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26 U.S.C. § 246 — Rules applying to deductions for dividends received

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26 U.S.C. § 246 — Rules applying to deductions for dividends received

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Source file: Laws/federal/codes/united-states-code/title-26/section-246-rules-applying-to-deductions-for-dividends-received--06c6ac2cdc.md
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Source location: Title 26, Chapter 1, § 246; chapter-001-normal-taxes-and-surtaxes.md

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**(a) Deduction not allowed for dividends from certain corporations** (1) **In general** — The deductions allowed by sections 243 11 So in original. Probably should be followed by a comma. 245, and 245A shall not apply to any dividend from a corporation which, for the taxable year of the corporation in which the distribution is made, or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section 501 (relating to certain charitable, etc., organizations) or section 521 (relating to farmers’ cooperative associations). (2) **Subsection not to apply to certain dividends of Federal Home Loan Banks** (A) *Dividends out of current earnings and profits* — In the case of any dividend paid by any FHLB out of earnings and profits of the FHLB for the taxable year in which such dividend was paid, paragraph (1) shall not apply to that portion of such dividend which bears the same ratio to the total dividend as— (i) the dividends received by the FHLB from the FHLMC during such taxable year, bears to (ii) the total earnings and profits of the FHLB for such taxable year. (B) *Dividends out of accumulated earnings and profits* — In the case of any dividend which is paid out of any accumulated earnings and profits of any FHLB, paragraph (1) shall not apply to that portion of the dividend which bears the same ratio to the total dividend as— (i) the amount of dividends received by such FHLB from the FHLMC which are out of earnings and profits of the FHLMC— (I) for taxable years ending after December 31, 1984, and (II) which were not previously treated as distributed under subparagraph (A) or this subparagraph, bears to (ii) the total accumulated earnings and profits of the FHLB as of the time such dividend is paid. For purposes of clause (ii), the accumulated earnings and profits of the FHLB as of January 1, 1985, shall be treated as equal to its retained earnings as of such date. (C) *Coordination with section 243* — To the extent that paragraph (1) does not apply to any dividend by reason of subparagraph (A) or (B) of this paragraph, the requirement contained in section 243(a) that the corporation paying the dividend be subject to taxation under this chapter shall not apply. (D) *Definitions* — For purposes of this paragraph— (i) *FHLB* — The term “FHLB” means any Federal Home Loan Bank. (ii) *FHLMC* — The term “FHLMC” means the Federal Home Loan Mortgage Corporation. (iii) *Taxable year of FHLB* — The taxable year of an FHLB shall, except as provided in regulations prescribed by the Secretary, be treated as the calendar year. (iv) *Earnings and profits* — The earnings and profits of any FHLB for any taxable year shall be treated as equal to the sum of— (I) any dividends received by the FHLB from the FHLMC during such taxable year, and (II) the total earnings and profits (determined without regard to dividends described in subclause (I)) of the FHLB as reported in its annual financial statement prepared in accordance with section 20 of the Federal Home Loan Bank Act ([12 U.S.C. 1440](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1440&num=0&edition=prelim)). **(b) Limitation on aggregate amount of deductions** (1) **General rule** — Except as provided in paragraph (2), the aggregate amount of the deductions allowed by section 243(a)(1), subsection 22 So in original. (a) and 2 (b) of section 245, and section 250 shall not exceed the percentage determined under paragraph (3) of the taxable income computed without regard to the deductions allowed by sections 172, 199A, 243(a)(1), subsection 2 (a) and 2 (b) of section 245, and 250, without regard to any adjustment under section 1059, and without regard to any capital loss carryback to the taxable year under section 1212(a)(1). (2) **Effect of net operating loss** — Paragraph (1) shall not apply for any taxable year for which there is a net operating loss (as determined under section 172). (3) **Special rules** — The provisions of paragraph (1) shall be applied— (A) first separately with respect to dividends from 20-percent owned corporations (as defined in section 243(c)(2)) and the percentage determined under this paragraph shall be 65 percent, and (B) then separately with respect to dividends not from 20-percent owned corporations and the percentage determined under this paragraph shall be 50 percent and the taxable income shall be reduced by the aggregate amount of dividends from 20-percent owned corporations (as so defined). **(c) Exclusion of certain dividends** (1) **In general** — No deduction shall be allowed under section 243 1 245, or 245A, in respect of any dividend on any share of stock— (A) which is held by the taxpayer for 45 days or less during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend, or (B) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. (2) **90-day rule in the case of certain preference dividends** — In the case of stock having preference in dividends, if the taxpayer receives dividends with respect to such stock which are attributable to a period or periods aggregating in excess of 366 days, paragraph (1)(A) shall be applied— (A) by substituting “90 days” for “45 days” each place it appears, and (B) by substituting “181-day period” for “91-day period”. (3) **Determination of holding periods** — For purposes of this subsection, in determining the period for which the taxpayer has held any share of stock— (A) the day of disposition, but not the day of acquisition, shall be taken into account, and (B) paragraph (3) of section 1223 shall not apply. (4) **Holding period reduced for periods where risk of loss diminished** — The holding periods determined for purposes of this subsection shall be appropriately reduced (in the manner provided in regulations prescribed by the Secretary) for any period (during such periods) in which— (A) the taxpayer has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of, substantially identical stock or securities, (B) the taxpayer is the grantor of an option to buy substantially identical stock or securities, or (C) under regulations prescribed by the Secretary, a taxpayer has diminished his risk of loss by holding 1 or more other positions with respect to substantially similar or related property. The preceding sentence shall not apply in the case of any qualified covered call (as defined in section 1092(c)(4) but without regard to the requirement that gain or loss with respect to the option not be ordinary income or loss), other than a qualified covered call option to which section 1092(f) applies. (5) **Special rules for foreign source portion of dividends received from specified 10-percent owned foreign corporations** (A) *1-year holding period requirement* — For purposes of section 245A— (i) paragraph (1)(A) shall be applied— (I) by substituting “365 days” for “45 days” each place it appears, and (II) by substituting “731-day period” for “91-day period”, and (ii) paragraph (2) shall not apply. (B) *Status must be maintained during holding period* — For purposes of applying paragraph (1) with respect to section 245A, the taxpayer shall be treated as holding the stock referred to in paragraph (1) for any period only if— (i) the specified 10-percent owned foreign corporation referred to in section 245A(a) is a specified 10-percent owned foreign corporation at all times during such period, and (ii) the taxpayer is a United States shareholder with respect to such specified 10-percent owned foreign corporation at all times during such period. **(d) Dividends from a DISC or former DISC** No deduction shall be allowed under section 243 in respect of a dividend from a corporation which is a DISC or former DISC (as defined in section 992(a)) to the extent such dividend is paid out of the corporation’s accumulated DISC income or previously taxed income, or is a deemed distribution pursuant to section 995(b)(1).

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 56 — Adjustments in computing alternative minimum taxable income

**(a) Adjustments applicable to all taxpayers** In determining the amount of the alternative minimum taxable income for any taxable year the following treatment shall apply (in lieu of the treatment applicable for purposes of computing the regular tax): (1) **Depreciation** (A) *In general* (i) *Property other than certain personal property* — Except as provided in clause (ii), the depreciation deduction allowable under section 167 with respect to any tangible property placed in service after December 31, 1986, shall be determined under the alternative system of section 168(g). In the case of property placed in service after December 31, 1998, the preceding sentence shall not apply but clause (ii) shall continue to apply. (ii) *150-percent declining balance method for certain property* — The method of depreciation used shall be— (I) the 150 percent declining balance method, (II) switching to the straight line method for the 1st taxable year for which using the straight line method with respect to the adjusted basis as of the beginning of the year will yield a higher allowance. The preceding sentence shall not apply to any section 1250 property (as defined in section 1250(c)) (and the straight line method shall be used for such section 1250 property) or to any other property if the depreciation deduction determined under section 168 with respect to such other property for purposes of the regular tax is determined by using the straight line method. (B) *Exception for certain property* — This paragraph shall not apply to property described in paragraph (1), (2), (3), or (4) of section 168(f), or in section 168(e)(3)(C)(iv). (C) *Coordination with transitional rules* (i) *In general* — This paragraph shall not apply to property pla

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 56

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26 U.S.C. § 6013 — Joint returns of income tax by husband and wife

**(a) Joint returns** A husband and wife may make a single return jointly of income taxes under subtitle A, even though one of the spouses has neither gross income nor deductions, except as provided below: (1) no joint return shall be made if either the husband or wife at any time during the taxable year is a nonresident alien; (2) no joint return shall be made if the husband and wife have different taxable years; except that if such taxable years begin on the same day and end on different days because of the death of either or both, then the joint return may be made with respect to the taxable year of each. The above exception shall not apply if the surviving spouse remarries before the close of his taxable year, nor if the taxable year of either spouse is a fractional part of a year under section 443(a)(1); (3) in the case of death of one spouse or both spouses the joint return with respect to the decedent may be made only by his executor or administrator; except that in the case of the death of one spouse the joint return may be made by the surviving spouse with respect to both himself and the decedent if no return for the taxable year has been made by the decedent, no executor or administrator has been appointed, and no executor or administrator is appointed before the last day prescribed by law for filing the return of the surviving spouse. If an executor or administrator of the decedent is appointed after the making of the joint return by the surviving spouse, the executor or administrator may disaffirm such joint return by making, within 1 year after the last day prescribed by law for filing the return of the surviving spouse, a separate return for the taxable year of the decedent with respect to which the joint return was made, in which case the return made b

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 6013

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26 U.S.C. § 991 — Taxation of a domestic international sales corporation

For purposes of the taxes imposed by this subtitle upon a DISC (as defined in section 992(a)), a DISC shall not be subject to the taxes imposed by this subtitle.

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 991

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26 U.S.C. § 172 — Net operating loss deduction

**(a) Deduction allowed** There shall be allowed as a deduction for the taxable year an amount equal to— (1) in the case of a taxable year beginning before January 1, 2021, the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and (2) in the case of a taxable year beginning after December 31, 2020, the sum of— (A) the aggregate amount of net operating losses arising in taxable years beginning before January 1, 2018, carried to such taxable year, plus (B) the lesser of— (i) the aggregate amount of net operating losses arising in taxable years beginning after December 31, 2017, carried to such taxable year, or (ii) 80 percent of the excess (if any) of— (I) taxable income computed without regard to the deductions under this section and sections 199A and 250, over (II) the amount determined under subparagraph (A). For purposes of this subtitle, the term “net operating loss deduction” means the deduction allowed by this subsection. **(b) Net operating loss carrybacks and carryovers** (1) **Years to which loss may be carried** (A) *General rule* — A net operating loss for any taxable year— (i) shall be a net operating loss carryback to the extent provided in subparagraphs (B), (C)(i), and (D), and (ii) except as provided in subparagraph (C)(ii), shall be a net operating loss carryover— (I) in the case of a net operating loss arising in a taxable year beginning before January 1, 2018, to each of the 20 taxable years following the taxable year of the loss, and (II) in the case of a net operating loss arising in a taxable year beginning after December 31, 2017, to each taxable year following the taxable year of the loss. (B) *Farming losses* (i) *I

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 172

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26 U.S.C. § 62 — Adjusted gross income defined

**(a) General rule** For purposes of this subtitle, the term “adjusted gross income” means, in the case of an individual, gross income minus the following deductions: (1) **Trade and business deductions** — The deductions allowed by this chapter (other than by part VII of this subchapter) which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee. (2) **Certain trade and business deductions of employees** (A) *Reimbursed expenses of employees* — The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies. (B) *Certain expenses of performing artists* — The deductions allowed by section 162 which consist of expenses paid or incurred by a qualified performing artist in connection with the performances by him of services in the performing arts as an employee. (C) *Certain expenses of officials* — The deductions allowed by section 162 which consist of expenses paid or incurred with respect to services performed by an official as an employee of a State or a political subdivision thereof in a position compensated in whole or in part on a fee basis. (D) *Certain expenses of elementary and secondary school teachers* — The deductions allowed by section 162 which consist of expenses, not in excess of $250, paid or incurred by an eligible educator— (i) by reason of the participation of the educator

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26 U.S.C. § 243 — Dividends received by corporations

**(a) General rule** In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter: (1) 50 percent, in the case of dividends other than dividends described in paragraph (2) or (3); (2) 100 percent, in the case of dividends received by a small business investment company operating under the Small Business Investment Act of 1958 ([15 U.S.C. 661](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section661&num=0&edition=prelim) and following); and (3) 100 percent, in the case of qualifying dividends (as defined in subsection (b)(1)). **(b) Qualifying dividends** (1) **In general** — For purposes of this section, the term “qualifying dividend” means any dividend received by a corporation— (A) if at the close of the day on which such dividend is received, such corporation is a member of the same affiliated group as the corporation distributing such dividend, and (B) if such dividend is distributed out of the earnings and profits of a taxable year of the distributing corporation which ends after December 31, 1963, and on each day of which the distributing corporation and the corporation receiving the dividend were members of such affiliated group. (2) **Affiliated group** — For purposes of this subsection: (A) *In general* — The term “affiliated group” has the meaning given such term by section 1504(a), except that for such purposes sections 1504(b)(2) and 1504(c) shall not apply. (B) *Group must be consistent in foreign tax treatment* — The requirements of paragraph (1)(A) shall not be treated as being met with respect to any dividend received by a corporation if, for any taxabl

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 243

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26 U.S.C. § 23 — Adoption expenses

**(a) Allowance of credit** (1) **In general** — In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer. (2) **Year credit allowed** — The credit under paragraph (1) with respect to any expense shall be allowed— (A) in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and (B) in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred. (3) **$10,000 credit for adoption of child with special needs regardless of expenses** — In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years. (4) **Portion of credit refundable** — So much of the credit allowed under paragraph (1) as does not exceed $5,000 shall be treated as a credit allowed under subpart C and not as a credit allowed under this subpart. **(b) Limitations** (1) **Dollar limitation** — The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000. (2) **Income limitation** (A) *In general* —

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26 U.S.C. § 1212 — Capital loss carrybacks and carryovers

**(a) Corporations** (1) **In general** — If a corporation has a net capital loss for any taxable year (hereinafter in this paragraph referred to as the “loss year”), the amount thereof shall be— (A) a capital loss carryback to each of the 3 taxable years preceding the loss year, but only to the extent— (i) such loss is not attributable to a foreign expropriation capital loss, and (ii) the carryback of such loss does not increase or produce a net operating loss (as defined in section 172(c)) for the taxable year to which it is being carried back; (B) except as provided in subparagraph (C), a capital loss carryover to each of the 5 taxable years succeeding the loss year; and (C) a capital loss carryover to each of the 10 taxable years succeeding the loss year, but only to the extent such loss is attributable to a foreign expropriation loss, and shall be treated as a short-term capital loss in each such taxable year. The entire amount of the net capital loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried, and the portion of such loss which shall be carried to each of the other taxable years to which such loss may be carried shall be the excess, if any, of such loss over the total of the capital gain net income for each of the prior taxable years to which such loss may be carried. For purposes of the preceding sentence, the capital gain net income for any such prior taxable year shall be computed without regard to the net capital loss for the loss year or for any taxable year thereafter. In the case of any net capital loss which cannot be carried back in full to a preceding taxable year by reason of clause (ii) of subparagraph (A), the capital gain net income for such prior taxable year sha

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1212

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26 U.S.C. § 1 — Tax imposed

**(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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26 U.S.C. § 48 — Energy credit

**(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

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 48

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