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26 U.S.C. § 1254 — Gain from disposition of interest in oil, gas, geothermal, or other mineral properties
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule**
(1) **Ordinary income** — If any section 1254 property is disposed of, the lesser of—
(A) the aggregate amount of—
(i) expenditures which have been deducted by the taxpayer or any person under section 263, 616, or 617 with respect to such property and which, but for such deduction, would have been included in the adjusted basis of such property, and
(ii) the deductions for depletion under section 611 which reduced the adjusted basis of such property, or
(B) the excess of—
(i) in the case of—
(I) a sale, exchange, or involuntary conversion, the amount realized, or
(II) in the case of any other disposition, the fair market value of such property, over
(ii) the adjusted basis of such property,
shall be treated as gain which is ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.
(2) **Disposition of portion of property** — For purposes of paragraph (1)—
(A) In the case of the disposition of a portion of section 1254 property (other than an undivided interest), the entire amount of the aggregate expenditures or deductions described in paragraph (1)(A) with respect to such property shall be treated as allocable to such portion to the extent of the amount of the gain to which paragraph (1) applies.
(B) In the case of the disposition of an undivided interest in a section 1254 property (or a portion thereof), a proportionate part of the expenditures or deductions described in paragraph (1)(A) with respect to such property shall be treated as allocable to such undivided interest to the extent of the amount of the gain to which paragraph (1) applies.
This paragraph shall not apply to any expenditures to the extent the taxpayer establishes to the satisfaction of
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Source file: Laws/federal/codes/united-states-code/title-26/section-1254-gain-from-disposition-of-interest-in-oil-gas-geothermal-or-other-mineral--a8b00b7113.md
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Source location: Title 26, Chapter 1, § 1254; chapter-001-normal-taxes-and-surtaxes.md
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**(a) General rule**
(1) **Ordinary income** — If any section 1254 property is disposed of, the lesser of—
(A) the aggregate amount of—
(i) expenditures which have been deducted by the taxpayer or any person under section 263, 616, or 617 with respect to such property and which, but for such deduction, would have been included in the adjusted basis of such property, and
(ii) the deductions for depletion under section 611 which reduced the adjusted basis of such property, or
(B) the excess of—
(i) in the case of—
(I) a sale, exchange, or involuntary conversion, the amount realized, or
(II) in the case of any other disposition, the fair market value of such property, over
(ii) the adjusted basis of such property,
shall be treated as gain which is ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.
(2) **Disposition of portion of property** — For purposes of paragraph (1)—
(A) In the case of the disposition of a portion of section 1254 property (other than an undivided interest), the entire amount of the aggregate expenditures or deductions described in paragraph (1)(A) with respect to such property shall be treated as allocable to such portion to the extent of the amount of the gain to which paragraph (1) applies.
(B) In the case of the disposition of an undivided interest in a section 1254 property (or a portion thereof), a proportionate part of the expenditures or deductions described in paragraph (1)(A) with respect to such property shall be treated as allocable to such undivided interest to the extent of the amount of the gain to which paragraph (1) applies.
This paragraph shall not apply to any expenditures to the extent the taxpayer establishes to the satisfaction of the Secretary that such expenditures do not relate to the portion (or interest therein) disposed of.
(3) **Section 1254 property** — The term “section 1254 property” means any property (within the meaning of section 614) if—
(A) any expenditures described in paragraph (1)(A) are properly chargeable to such property, or
(B) the adjusted basis of such property includes adjustments for deductions for depletion under section 611.
(4) **Adjustment for amounts included in gross income under section 617(b)(1)(A)** — The amount of the expenditures referred to in paragraph (1)(A)(i) shall be properly adjusted for amounts included in gross income under section 617(b)(1)(A).
**(b) Special rules under regulations** Under regulations prescribed by the Secretary—
(1) rules similar to the rule of subsection (g) of section 617 and to the rules of subsections (b) and (c) of section 1245 shall be applied for purposes of this section; and
(2) in the case of the sale or exchange of stock in an S corporation, rules similar to the rules of section 751 shall be applied to that portion of the excess of the amount realized over the adjusted basis of the stock which is attributable to expenditures referred to in subsection (a)(1)(A) of this section.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** No deduction shall be allowed for—
(1) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate. This paragraph shall not apply to—
(A) expenditures for the development of mines or deposits deductible under section 616,
(B) research and experimental expenditures deductible under section 174 or 174A,
(C) soil and water conservation expenditures deductible under section 175,
(D) expenditures by farmers for fertilizer, etc., deductible under section 180,
(E) expenditures for removal of architectural and transportation barriers to the handicapped and elderly which the taxpayer elects to deduct under section 190,
(F) expenditures for tertiary injectants with respect to which a deduction is allowed under section 193,
(G) expenditures for which a deduction is allowed under section 179,
(H) expenditures for which a deduction is allowed under section 179B,
(I) expenditures for which a deduction is allowed under section 179C,
(J) expenditures for which a deduction is allowed under section 179D, or
(K) expenditures for which a deduction is allowed under section 179E.
(2) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made.
**(b) Repealed. Pub. L. 101–508, title XI, § 11801(a)(16), Nov. 5, 1990, 104 Stat. 1388–520]**
**(c) Intangible drilling and development costs in the case of oil and gas wells and geothermal wells** Notwithstanding subsection (a), and except as provided in subsection (i), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development c
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 263
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Allowance of deduction**
(1) **General rule** — At the election of the taxpayer, expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development stage of the mine, shall be allowed as a deduction in computing taxable income. This subsection shall apply only with respect to the amount of such expenditures which, but for this subsection, would not be allowable as a deduction for the taxable year. This subsection shall not apply to expenditures for the acquisition or improvement of property of a character which is subject to the allowance for depreciation provided in section 167, but allowances for depreciation shall be considered, for purposes of this subsection, as expenditures paid or incurred. In no case shall this subsection apply with respect to amounts paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of oil or gas or of any mineral with respect to which a deduction for percentage depletion is not allowable under section 613.
(2) **Elections**
(A) *Method* — Any election under this subsection shall be made in such manner as the Secretary may by regulations prescribe.
(B) *Time and scope* — The election provided by paragraph (1) for the taxable year may be made at any time before the expiration of the period prescribed for making a claim for credit or refund of the tax imposed by this chapter for the taxable year. Such an election for the taxable year shall apply to all expenditures described in paragraph (1) paid or incurred by the taxpayer during the taxable year or during any subsequent taxable year. Such an election may not be r
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 617
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Federal law — U.S. Code and appendices · legal_authorities
**(a) S corporation defined**
(1) **In general** — For purposes of this title, the term “S corporation” means, with respect to any taxable year, a small business corporation for which an election under section 1362(a) is in effect for such year.
(2) **C corporation** — For purposes of this title, the term “C corporation” means, with respect to any taxable year, a corporation which is not an S corporation for such year.
**(b) Small business corporation**
(1) **In general** — For purposes of this subchapter, the term “small business corporation” means a domestic corporation which is not an ineligible corporation and which does not—
(A) have more than 100 shareholders,
(B) have as a shareholder a person (other than an estate, a trust described in subsection (c)(2), or an organization described in subsection (c)(6)) who is not an individual,
(C) have a nonresident alien as a shareholder, and
(D) have more than 1 class of stock.
(2) **Ineligible corporation defined** — For purposes of paragraph (1), the term “ineligible corporation” means any corporation which is—
(A) a financial institution which uses the reserve method of accounting for bad debts described in section 585,
(B) an insurance company subject to tax under subchapter L, or
(C) a DISC or former DISC.
(3) **Treatment of certain wholly owned subsidiaries**
(A) *In general* — Except as provided in regulations prescribed by the Secretary, for purposes of this title—
(i) a corporation which is a qualified subchapter S subsidiary shall not be treated as a separate corporation, and
(ii) all assets, liabilities, and items of income, deduction, and credit of a qualified subchapter S subsidiary shall be treated as assets, liabilities, and such items (as the case may be) of the S corp
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1361
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** There shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness.
**(b) Installment purchases where interest charge is not separately stated**
(1) **General rule** — If personal property or educational services are purchased under a contract—
(A) which provides that payment of part or all of the purchase price is to be made in installments, and
(B) in which carrying charges are separately stated but the interest charge cannot be ascertained,
then the payments made during the taxable year under the contract shall be treated for purposes of this section as if they included interest equal to 6 percent of the average unpaid balance under the contract during the taxable year. For purposes of the preceding sentence, the average unpaid balance is the sum of the unpaid balance outstanding on the first day of each month beginning during the taxable year, divided by 12. For purposes of this paragraph, the term “educational services” means any service (including lodging) which is purchased from an educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization.
(2) **Limitation** — In the case of any contract to which paragraph (1) applies, the amount treated as interest for any taxable year shall not exceed the aggregate carrying charges which are properly attributable to such taxable year.
**(c) Redeemable ground rents** For purposes of this subtitle, any annual or periodic rental under a redeemable ground rent (excluding amounts in redemption thereof) shall be treated as interest on an indebtedness secured by a mortgage.
**(d) Limitation on investment interest**
(1) **In general** — In the case of a taxpayer other than a corporation, the amount al
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 163
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** Except as otherwise provided in this chapter, a distribution of property (as defined in section 317(a)) made by a corporation to a shareholder with respect to its stock shall be treated in the manner provided in subsection (c).
**(b) Amount distributed**
(1) **General rule** — For purposes of this section, the amount of any distribution shall be the amount of money received, plus the fair market value of the other property received.
(2) **Reduction for liabilities** — The amount of any distribution determined under paragraph (1) shall be reduced (but not below zero) by—
(A) the amount of any liability of the corporation assumed by the shareholder in connection with the distribution, and
(B) the amount of any liability to which the property received by the shareholder is subject immediately before, and immediately after, the distribution.
(3) **Determination of fair market value** — For purposes of this section, fair market value shall be determined as of the date of the distribution.
**(c) Amount taxable** In the case of a distribution to which subsection (a) applies—
(1) **Amount constituting dividend** — That portion of the distribution which is a dividend (as defined in section 316) shall be included in gross income.
(2) **Amount applied against basis** — That portion of the distribution which is not a dividend shall be applied against and reduce the adjusted basis of the stock.
(3) **Amount in excess of basis**
(A) *In general* — Except as provided in subparagraph (B), that portion of the distribution which is not a dividend, to the extent that it exceeds the adjusted basis of the stock, shall be treated as gain from the sale or exchange of property.
(B) *Distributions out of increase in value accrued before March 1, 1913* — Th
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 301
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Except as otherwise provided in this section, on the distribution of property by a corporation with respect to its stock, the earnings and profits of the corporation (to the extent thereof) shall be decreased by the sum of—
(1) the amount of money,
(2) the principal amount of the obligations of such corporation (or, in the case of obligations having original issue discount, the aggregate issue price of such obligations), and
(3) the adjusted basis of the other property, so distributed.
**(b) Distributions of appreciated property** On the distribution by a corporation, with respect to its stock, of any property (other than an obligation of such corporation) the fair market value of which exceeds the adjusted basis thereof—
(1) the earnings and profits of the corporation shall be increased by the amount of such excess, and
(2) subsection (a)(3) shall be applied by substituting “fair market value” for “adjusted basis”.
For purposes of this subsection and subsection (a), the adjusted basis of any property is its adjusted basis as determined for purposes of computing earnings and profits.
**(c) Adjustments for liabilities** In making the adjustments to the earnings and profits of a corporation under subsection (a) or (b), proper adjustment shall be made for—
(1) the amount of any liability to which the property distributed is subject, and
(2) the amount of any liability of the corporation assumed by a shareholder in connection with the distribution.
**(d) Certain distributions of stock and securities**
(1) **In general** — The distribution to a distributee by or on behalf of a corporation of its stock or securities, of stock or securities in another corporation, or of property, in a distribution to which this title applies, shall not be consid
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Sale or exchange of interest in partnership** The amount of any money, or the fair market value of any property, received by a transferor partner in exchange for all or a part of his interest in the partnership attributable to—
(1) unrealized receivables of the partnership, or
(2) inventory items of the partnership,
shall be considered as an amount realized from the sale or exchange of property other than a capital asset.
**(b) Certain distributions treated as sales or exchanges**
(1) **General rule** — To the extent a partner receives in a distribution—
(A) partnership property which is—
(i) unrealized receivables, or
(ii) inventory items which have appreciated substantially in value,
in exchange for all or a part of his interest in other partnership property (including money), or
(B) partnership property (including money) other than property described in subparagraph (A)(i) or (ii) in exchange for all or a part of his interest in partnership property described in subparagraph (A)(i) or (ii),
such transactions shall, under regulations prescribed by the Secretary, be considered as a sale or exchange of such property between the distributee and the partnership (as constituted after the distribution).
(2) **Exceptions** — Paragraph (1) shall not apply to—
(A) a distribution of property which the distributee contributed to the partnership, or
(B) payments, described in section 736(a), to a retiring partner or successor in interest of a deceased partner.
(3) **Substantial appreciation** — For purposes of paragraph (1)—
(A) *In general* — Inventory items of the partnership shall be considered to have appreciated substantially in value if their fair market value exceeds 120 percent of the adjusted basis to the partnership of such pro
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 751
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Federal law — U.S. Code and appendices · legal_authorities
Page 2367
TITLE 26—INTERNAL REVENUE CODE
§ 1254
Subsec. (d)(2). Pub. L. 101–239, § 7622(b), designated ex-
isting provisions as subpar. (A), inserted subpar. head-
ing, redesignated former subpars. (A) to (C) as cls. (i) to
(iii), respectively, and former cls. (i) and (ii) of former
subpar. (B) as subcls. (I) and (II), respectively, of cl. (ii),
and added subpar. (B).
Subsec. (d)(3) to (5). Pub. L. 101–239, § 7622(c), added
pars. (3) to (5).
1976—Subsec. (d)(2)(C). Pub. L. 94–455 struck out ‘‘or
his delegate’’ after ‘‘Secretary’’.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Pub. L. 108–357 applicable to property
acquired after Oct. 22, 2004, see section 886(c)(1) of Pub.
L. 108–357, set out as a note under section 197 of this
title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103–66 applicable, except as
otherwise provided, with respect to property acquired
after Aug. 10, 1993, see section 13261(g) of Pub. L. 103–66,
set out as an Effective Date note under section 197 of
this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101–508 effective, except as
otherwise provided, as if included in the provision of
the Revenue Reconciliation Act of 1989, Pub. L. 101–239,
title VII, to which such amendment relates, see section
11701(n) of Pub. L. 101–508, set out as a note under sec-
tion 42 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101–239 applicable to transfers
after Oct. 2, 1989, but not applicable to any transfer
pursuant to a written binding contract in effect on Oct.
2, 1989, and at all times thereafter before the transfer,
see section 7622(c)[(e)] of Pub. L. 101–239, set out as a
note under section 167 of this title.
EFFECTIVE DATE
Section applicabl
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 1254
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