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26 U.S.C. § 1274 — Determination of issue price in the case of certain debt instruments issued for property
Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** In the case of any debt instrument to which this section applies, for purposes of this subpart, the issue price shall be—
(1) where there is adequate stated interest, the stated principal amount, or
(2) in any other case, the imputed principal amount.
**(b) Imputed principal amount** For purposes of this section—
(1) **In general** — Except as provided in paragraph (3), the imputed principal amount of any debt instrument shall be equal to the sum of the present values of all payments due under such debt instrument.
(2) **Determination of present value** — For purposes of paragraph (1), the present value of a payment shall be determined in the manner provided by regulations prescribed by the Secretary—
(A) as of the date of the sale or exchange, and
(B) by using a discount rate equal to the applicable Federal rate, compounded semiannually.
(3) **Fair market value rule in potentially abusive situations**
(A) *In general* — In the case of any potentially abusive situation, the imputed principal amount of any debt instrument received in exchange for property shall be the fair market value of such property adjusted to take into account other consideration involved in the transaction.
(B) *Potentially abusive situation defined* — For purposes of subparagraph (A), the term “potentially abusive situation” means—
(i) a tax shelter (as defined in section 6662(d)(2)(C)(ii)), and
(ii) any other situation which, by reason of—
(I) recent sales transactions,
(II) nonrecourse financing,
(III) financing with a term in excess of the economic life of the property, or
(IV) other circumstances,
is of a type which the Secretary specifies by regulations as having potential for tax avoidance.
**(c) Debt instruments
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Source location: Title 26, Chapter 1, § 1274; chapter-001-normal-taxes-and-surtaxes.md
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**(a) In general** In the case of any debt instrument to which this section applies, for purposes of this subpart, the issue price shall be—
(1) where there is adequate stated interest, the stated principal amount, or
(2) in any other case, the imputed principal amount.
**(b) Imputed principal amount** For purposes of this section—
(1) **In general** — Except as provided in paragraph (3), the imputed principal amount of any debt instrument shall be equal to the sum of the present values of all payments due under such debt instrument.
(2) **Determination of present value** — For purposes of paragraph (1), the present value of a payment shall be determined in the manner provided by regulations prescribed by the Secretary—
(A) as of the date of the sale or exchange, and
(B) by using a discount rate equal to the applicable Federal rate, compounded semiannually.
(3) **Fair market value rule in potentially abusive situations**
(A) *In general* — In the case of any potentially abusive situation, the imputed principal amount of any debt instrument received in exchange for property shall be the fair market value of such property adjusted to take into account other consideration involved in the transaction.
(B) *Potentially abusive situation defined* — For purposes of subparagraph (A), the term “potentially abusive situation” means—
(i) a tax shelter (as defined in section 6662(d)(2)(C)(ii)), and
(ii) any other situation which, by reason of—
(I) recent sales transactions,
(II) nonrecourse financing,
(III) financing with a term in excess of the economic life of the property, or
(IV) other circumstances,
is of a type which the Secretary specifies by regulations as having potential for tax avoidance.
**(c) Debt instruments to which section applies**
(1) **In general** — Except as otherwise provided in this subsection, this section shall apply to any debt instrument given in consideration for the sale or exchange of property if—
(A) the stated redemption price at maturity for such debt instrument exceeds—
(i) where there is adequate stated interest, the stated principal amount, or
(ii) in any other case, the imputed principal amount of such debt instrument determined under subsection (b), and
(B) some or all of the payments due under such debt instrument are due more than 6 months after the date of such sale or exchange.
(2) **Adequate stated interest** — For purposes of this section, there is adequate stated interest with respect to any debt instrument if the stated principal amount for such debt instrument is less than or equal to the imputed principal amount of such debt instrument determined under subsection (b).
(3) **Exceptions** — This section shall not apply to—
(A) *Sales for $1,000,000 or less of farms by individuals or small businesses*
(i) *In general* — Any debt instrument arising from the sale or exchange of a farm (within the meaning of section 6420(c)(2))—
(I) by an individual, estate, or testamentary trust,
(II) by a corporation which as of the date of the sale or exchange is a small business corporation (as defined in section 1244(c)(3)), or
(III) by a partnership which as of the date of the sale or exchange meets requirements similar to those of section 1244(c)(3).
(ii) *$1,000,000 limitation* — Clause (i) shall apply only if it can be determined at the time of the sale or exchange that the sales price cannot exceed $1,000,000. For purposes of the preceding sentence, all sales and exchanges which are part of the same transaction (or a series of related transactions) shall be treated as 1 sale or exchange.
(B) *Sales of principal residences* — Any debt instrument arising from the sale or exchange by an individual of his principal residence (within the meaning of section 121).
(C) *Sales involving total payments of $250,000 or less*
(i) *In general* — Any debt instrument arising from the sale or exchange of property if the sum of the following amounts does not exceed $250,000:
(I) the aggregate amount of the payments due under such debt instrument and all other debt instruments received as consideration for the sale or exchange, and
(II) the aggregate amount of any other consideration to be received for the sale or exchange.
(ii) *Consideration other than debt instrument taken into account at fair market value* — For purposes of clause (i), any consideration (other than a debt instrument) shall be taken into account at its fair market value.
(iii) *Aggregation of transactions* — For purposes of this subparagraph, all sales and exchanges which are part of the same transaction (or a series of related transactions) shall be treated as 1 sale or exchange.
(D) *Debt instruments which are publicly traded or issued for publicly traded property* — Any debt instrument to which section 1273(b)(3) applies.
(E) *Certain sales of patents* — In the case of any transfer described in section 1235(a) (relating to sale or exchange of patents), any amount contingent on the productivity, use, or disposition of the property transferred.
(F) *Sales or exchanges to which section 483(e) applies* — Any debt instrument to the extent section 483(e) (relating to certain land transfers between related persons) applies to such instrument.
(4) **Exception for assumptions** — If any person—
(A) in connection with the sale or exchange of property, assumes any debt instrument, or
(B) acquires any property subject to any debt instrument,
in determining whether this section or section 483 applies to such debt instrument, such assumption (or such acquisition) shall not be taken into account unless the terms and conditions of such debt instrument are modified (or the nature of the transaction is changed) in connection with the assumption (or acquisition).
**(d) Determination of applicable Federal rate** For purposes of this section—
(1) **Applicable Federal rate**
(A) *In general* — In the case of a debt instrument with a term of:The applicable Federal rate is: Not over 3 yearsThe Federal short-term rate. Over 3 years but not over 9 yearsThe Federal mid-term rate. Over 9 yearsThe Federal long-term rate.
(B) *Determination of rates* — During each calendar month, the Secretary shall determine the Federal short-term rate, mid-term rate, and long-term rate which shall apply during the following calendar month.
(C) *Federal rate for any calendar month* — For purposes of this paragraph—
(i) *Federal short-term rate* — The Federal short-term rate shall be the rate determined by the Secretary based on the average market yield (during any 1-month period selected by the Secretary and ending in the calendar month in which the determination is made) on outstanding marketable obligations of the United States with remaining periods to maturity of 3 years or less.
(ii) *Federal mid-term and long-term rates* — The Federal mid-term and long-term rate shall be determined in accordance with the principles of clause (i).
(D) *Lower rate permitted in certain cases* — The Secretary may by regulations permit a rate to be used with respect to any debt instrument which is lower than the applicable Federal rate if the taxpayer establishes to the satisfaction of the Secretary that such lower rate is based on the same principles as the applicable Federal rate and is appropriate for the term of such instrument.
(2) **Lowest 3-month rate applicable to any sale or exchange**
(A) *In general* — In the case of any sale or exchange, the applicable Federal rate shall be the lowest 3-month rate.
(B) *Lowest 3-month rate* — For purposes of subparagraph (A), the term “lowest 3-month rate” means the lowest of the applicable Federal rates in effect for any month in the 3-calendar-month period ending with the 1st calendar month in which there is a binding contract in writing for such sale or exchange.
(3) **Term of debt instrument** — In determining the term of a debt instrument for purposes of this subsection, under regulations prescribed by the Secretary, there shall be taken into account options to renew or extend.
**(e) 110 Percent rate where sale-leaseback involved**
(1) **In general** — In the case of any debt instrument to which this subsection applies, the discount rate used under subsection (b)(2)(B) or section 483(b) shall be 110 percent of the applicable Federal rate, compounded semiannually.
(2) **Lower discount rates shall not apply** — Section 1274A shall not apply to any debt instrument to which this subsection applies.
(3) **Debt instruments to which this subsection applies** — This subsection shall apply to any debt instrument given in consideration for the sale or exchange of any property if, pursuant to a plan, the transferor or any related person leases a portion of such property after such sale or exchange.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** The amount of any deduction or credit allowed by this subtitle shall be taken for the taxable year which is the proper taxable year under the method of accounting used in computing taxable income.
**(b) 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 as a deduction or credit only by reason of the death of the taxpayer shall not be allowed in computing taxable income for the period in which falls the date of the taxpayer’s death.
**(c) Accrual of real property taxes**
(1) **In general** — If the taxable income is computed under an accrual method of accounting, then, at the election of the taxpayer, any real property tax which is related to a definite period of time shall be accrued ratably over that period.
(2) **When election may be made**
(A) *Without consent* — A taxpayer may, without the consent of the Secretary, make an election under this subsection for his first taxable year in which he incurs real property taxes. Such an election shall be made not later than the time prescribed by law for filing the return for such year (including extensions thereof).
(B) *With consent* — A taxpayer may, with the consent of the Secretary, make an election under this subsection at any time.
**(d) Limitation on acceleration of accrual of taxes**
(1) **General rule** — In the case of a taxpayer whose taxable income is computed under an accrual method of accounting, to the extent that the time for accruing taxes is earlier than it would be but for any action of any taxing jurisdiction taken after December 31, 1960, then, under regulations prescribed by the Secretary, such taxes shall be treated as accruing at the time they would have accru
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Exclusion** Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.
**(b) Limitations**
(1) **In general** — The amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000.
(2) **Special rules for joint returns** — In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property—
(A) *$500,000 Limitation for certain joint returns* — Paragraph (1) shall be applied by substituting “$500,000” for “$250,000” if—
(i) either spouse meets the ownership requirements of subsection (a) with respect to such property;
(ii) both spouses meet the use requirements of subsection (a) with respect to such property; and
(iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3).
(B) *Other joint returns* — If such spouses do not meet the requirements of subparagraph (A), the limitation under paragraph (1) shall be the sum of the limitations under paragraph (1) to which each spouse would be entitled if such spouses had not been married. For purposes of the preceding sentence, each spouse shall be treated as owning the property during the period that either spouse owned the property.
(3) **Application to only 1 sale or exchange every 2 years** — Subsection (a) shall not apply to any sale or exchange by the taxpayer if, during the 2-year period ending on the date of such sale or exchange, there was any other sale or exchange by the taxpayer to which subsec
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 121
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** For purposes of this title—
(1) **Retirement** — Amounts received by the holder on retirement of any debt instrument shall be considered as amounts received in exchange therefor.
(2) **Ordinary income on sale or exchange where intention to call before maturity**
(A) *In general* — If at the time of original issue there was an intention to call a debt instrument before maturity, any gain realized on the sale or exchange thereof which does not exceed an amount equal to—
(i) the original issue discount, reduced by
(ii) the portion of original issue discount previously includible in the gross income of any holder (without regard to section 1272(a)(7) (or the corresponding provisions of prior law)),
shall be treated as ordinary income.
(B) *Exceptions* — This paragraph shall not apply to—
(i) any tax-exempt obligation, or
(ii) any holder who has purchased the debt instrument at a premium.
(3) **Certain short-term Government obligations**
(A) *In general* — On the sale or exchange of any short-term Government obligation, any gain realized which does not exceed an amount equal to the ratable share of the acquisition discount shall be treated as ordinary income.
(B) *Short-term Government obligation* — For purposes of this paragraph, the term “short-term Government obligation” means any obligation of the United States or any of its possessions, or of a State or any political subdivision thereof, or of the District of Columbia, which has a fixed maturity date not more than 1 year from the date of issue. Such term does not include any tax-exempt obligation.
(C) *Acquisition discount* — For purposes of this paragraph, the term “acquisition discount” means the excess of the stated redemption price at maturity over the t
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1271
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Energy credit**
(1) **In general** — For purposes of section 46, except as provided in paragraphs (1)(B), (2)(B), and (3)(B) of subsection (c), the energy credit for any taxable year is the energy percentage of the basis of each energy property placed in service during such taxable year.
(2) **Energy percentage**
(A) *In general* — Except as provided in paragraphs (6) and (7), the energy percentage is—
(i) 6 percent in the case of—
(I) qualified fuel cell property,
(II) energy property described in clause (i) or (iii) of paragraph (3)(A) but only with respect to property the construction of which begins before January 1, 2025,
(III) energy property described in paragraph (3)(A)(ii),
(IV) qualified small wind energy property,
(V) waste energy recovery property,
(VI) energy storage technology,
(VII) qualified biogas property,
(VIII) microgrid controllers, and
(IX) energy property described in clauses (v) and (vii) of paragraph (3)(A), and
(ii) in the case of any energy property to which clause (i) does not apply, 0 percent.
(B) *Coordination with rehabilitation credit* — The energy percentage shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures.
(C) *Nonapplication of increases to energy percentage* — For purposes of energy property described in subparagraph (A)(ii), the energy percentage applicable to such property pursuant to such subparagraph shall not be increased or otherwise adjusted by any provision of this section.
(3) **Energy property** — For purposes of this subpart, the term “energy property” means any property—
(A) which is—
(i) equipment which uses solar energy to generate electricity, to he
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Requirements for qualification** A trust created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan of an employer for the exclusive benefit of his employees or their beneficiaries shall constitute a qualified trust under this section—
(1) if contributions are made to the trust by such employer, or employees, or both, or by another employer who is entitled to deduct his contributions under section 404(a)(3)(B) (relating to deduction for contributions to profit-sharing and stock bonus plans), or by a charitable remainder trust pursuant to a qualified gratuitous transfer (as defined in section 664(g)(1)), for the purpose of distributing to such employees or their beneficiaries the corpus and income of the fund accumulated by the trust in accordance with such plan;
(2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees or their beneficiaries (but this paragraph shall not be construed, in the case of a multiemployer plan, to prohibit the return of a contribution within 6 months after the plan administrator determines that the contribution was made by a mistake of fact or law (other than a mistake relating to whether the plan is described in section 401(a) or the trust which is part of such plan is exempt from taxation under section 501(a), or the return of any withdrawal liability payment determined to be an overpayment within 6 months of such determination));
(3) if the plan of which such trust is a part satisfies the requireme
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Lower discount rate** In the case of any qualified debt instrument, the discount rate used for purposes of sections 483 and 1274 shall not exceed 9 percent, compounded semiannually.
**(b) Qualified debt instrument defined** For purposes of this section, the term “qualified debt instrument” means any debt instrument given in consideration for the sale or exchange of property (other than new section 38 property within the meaning of section 48(b), as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) if the stated principal amount of such instrument does not exceed $2,800,000.
**(c) Election to use cash method where stated principal amount does not exceed $2,000,000**
(1) **In general** — In the case of any cash method debt instrument—
(A) section 1274 shall not apply, and
(B) interest on such debt instrument shall be taken into account by both the borrower and the lender under the cash receipts and disbursements method of accounting.
(2) **Cash method debt instrument** — For purposes of paragraph (1), the term “cash method debt instrument” means any qualified debt instrument if—
(A) the stated principal amount does not exceed $2,000,000,
(B) the lender does not use an accrual method of accounting and is not a dealer with respect to the property sold or exchanged,
(C) section 1274 would have applied to such instrument but for an election under this subsection, and
(D) an election under this subsection is jointly made with respect to such debt instrument by the borrower and lender.
(3) **Successors bound by election**
(A) *In general* — Except as provided in subparagraph (B), paragraph (1) shall apply to any successor to the borrower or lender with respect to a cash method debt instrument.
(B)
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1274A
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** No deduction shall be allowed under this chapter for any excess parachute payment.
**(b) Excess parachute payment** For purposes of this section—
(1) **In general** — The term “excess parachute payment” means an amount equal to the excess of any parachute payment over the portion of the base amount allocated to such payment.
(2) **Parachute payment defined**
(A) *In general* — The term “parachute payment” means any payment in the nature of compensation to (or for the benefit of) a disqualified individual if—
(i) such payment is contingent on a change—
(I) in the ownership or effective control of the corporation, or
(II) in the ownership of a substantial portion of the assets of the corporation, and
(ii) the aggregate present value of the payments in the nature of compensation to (or for the benefit of) such individual which are contingent on such change equals or exceeds an amount equal to 3 times the base amount.
For purposes of clause (ii), payments not treated as parachute payments under paragraph (4)(A), (5), or (6) shall not be taken into account.
(B) *Agreements* — The term “parachute payment” shall also include any payment in the nature of compensation to (or for the benefit of) a disqualified individual if such payment is made pursuant to an agreement which violates any generally enforced securities laws or regulations. In any proceeding involving the issue of whether any payment made to a disqualified individual is a parachute payment on account of a violation of any generally enforced securities laws or regulations, the burden of proof with respect to establishing the occurrence of a violation of such a law or regulation shall be upon the Secretary.
(C) *Treatment of certain agreements entered into w
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Amount constituting interest** For purposes of this title, in the case of any payment—
(1) under any contract for the sale or exchange of any property, and
(2) to which this section applies,
there shall be treated as interest that portion of the total unstated interest under such contract which, as determined in a manner consistent with the method of computing interest under section 1272(a), is properly allocable to such payment.
**(b) Total unstated interest** For purposes of this section, the term “total unstated interest” means, with respect to a contract for the sale or exchange of property, an amount equal to the excess of—
(1) the sum of the payments to which this section applies which are due under the contract, over
(2) the sum of the present values of such payments and the present values of any interest payments due under the contract.
For purposes of the preceding sentence, the present value of a payment shall be determined under the rules of section 1274(b)(2) using a discount rate equal to the applicable Federal rate determined under section 1274(d).
**(c) Payments to which subsection (a) applies**
(1) **In general** — Except as provided in subsection (d), this section shall apply to any payment on account of the sale or exchange of property which constitutes part or all of the sales price and which is due more than 6 months after the date of such sale or exchange under a contract—
(A) under which some or all of the payments are due more than 1 year after the date of such sale or exchange, and
(B) under which there is total unstated interest.
(2) **Treatment of other debt instruments** — For purposes of this section, a debt instrument of the purchaser which is given in consideration for the sale or exchange of property shall not be treate
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 483
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Satisfaction of requirements by pension plans** Each pension plan shall satisfy the requirements of subsection (b)(3), and—
(1) in the case of a defined benefit plan, shall satisfy the requirements of subsection (b)(1); and
(2) in the case of a defined contribution plan, shall satisfy the requirements of subsection (b)(2).
**(b) Enumeration of plan requirements**
(1)
(A) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which each participant is entitled upon his separation from the service is not less than—
(i) 3 percent of the normal retirement benefit to which he would be entitled at the normal retirement age if he commenced participation at the earliest possible entry age under the plan and served continuously until the earlier of age 65 or the normal retirement age specified under the plan, multiplied by
(ii) the number of years (not in excess of 33⅓) of his participation in the plan.
In the case of a plan providing retirement benefits based on compensation during any period, the normal retirement benefit to which a participant would be entitled shall be determined as if he continued to earn annually the average rate of compensation which he earned during consecutive years of service, not in excess of 10, for which his compensation was the highest. For purposes of this subparagraph, social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after such current year.
(B) A defined benefit plan satisfies the requirements of this paragraph of a particular plan year if under the plan the accrued benefit payable at the normal retirement age is equal to the normal retirement benefit and the annual rate
Source: Supplied U.S. Code snapshot — release unconfirmed · 29 U.S.C. § 1054
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** For purposes of [section 1082 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title29-section1082&num=0&edition=prelim), the term “accumulated funding deficiency” for a CSEC plan means the excess of the total charges to the funding standard account for all plan years (beginning with the first plan year to which [section 1082 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title29-section1082&num=0&edition=prelim) applies) over the total credits to such account for such years or, if less, the excess of the total charges to the alternative minimum funding standard account for such plan years over the total credits to such account for such years.
**(b) Funding standard account**
(1) **Account required** — Each plan to which this section applies shall establish and maintain a funding standard account. Such account shall be credited and charged solely as provided in this section.
(2) **Charges to account** — For a plan year, the funding standard account shall be charged with the sum of—
(A) the normal cost of the plan for the plan year,
(B) the amounts necessary to amortize in equal annual installments (until fully amortized)—
(i) in the case of a plan in existence on January 1, 1974, the unfunded past service liability under the plan on the first day of the first plan year to which [section 1082 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title29-section1082&num=0&edition=prelim) applies, over a period of 40 plan years,
(ii) in the case of a plan which comes into existence after January 1, 1974, but before the first day of the first plan year beginning after December 31, 2013, the unfunded past service liability under the plan on the first day of t
Source: Supplied U.S. Code snapshot — release unconfirmed · 29 U.S.C. § 1085a
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