contract (other than a single premium contract or a contract treated as a single premium contract) pursuant to a plan of purchase which contemplates the systematic direct or indirect borrowing of part or all of the increases in the cash value of such contract (either from the insurer or otherwise).
(4) Except as provided in subsection (e), any interest paid or accrued on any indebtedness with respect to 1 or more life insurance policies owned by the taxpayer covering the life of any individual, or any endowment or annuity contracts owned by the taxpayer covering any individual.
Paragraph (2) shall apply in respect of annuity contracts only as to contracts purchased after March 1, 1954. Paragraph (3) shall apply only in respect of contracts purchased after August 6, 1963. Paragraph (4) shall apply with respect to contracts purchased after June 20, 1986.
**(b) Exceptions to subsection (a)(1)** Subsection (a)(1) shall not apply to—
(1) any annuity contract described in section 72(s)(5), and
(2) any annuity contract to which section 72(u) applies.
**(c) Contracts treated as single premium contracts** For purposes of subsection (a)(2), a contract shall be treated as a single premium contract—
(1) if substantially all the premiums on t
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 264
Stored review status: release_metadata_unconfirmed. The source passage cites 26 U.S.C. § 264. This identifies an authority to review, not proof of applicability.
Federal law — U.S. Code and appendices · legal_authorities
Page 1009
TITLE 26—INTERNAL REVENUE CODE
§ 264
ALLOCATION RATIO FOR APPORTIONING STORAGE COSTS
AND RELATED HANDLING COSTS
Pub. L. 100–647, title I, § 1008(b)(8), Nov. 10, 1988, 102
Stat. 3438, provided that: ‘‘The allocation used in the
regulations prescribed under section 263A(h)(2) of the
Internal Revenue Code of 1986 for apportioning storage
costs and related handling costs shall be determined by
dividing the amount of such costs by the beginning in-
ventory balances and the purchases during the year and
by multiplying the resulting allocation ratio by inven-
tory amounts determined in accordance with the provi-
sions of the joint explanatory statement of the com-
mittee of conference of the conference report accom-
panying H.R. 3838 (H.R. Rept. No. 99–841, Vol. II., 99th
Cong., 2d Sess. II–306–307 (1986)).’’
AMORTIZATION OF PAST SERVICE PENSION COSTS
Pub. L. 100–203, title X, § 10204, Dec. 22, 1987, 101 Stat.
1330–394, provided that:
‘‘(a) IN GENERAL.—For purposes of sections 263A and
460 of the Internal Revenue Code of 1986, the allocable
costs (within the meaning of section 263A(a)(2) or sec-
tion 460(c) of such Code, whichever is applicable) with
respect to any property shall include contributions
paid to or under a pension or annuity plan whether or
not such contributions represent past service costs.
‘‘(b) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—Except as provided in paragraph
(2), subsection (a) shall apply to costs incurred after
December 31, 1987, in taxable years ending after such
date.
‘‘(2) SPECIAL RULE FOR INVENTORY PROPERTY.—In the
case of any property which is inventory in the hands
of the taxpayer—
‘‘(A) IN GENERAL.—Subsection (a) shall apply to
taxable years beginning after December 31, 1987.
‘‘(B) CHANGE
IN
METHOD
OF
ACCOUNTING.
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 264
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Limitation on amount of depreciation for luxury automobiles**
(1) **Depreciation**
(A) *Limitation* — The amount of the depreciation deduction for any taxable year for any passenger automobile shall not exceed—
(i) $10,000 for the 1st taxable year in the recovery period,
(ii) $16,000 for the 2nd taxable year in the recovery period,
(iii) $9,600 for the 3rd taxable year in the recovery period, and
(iv) $5,760 for each succeeding taxable year in the recovery period.
(B) *Disallowed deductions allowed for years after recovery period*
(i) *In general* — Except as provided in clause (ii), the unrecovered basis of any passenger automobile shall be treated as an expense for the 1st taxable year after the recovery period. Any excess of the unrecovered basis over the limitation of clause (ii) shall be treated as an expense in the succeeding taxable year.
(ii) *$5,760 limitation* — The amount treated as an expense under clause (i) for any taxable year shall not exceed $5,760.
(iii) *Property must be depreciable* — No amount shall be allowable as a deduction by reason of this subparagraph with respect to any property for any taxable year unless a depreciation deduction would be allowable with respect to such property for such taxable year.
(iv) *Amount treated as depreciation deduction* — For purposes of this subtitle, any amount allowable as a deduction by reason of this subparagraph shall be treated as a depreciation deduction allowable under section 168.
(2) **Coordination with reductions in amount allowable by reason of personal use, etc.** — This subsection shall be applied before—
(A) the application of subsection (b), and
(B) the application of any other reduction in the amount of any depreciation deduction allowab
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 280F
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Federal law — U.S. Code and appendices · legal_authorities
Page 1055
TITLE 26—INTERNAL REVENUE CODE
§ 280F
this section, such individual shall be treated for pur-
poses of the credit allowed by section 40 as having
first begun work for the taxpayer not earlier than
January 1, 1979, and any wages paid or incurred after
December 31, 1978, with respect to such individual
shall be considered to be attributable to services ren-
dered after that date.’’
[Pub. L. 96–178, § 6(d), Jan. 2, 1980, 93 Stat. 1298, pro-
vided that: ‘‘Any amendment made by this section to
the Revenue Act of 1978 [amending section 322(e)(1) and
(2) of Pub. L. 95–600, set out above] shall take effect as
if it had been included in the provision of the Revenue
Act of 1978 [Pub. L. 95–600] to which such amendment
relates.’’]
EFFECTIVE DATE
Section applicable to taxable years beginning after
Dec. 31, 1976, and to credit carrybacks from such years,
see section 202(e) of Pub. L. 95–30, set out as a note
under section 51 of this title.
SAVINGS PROVISION
For provisions that amendment made by section
401(d)(3)(B)(iii) of Pub. L. 115–141 not apply to expendi-
tures made in taxable years beginning before Jan. 1,
2011, in the case of the repeal of section 48D(e)(1) of this
title, see section 401(d)(3)(C) of Pub. L. 115–141, set out
as a note under section 49 of this title.
For provisions that amendment made by section
401(d)(6)(B)(iv) of Pub. L. 115–141 not apply, in the case
of certain repeals, to various types of wages, bonds,
property, or other items before specific dates, see sec-
tion 401(d)(6)(C) of Pub. L. 115–141, set out as a note
under former section 1400L of this title.
For provisions that nothing in amendment by section
401(d)(3)(B)(iii), (6)(B)(iv) of Pub. L. 115–141 be construed
to affect treatment of certain transactions occurring
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 280F
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Limitation to amount at risk**
(1) **In general** — In the case of—
(A) an individual, and
(B) a C corporation with respect to which the stock ownership requirement of paragraph (2) of section 542(a) is met,
engaged in an activity to which this section applies, any loss from such activity for the taxable year shall be allowed only to the extent of the aggregate amount with respect to which the taxpayer is at risk (within the meaning of subsection (b)) for such activity at the close of the taxable year.
(2) **Deduction in succeeding year** — Any loss from an activity to which this section applies not allowed under this section for the taxable year shall be treated as a deduction allocable to such activity in the first succeeding taxable year.
(3) **Special rules for applying paragraph (1)(B)** — For purposes of paragraph (1)(B)—
(A) section 544(a)(2) shall be applied as if such section did not contain the phrase “or by or for his partner”; and
(B) sections 544(a)(4)(A) and 544(b)(1) shall be applied by substituting “the corporation meet the stock ownership requirements of section 542(a)(2)” for “the corporation a personal holding company”.
**(b) Amounts considered at risk**
(1) **In general** — For purposes of this section, a taxpayer shall be considered at risk for an activity with respect to amounts including—
(A) the amount of money and the adjusted basis of other property contributed by the taxpayer to the activity, and
(B) amounts borrowed with respect to such activity (as determined under paragraph (2)).
(2) **Borrowed amounts** — For purposes of this section, a taxpayer shall be considered at risk with respect to amounts borrowed for use in an activity to the extent that he—
(A) is personally liable for the repayment of such amou
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 465
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Federal law — U.S. Code and appendices · legal_authorities
Page 1616
TITLE 26—INTERNAL REVENUE CODE
§ 465
102 Stat. 3437; Pub. L. 105–34, title III, § 312(d)(1),
Aug. 5, 1997, 111 Stat. 839; Pub. L. 113–295, div. A,
title II, § 221(a)(58)(A), (B)(i), (C), (D), Dec. 19,
2014, 128 Stat. 4047; Pub. L. 115–141, div. U, title
IV, § 401(a)(118), (119), Mar. 23, 2018, 132 Stat.
1190.)
Editorial Notes
AMENDMENTS
2018—Pub. L. 115–141, § 401(a)(118), inserted ‘‘expenses’’
after ‘‘farming’’ in section catchline.
Subsec. (d)(2)(B)(iii). Pub. L. 115–141, § 401(a)(119), sub-
stituted
‘‘section
461(k)(2)(E)’’
for
‘‘subsection
(c)(2)(E)’’.
2014—Subsecs. (a), (b). Pub. L. 113–295, § 221(a)(58)(A),
substituted ‘‘any taxpayer to whom subsection (d) ap-
plies’’ for ‘‘any farming syndicate (as defined in sub-
section (c))’’ in subsec. (a) and in introductory provi-
sions of subsec. (b).
Subsec. (c). Pub. L. 113–295, § 221(a)(58)(C)(i), redesig-
nated subsec. (d) as (c). Former subsec. (c) transferred
to section 461 of this title.
Pub. L. 113–295, § 221(a)(58)(B)(i), transferred subsec.
(c) defining the term ‘‘farming syndicate’’ to section
461 of this title and redesignated it as subsec. (j) of that
section.
Subsec. (d). Pub. L. 113–295, § 221(a)(58)(D), struck out
‘‘Subsections (a) and (b) to apply to’’ before ‘‘Certain
persons’’ in heading, redesignated pars. (2) to (4) as (1)
to (3), respectively, and struck out former par. (1).
Prior to amendment, text of par. (1) read as follows: ‘‘In
the case of a taxpayer to whom this subsection applies,
subsections (a) and (b) shall apply to the excess prepaid
farm supplies of such taxpayer in the same manner as
if such taxpayer were a farming syndicate.’’
Pub. L. 113–295, § 221(a)(58)(C)(i), redesignated subsec.
(f) as (d). Former subsec. (d) redesignated (c).
Subsec. (e).
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 465
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Disallowance**
(1) **In general** — If for any taxable year the taxpayer is described in paragraph (2), neither—
(A) the passive activity loss, nor
(B) the passive activity credit,
for the taxable year shall be allowed.
(2) **Persons described** — The following are described in this paragraph:
(A) any individual, estate, or trust,
(B) any closely held C corporation, and
(C) any personal service corporation.
**(b) Disallowed loss or credit carried to next year** Except as otherwise provided in this section, any loss or credit from an activity which is disallowed under subsection (a) shall be treated as a deduction or credit allocable to such activity in the next taxable year.
**(c) Passive activity defined** For purposes of this section—
(1) **In general** — The term “passive activity” means any activity—
(A) which involves the conduct of any trade or business, and
(B) in which the taxpayer does not materially participate.
(2) **Passive activity includes any rental activity** — Except as provided in paragraph (7), the term “passive activity” includes any rental activity.
(3) **Working interests in oil and gas property**
(A) *In general* — The term “passive activity” shall not include any working interest in any oil or gas property which the taxpayer holds directly or through an entity which does not limit the liability of the taxpayer with respect to such interest.
(B) *Income in subsequent years* — If any taxpayer has any loss for any taxable year from a working interest in any oil or gas property which is treated as a loss which is not from a passive activity, then any net income from such property (or any property the basis of which is determined in whole or in part by reference to the basis of such property) for any succeedin
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 469
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Federal law — U.S. Code and appendices · legal_authorities
Page 1634
TITLE 26—INTERNAL REVENUE CODE
§ 469
Subsec. (g). Pub. L. 100–647, § 1018(f)(5)(A), added sub-
sec. (g).
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 2006 AMENDMENT
Pub. L. 109–432, div. A, title IV, § 409(b), Dec. 20, 2006,
120 Stat. 2963, provided that: ‘‘The amendment made by
this section [amending this section] shall take effect as
if included in section 201 of the Tax Increase Preven-
tion and Reconciliation Act of 2005 [Pub. L. 109–222].’’
Pub. L. 109–222, title II, § 201(b), May 17, 2006, 120 Stat.
348, provided that: ‘‘The amendment made by sub-
section (a) [amending this section] shall apply to ac-
counts and funds established after the date of the en-
actment of this Act [May 17, 2006].’’
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101–508 effective as if included
in the provision of the Technical and Miscellaneous
Revenue Act of 1988, Pub. L. 100–647, to which such
amendment relates, see section 11702(j) of Pub. L.
101–508, set out as a note under section 59 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100–647 effective, except as
otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99–514, to which
such amendment relates, see section 1019(a) of Pub. L.
100–647, set out as a note under section 1 of this title.
EFFECTIVE DATE
Section effective, except as otherwise provided, as if
included in the provisions of the Tax Reform Act of
1984, Pub. L. 98–369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99–514, set out as an
Effective Date of 1986 Amendment note under section 48
of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1989
For provisions directing that if any amendments
made by subtitle A or subtitle C
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 469
Stored review status: historical_2024_not_currentness_verified. The source passage cites 26 U.S.C. § 469. This identifies an authority to review, not proof of applicability.